How to measure consumer engagement. The metrics you should check
Are you wondering about how to measure consumer engagement? From web traffic to customer satisfaction, there are many metrics you can monitor.
Paul Greenberg defined consumer engagement as “The ongoing interactions between company and customer, offered by the company chosen by the customer.”
Why is it so important? Because today the sales experience often counts more than the goods or services customers buy. Furthermore, a positive customer experience is made up of many different elements, and it takes time and resources to build. In other words, it is an investment that must bring results, such as customer satisfaction, customer retention, and customer loyalty.
However, there is a problem: how do you know if you are doing the right thing? You should have parameters to understand if your decisions are bringing the desired results.
In this article, we will explain how to measure consumer engagement and which metrics you should keep an eye on.
How to measure consumer engagement: 4 essential metrics
As for measuring customer loyalty, also for consumer engagement you can get an idea of how things are going by checking some metrics that show consumers' appreciation of your brand or your products/services.
Some of this information is within the data analytics at your disposal (eg: Google Analytics, Facebook Insight, e-commerce reports, and so on). Others, you have to actively collect them. How? By asking your consumers!
Here are 3 essential metrics to check.
1) Customer satisfaction
This is the most important metric to understand consumer engagement.
Indeed, it measures how well your company meets the needs and expectations of your customers.
There are different ways to calculate it, but the most common is through customer feedback surveys. You can use online tools such as SurveyMonkey or Google Forms to create a survey and send it to your customers via email. Another option is to use a third-party company that specialises in customer satisfaction surveys.
You can also use Net Promoter Score (NPS).
The NPS is a metric that goes from -100 to 100 and that measures the willingness of customers to recommend your products or services to others. It is obtained by subtracting the percentage of detractors from the percentage of promoters.
You can use it to understand how satisfied your customers are, but also to identify areas for improvement in customer service or in the product/service itself.
How to improve consumer engagement with this metric: offer excellent customer service and products/services that fully meet consumer needs.
2) Customer retention
This metric measures the percentage of customers who continue to use your company's products or services over a certain period of time. In other words, it measures how long your customers stay with you. It is a good indicator to understand if your consumers are satisfied with what you offer and if they find it useful.
You can calculate it using this formula: ((E-N)/C)) x 100.
E is the number of customers at the end of the period, N is the number of new customers acquired during that period, and C is the number of customers at the beginning of that period.
For example, if you have 100 customers at the beginning of the year and 80 at the end, your customer retention rate is 80%.
How to improve consumer engagement with this metric: focus on offering a great customer experience, so that consumers remain satisfied with your company over time.
3) Customer lifetime value
This metric measures the total amount of money a customer spends on your products or services during their entire relationship with your company. In other words, it shows how much revenue a single customer generates over time.
You can calculate it using this formula: ((A x P) – C) / L.
A is the average order value, P is the number of purchases made, C is the customer churn rate, and L is the average retention time.
For example, if the average order value is $100, a customer makes 5 purchases in their lifetime, the customer churn rate is 20%, and the average retention time is 2 years, then the customer lifetime value would be $500.
This metric is important because it shows how much revenue a single customer can generate and, therefore, how valuable they are to your business.
How to improve consumer engagement with this metric: focus on offering products or services of excellent quality, so that customers remain satisfied over time and continue to make purchases. And don't forget to create an up-selling and cross-selling system built around the individual consumer as much as possible. Personalisation is an important element for consumer engagement!
4) Churn rate
This metric measures the percentage of customers who stop using your products or services during a given period. In other words, it shows how many customers you lose over time.
Since churn rate is connected to customer retention, you can calculate it using a similar formula: (C-N)/C x 100.
C is the number of customers at the beginning of the period, and N is the number of customers at the end of the period.
For example, if you have 100 customers at the beginning of the month and 80 at the end, your churn rate would be 20%.
How to improve consumer engagement with this metric: focus on offering products or services of excellent quality and a great customer service, so that customers remain satisfied over time and continue to choose your company.
Other metrics worth a check
In addition to those already mentioned, there are many other metrics you can use to measure consumer engagement.
Here are a few of them.
1) Web traffic
This metric measures the number of visitors to your website. It is a good indicator of consumer interest in your company and its products or services.
It is the result of how interesting the content you share is, but also of your SEO, your activities on social media platforms, your ads campaigns and the very structure of your website.
How to improve consumer engagement with this metric: by creating an easy-to-use website and sharing content that your consumers really care about, they surely will want to come back again and again.
2) Conversion rate
This metric measures the percentage of visitors to your website or e-commerce who take the desired action, such as making a purchase or signing up for a newsletter.
It is a good indicator of the effectiveness of the customer journey you have designed, since consumer engagement is the result of a positive user experience.
How to improve consumer engagement with this metric: if you see that your conversion rate is low, identify where users leave the customer journey. When you understand why it happens, make the necessary changes. In general, make your user experience as simple and fast as possible. And don't neglect customer service.