Of all the 282 Google product obituaries, the discontinuation of Inbox was the most devastating. Inbox made its debut on May 28, 2015, and immediately stood out as the smarter alternative to other email platforms. It offered a clean, streamlined, and intuitive navigation system, making ‘Inbox zero’ a realistic goal. However, despite being miles ahead of the competition, March 2019 marked the end of the road for this beloved email client. Sadly, Inbox’s failure to gain widespread adoption can be attributed to the Pavlovian response of customers who had already become accustomed to the look and feel of Gmail. Although Inbox’s innovation was impressive, its inability to drive user engagement proved to be its downfall.
User engagement is the key to success for any product or service. It refers to how effectively users interact with and derive value from a product or service. Building meaningful interactions with users fosters loyalty, and engaged users are more likely to be strong advocates for the brand. This is particularly important for subscription businesses, where active and engaged users drive recurring revenue. In a highly competitive SaaS market, user engagement is often the determining factor for success, separating the truly successful from the also-rans.
User engagement should not be confused with user experience, which is simply the process of vetting how users interact with a product. User engagement evaluates how users derive value from a product or service, and it is crucial for building long-term customer loyalty. Active and engaged users stay with the product longer, adopt new features quickly, and influence overall profitability. It’s especially important for businesses that rely on product-led growth, where user engagement impacts not just retention, but also acquisitions. Hence, proper customer onboarding is essential, aligning with user engagement principles to transform new users into recurring revenue drivers.
User engagement is a critical metric for businesses, as engaged users are more likely to stay longer and upgrade their subscriptions. It helps businesses to identify “who’s who” at the point of cancellation and prioritize retention efforts. Customer retention is more valuable than acquisition, and with the right user engagement strategy, businesses can avoid high customer drop-off rates that lead to revenue losses and non-recovered customer acquisition costs (CAC). By increasing user engagement thoughtfully, businesses can formulate targeted retention strategies that help to expand revenue opportunities.
Measuring user engagement involves identifying specific metrics that reflect how customers perceive a business. Different businesses will have unique engagement goals and measurement parameters. Some common metrics include weekly/monthly usage, app launches, time spent on critical features, items added to cart, product reviews, returning visitors, site usability, daily usage, session duration, returning users, ratings, and invites to friends. It’s important to analyze each metric as a cohort to get actionable insights on user engagement.
Key user engagement metrics that businesses should track include key actions, daily/weekly/monthly active users, and time spent in between two critical actions. A healthy count of active users indicates a product’s viability and value, and businesses should also track concentrated bursts of active users to identify seasonal impacts. Checking active users for specific features or products can help to determine what features or products are the most effective in driving user engagement. Overall, user engagement is a crucial determinant for building customer loyalty, driving revenue, and staying ahead of the competition.