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Product Engagement Scores: A Key Growth Lever for SaaS

February 19, 2023
December 5, 2022
December 5, 2022

Customers are more empowered today than they have ever been. While this shift began in the B2C world, championed by online commerce giants like Amazon, it was only a matter of time before B2B caught up.

And it has.

Customers have greater expectations than ever, and most SaaS businesses have put significant emphasis on customer success and communication more generally.

However, having an open line of communication and fast response times is no longer good enough.

Explicit customer feedback through in-app chat messages, customer satisfaction score (CSAT), or net promoter score (NPS) surveys only capture a small portion of what a customer is communicating to you.

And if you aren't listening to the other part of that communication, you will lose customers to competitors that do.

How your customers and users engage with your SaaS product sends all sorts of meaningful signals; the problem is that those signals often get lost in the noise.

One of the most basic ways to listen to this implicit communication from your users is to measure Product Engagement Scores.

What is a product engagement score (PES)?

Product engagement score measures how much (or how little) a user is not only accessing your product but actually leveraging its features.

Scoring contacts is not new; marketers and sellers have been doing it through marketing and sales-qualified leads for over a decade.

More recently, PLG companies have embraced a lead scoring model that leveraged product behavior as a proxy for readiness to go from free-to-paid using the Product Qualified Lead.

Product Qualified Lead scoring is a form of Product Engagement Score. The customer, user, or account is scored based on their engagement with your product. The scoring rules are somewhat arbitrary but should add or subtract points to an account or contact based on critical engagement with the product or lack of engagement.

How SaaS companies can use product engagement scores

High customer engagement with your product can mean all sorts of things. Conversely, a highly unengaged user can be equally telling.

SaaS companies today can no longer rely on tracking behavior exclusively on their website or other content channels; they need to incorporate product usage behaviors into their overall scoring models.

There are many ways for SaaS companies to leverage the power of engagement scoring, but here are some of the most popular:

1. Identify expansion revenue opportunities

Companies have no greater untapped revenue opportunity than existing customers in today's SaaS environment.

Competition is growing far faster than the pool of potential customers, the costs to acquire those new customers continue to increase, and significant economic headwinds have left few companies unscathed.

Product engagement scoring is a powerful tool for SaaS companies to identify expansion opportunities. No generic set of rules for what behaviors are signals for expansion, as no two products are the same. By leveraging product engagement scores, companies can build their own scoring methodology that considers various behavioral events.  

2. Uncover product-qualified leads (PQLs)

In Product Led Growth, one of the most important keys to success is identifying and converting product-qualified leads.

A product-qualified lead generally refers to a free trial or free tier user in your product who has reached some predetermined threshold of usage and ICP fit.

Product engagement scoring is a critical aspect of PQLs as you need to incorporate how the user engages (or doesn't) with your product to define their level of qualification.

3. Minimize customer churn

Product engagement scoring is a way of gauging customer involvement with a product or service.

By monitoring metrics such as how often customers use the product, for how long they utilize it, and which features they interact with, companies can create an individualized score for each user.

This score helps identify those who are at risk of abandoning their subscription.

To reduce churn rates, businesses may offer personalized recommendations and incentives to customers whose scores indicate low engagement levels. For instance, if someone has not taken advantage of a certain feature in the product offering yet, then the company could provide them discounts or free trials to encourage them to try it out.

Additionally, providing additional customer support like one-on-one assistance sessions or tutorials via live chat might help keep users engaged too.

Moreover, regularly releasing new updates and features keeps things fresh and exciting - this prevents disinterest from setting in among customers, thus decreasing their likelihood of canceling subscriptions altogether!

By using product engagement scoring to pinpoint potential churners and taking steps towards keeping them interested, companies can lower their customer turnover rate while simultaneously improving renewal numbers!

4. Improve the product experience

By keeping an eye on how customers engage with different features, SaaS companies can gain valuable insights into their product usage and which areas provide the most value.

This data can then be used to identify potential areas of improvement or expansion that could lead to increased customer lifetime value.

Analyzing engagement metrics allows businesses to comprehend how users interact with their product and what elements drive the most benefit. This information is invaluable when deciding which features should be prioritized, optimized, or even developed from scratch.

With proper product engagement scoring, SaaS companies will better understand gaps in their offering and new growth opportunities.

