Introducing the User Engagement Calculator
Since before we even incorporated Knowtify, we were focused on building a product (eventually products) that help companies drive higher levels of User Engagement. It’s been at the core of what drives us since our first conversations back at Contraband Coffee.
Why do we care about user engagement?
Because software builders of today live in a much different world than existed just 10 years ago. We now live in a Post-Sales world where value is ONLY generated by keeping your users active, engaged and on-board for long periods of time. Long gone are the days of the big, multi-million, multi-year software deal. Today, users pay (the ones that do) month-by-month (or maybe annually) — and only when they want to.
This means that…
…an engaged user is a valuable user.
An unengaged user is not.
And this is the root of our obsession with User Engagement. It’s really not more complicated than that.
But how do you define the value of User Engagement?
We are still very early in this Post-Sales world (I mean, Salesforce is only 15 years old), so the idea of user engagement is still a relatively new focus for software businesses. But that is changing rapidly as more and more SaaS companies start to realize that this metric is inextricably tied to value of the business.
SaaS pros are realizing that an engaged user:
- Sticks around—paying their usage fee for many, many months (increasing LTV by extending the lifetime)
- Grows—engaged users grow their usage (and, as a result, how much they pay you) over time (increasing LTV by increasing MRR)
- Bring you new users—either through direct referrals or through random word-of-mouth conversations (both online and off)
And while many SaaS builders are starting to abstractly understand and admit to the value of user engagement, not many have actually put concrete dollar values against the concept. We thought we could help with that.
Introducing the User Engagement Calculator
We are happy to release a fun little app that we hope will help SaaS peeps start to think about the actual dollar value of an engaged user. We call it the User Engagement Calculator.
We encourage you to take the app for a spin. It’s quick, simple, a bit of fun…and we hope helpful for framing the importance of user engagement for your app.
Some notes on the calculator:
- The point of the calculator is to help you hone in on the value of a single engaged user (or account) and then compare that against an unengaged user (assuming there is SOME value to an unengaged user—which there may not be, in which case an engaged user will be infinitely more valuable than an engaged user).
- We try to break down the “value” into the three main buckets in which an engaged user can generate value for your SaaS app—retention, growth & referral (don’t forget about referral and second order revenue!)
- This calculator was really built for SaaS apps—there are different nuances for other models (B2C apps, prosumer, or apps with a heavy freemium model) that this calculator doesn’t perfectly cover. However, if this goes well, maybe we’ll release apps for the different use cases…
- The final results page will show you the value of a single engaged user for your app, but the real power comes when you see the impact of converting a higher and higher percentage of your users to engaged users. Don’t leave the calculator without playing with the percentage toggle at the bottom of the results page. It’s super fun.
- This simple calculation should help many different departments justify their work. We firmly believe that driving user engagement is a practice that stretches across departments and therefore requires the coordination of many different people in an organization. So…for Customer Success pros, Product Managers, Community Managers, Growth folks, Marketing, etc—this app should help bring clarity to the importance of your work.
This is not an exact science
A word of caution. We realize the algorithm we used in our calculator is pretty basic. It does not represent a perfect calculation and we realize each app will have nuances that will not line up perfectly with this calculation.
But that’s ok — it wasn’t our intention to create a perfect algorithm. The ultimate goal of this app is to encourage all our SaaS peeps to start thinking about user engagement more seriously. To help them realize that there is actual a dollar value associated with keeping users engaged.
In a post-sales world, acquiring users isn’t the hard part. No, it’s not easy, but it’s not the hard part. People can start using an app with one click, no credit card, without talking to sales, attending a conference, etc. Just click here and get started. Frictionless.
But getting someone started isn’t the name of the game anymore. Keeping them engaged, however—now that’s the playing field on which we’re all competing now…
We hope you enjoy the User Engagement Calculator. Tweet us comments at @knowtifyio!
Special thanks to Lincoln Murphy
A very special thanks to Lincoln Murphy for contributing the great Top 19 Ways to Drive User Engagement piece that you can find at the end of the calculator.
Lincoln is one of our favorite people in the SaaS space. His thoughts and lessons are always deep-routed in common sense and are always highly actionable—and this guide is no different. In it he offers a bunch of very solid, very actionable tips on increasing your user engagement. You should definitely download it.
Better yet, you should definitely plan to execute on a handful of his tips in the next 12 months…
Thanks, Lincoln!
