SaaS Talk: What is an Engaged User?
This is an excerpt from Drive World Class User Engagement White Paper by Linoln Murphy.
'Engagement' is a term that gets thrown around a lot these days, but if you ask 10 people to define it, you’ll likely get 10 different definitions.
While I don’t expect everyone to agree with me, I want you to know how I define 'Engagement' so you know where I’m coming from. ‘Engagement’ is when your customer is realizing value from your SaaS.
When you look at engagement this way, it completely changes everything. Because you will start looking at everything differently. Instead of thinking about engagement as a “product” issue, you will see that it is actually a customer issue. And, more specifically, it’s a customer lifecycle issue.
Why Should You Care About User Engagement?
You should care about user engagement because: There is nothing more important to a SaaS business than user engagement.
Gone are the days of the huge, expensive perpetual software license as well as the AOL our-users-have-no-idea-that-we-are-still-chargingtheir-credit-cards business model. In the SaaS world, customers who aren’t engaging with your service simply won’t pay for your service for very long. They will cancel.
And that means death to a SaaS business whose profitability and value depends on users paying their monthly fees for many, many months (i.e. - years).
Or better yet, increasing their monthly fees over time.
Oh yeah...and referring friends, co-workers, colleagues, & Twitter followers. But definitely not cancelling their subscriptions. As it turns out, engaged users stay longer, pay more and refer you more customers.
This means, in many ways, user engagement is the ONLY metric that matters to a SaaS business.