Free Customer Health Scorecard Template

How to calculate your product engagement score

Companies have a few options for creating and tracking product engagement scores. One approach is to use a binary model, where customers are either marked as engaged or not based on whether they meet a set of criteria. For example, someone who uses the product at least once per week might be considered engaged while those who use it less frequently would be regarded as not engaged. This can help companies identify which customers may churn and take steps to keep them engaged.

A weighted model is another option wherein different actions and behaviors are given varying weights depending on their perceived importance. For instance, a certain product feature may be given more weight than simply logging in to the product. This enables companies to create an accurate and nuanced product engagement score that helps them understand which customers are most engaged with the product.

A predictive model provides yet another option, one that uses machine learning algorithms to forecast which customers may churn based on their engagement score and other factors. This can be an effective tool for identifying high-risk customers and taking steps to prevent churning. Companies can leverage predictive models to stay ahead of customer behavior changes and keep their customers engaged and loyal to the product.

The best model for creating and tracking product engagement scores will depend on a company's particular needs and goals; thus, experimenting with different models may help find the best fit for any given situation. With such scoring systems in place, businesses can reduce customer churn while improving customer retention rates.

How to improve product engagement scores

Improving product engagement scores can help companies retain customers and reduce churn. To improve product engagement scores, companies can take the following steps:

1. Offer a freemium plan

This can help attract new customers who are hesitant to commit to a paid plan. By allowing customers to try the product for free, companies can give them a taste of its value and encourage them to upgrade to a paid plan.

2. Expedite time-to-value

Customers are more likely to remain invested in a product if they can quickly recognize its value. To reduce the time it takes for customers to realize this, companies should provide clear instructions and tutorials, personalize their recommendations, and ensure that customers can easily access the most beneficial features of the product.

3. Use in-app marketing

In-app marketing can help keep customers engaged with the product by providing them with relevant, timely, and personalized information and offers. This could include notifications about new features, special deals or discounts, and personalized recommendations.

4. Provide one-to-one support

Providing tailored assistance can help customers make the most of their product and maintain their interest. This could include live chat support, personalized guidance, or individual training sessions.

5. Act on customer feedback

By paying attention to and acting on customer feedback, companies can make their product more valuable.

Regularly gathering and responding to comments from customers allows them to identify areas that need improvement, which they can then address in order to keep users engaged with the product.

Taking these steps will help increase engagement ratings while also helping retain existing customers and reducing churn rates.

How to operationalize your Product Engagement Scores with Parative

Parative is a unique tool that enables you to operationalize your product engagement scoring and reduce customer churn. Parative allows you to easily and effectively track customer readiness and risk by using any existing relationship and behavior data. Plus, with Parative's powerful customer scoring technology, you can build scoring rules directly in your current CRM or CSP.

This means you can use the tools you already use to track and improve your product engagement scores, without the need for additional software or training.

  • Flexible Rule: Flexibility to create multiple levels of rules based on user and account-level behavior, signal pings, and segment membership.
  • Dynamic Scoring: Parative dynamically tracks users and updates scores based on user and account-level product behavior, signal pings, and segment membership.
  • Exists in your CRM: Create custom score fields in your CRM or CSP that will be updated as Parative scores change.

Here are five examples of how Parative helps you operationalize your product engagement scores:

1. On Target Utilization

Create complex, dynamically updated scoring models to measure the level of a customer's utilization of any unit of volume included in their contract to determine if a customer's utilization is healthy, indicates risk, or has the potential for expansion.

2. Propensity to Expand

Leverage robust segmentation rules and dynamic scoring to track opportunities for expansion based on any combination of segments, signals, or scores. Expansion Readiness scores will update automatically across all your other tools based on changes tracked with Parative.

3. Retention Risk

Parative can track key behavioral indicators of churn risk, such as when an account exports its data from the platform. These signals are then synced with your CRM scores and can trigger real-time alerts to your team to take intervening action.

4. Customer Health

Use Parative's scoring engine to build a holistic, high-level overview of the health of a current customer. Use this customer health score to incorporate both implicit behavioral signals of product usage and explicit feedback, such as NPS scores and CSATs.

4. Product Qualified Lead

Parative's scoring allows you to define your PQL qualifications - from ICP fit and marketing engagement to activation and product adoption - and use these to directly identify and score PQLs in real time in the tools you already use.

Get started with Parative today.

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Mark Lerner

Head of Marketing @ Parative, the Customer Behavior Platform. SaaS enthusiast, B2B Marketing Specialist, Startup Survivalist. Dad x2.

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