Mar 28, 2023

Read Time 5 min

Four customer engagement strategies for SaaS companies


Early-stage SaaS businesses tend to put most of their focus on acquiring net new customers. For a little while, customer retention is a manageable task with existing staff. When you have only a handful of customers, your sales team, product team, customer support team—and even executives—can join forces to keep them happy.

However, this isn’t scalable. As you grow your customer base, you must also dedicate resources to Customer Success. A successful subscription model depends on retention. One key to keeping customers is keeping them engaged.

What is customer engagement?

Customer engagement is the sum of all interactions between a customer and a company. This includes interactions that happen both inside and outside of a product. A few examples include when a customer:

  • Attends a webinar;
  • Uses a product;
  • Calls support;
  • Travels to a user conference;
  • Experiments with a new feature; and
  • Pays an invoice.

Many of these are individual interactions but some engagement occurs at an organizational level. For example, a customer with a software license utilization of 90% or more suggests that company-wide engagement is solid.

In defining what customer engagement is, it’s also important to describe what it is not. Customer engagement is not the same thing as customer satisfaction. For example, it’s possible to have high engagement and yet have low satisfaction, or conversely low engagement and high satisfaction.

Customer engagement is a building block of customer experience (CX). Ideally, each engagement will improve the CX and contribute to a positive relationship. However, you should also have a feedback loop to identify when and if those engagements fall short of expectations.

How to measure customer engagement

A straightforward way to gain insight and measure customer engagement is to simply ask customers for feedback. There are three standardized survey methodologies for this purpose: Net Promoter Score (NPS), Customer Satisfaction Score (CSAT), and Customer Effort Score (CES).

  • NPS indicates customer loyalty. This survey asks customers, “How likely are you to recommend us to a friend or colleague?” Answers range on a scale of 1-10, where 10 is best. Responses are grouped into three categories: promoters (answered 9 or 10), passives (answered 7 or 8) and detractors (answered 0 to 6).
  • CSAT measures customer satisfaction. This one-question survey typically asks, “How satisfied are you with your experience with [company]?” Answer options are usually presented on a 3-point or 5-point scale (e.g., very unsatisfied, unsatisfied, neutral, satisfied, very satisfied).
  • CES measures the ease or difficulty of an experience. A common question for this survey is “Overall, how easy was your experience interacting with [company]?” The answers often fall on a scale of 1-7.

Behavioral indicators of customer engagement

One of the most significant problems with surveys is the unpredictable nature of humans. We sometimes say we believe one thing and yet do another. As you measure customer engagement, it’s important to include behavioral indications to augment survey data.

Some useful behavioral indicators include:

  • Product usage data. This looks at factors such as user activity and license utilization. For example, a customer who is active in the product more than 15 days out of the last 30, or a customer with 120 minutes in an app over the last few days. Consider who is using the product as well, such as end users, admins, primary contacts and decision-makers.
  • Product feedback or feature requests. Highly engaged customers tend to be vocal—so keep track of which ones are making product feedback or feature requests. Smart companies also give this a nudge by asking for input periodically. On the flip side, be sure to point out when you deliver improvements based on that feedback.
  • Resource consumption. This ranges from onboarding and training sessions completed to involvement in an online customer community and the number of knowledge base articles a customer has read. These are all indications of proactive customers interested in getting the most out of their purchase.
  • Customer support history. Support interactions are an opportunity to delight customers. Some ways to keep tabs on this is by the frequency of support calls and time-to-resolution. A best practice is to send a CSAT to a customer whenever a support ticket is closed.
  • Event participation. The volume of event participation—in webinars, virtual conferences and meetings—is one way to measure this indicator. Another is to consider the quality of the event. For example, when a customer attends an annual user conference in person, that should count for more.

The real value in tracking behavioral indications is the combination of data. Progressive Customer Success teams roll all of these factors together, and add qualitative inputs like relationship quality, to produce a succinct customer health score.

Four customer engagement strategies

Peter Drucker is attributed with saying “what gets measured, gets managed.” The process of measuring customer engagement through surveys and behavioral indicators will naturally lead to the question: How can we improve customer engagement?

Below are four strategies to consider.

1. Segment your customers and tailor engagement.

All customers do not hold the same value to your business. This is most obvious among SaaS companies that offer tiered pricing and services.

To tailor and prioritize your customer engagements based on that value and other key customer attributes and behavior, you’ll need to create a segmentation strategy.

Segmentation underpins every aspect of Customer Success. A segment groups customers who share similar characteristics and needs. For example, you can segment customers based on:

  1. Basic customer information: tiers, product edition, company size, and industry;
  2. The customer lifecycle: customers who are in a trial, currently onboarding or have expansion potential;
  3. Positive behaviors and engagement: high product usage or license utilization levels;
  4. Negative behaviors and lack of engagement: low product usage or license utilization levels;
  5. Potential value: those that purchase new or additional features, or by revenue size; and
  6. Combinations of these categories.

Read the complete guide: Smart segmentation guide

2. Match engagement to the stage in the customer journey.

There are five traditional stages to the customer journey: awareness, consideration, purchase, retention, and advocacy. Customers will have different needs at each stage, so fine-tuning communications for each stage is more likely to improve engagement.

The onboarding process following a purchase is especially crucial in SaaS. It’s a first impression that will have a lasting influence when renewal time comes around.

CSM Practice Chief Customer Officer and CEO Irit Eizips, put it aptly in our onboarding guide:

“End users need to immediately understand the value they get from the product during onboarding…If they can’t quickly see this value, the likelihood to adopt the solution drops significantly.”

You can go one step further by pairing customer segmentation and lifecycle stage. This will make your outreach effort highly personalized and relevant which will drive up engagement scores.

Read the complete guide: How to crush SaaS customer onboarding

3. Develop playbooks that trigger automated outreach.

There are certain actions that every customer will take at some point in the customer lifecycle. These are opportunities to develop playbooks and automation to deliver personalized outreach and engage a customer at their precise moment of need.

You can automate key touchpoints such as:

  • Welcome messages for new users, which are often among the most opened emails;
  • Trial guidance with tips for new users testing out a new product or feature;
  • Onboarding milestones that congratulate and encourage engagement;
  • Renewal reminders so customers aren’t surprised by an invoice; and
  • Recognition and affirmation for power users.

Read the complete guide: New to Customer Success automation? 15 ideas to get started

4. Deliver in-the-moment assistance with in-app messaging

In-app communication takes automation to the next level. It allows you to deliver relevant messages as a customer is using a product. A good example is using in-app messaging to provide product tours or “walkthroughs” that include tips to familiarize new users with available features.

It can also be combined with other engagement strategies. For example, you can use in-app tools to deliver an NPS survey or notify customers of upcoming events. We recommend using this sparingly to avoid annoying users.

Read the complete guide: The ChurnZero guide to product walkthroughs

The building blocks of customer satisfaction and loyalty

Customer engagement is a building block of customer satisfaction and loyalty. There is a clear connection between customer engagement and metrics such as lower churn rates, higher customer retention and greater customer lifetime value (CLTV).

Engaged customers also help a company improve its products and services. Engagement generates usage data that provides insights into customer behavior, preferences, and buying habits. This data can be used to optimize offerings and improve the overall customer experience.

If you enjoyed this article, you might also like: Why you need to engage new users even after product launch


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