Customer engagement is all about building an emotional connection with customers that goes well beyond their initial purchase with your business. There are numerous strategies for increasing customer engagement and loyalty; however, no matter how much effort you put into them, there’s only one way to tell whether they're working - you must quantify your campaigns’ performance.
In this article, we'll explore some fundamental customer engagement metrics that'll help you determine whether you're on the track to success.
Why measuring customer engagement performance is essential
It's vital to know how your customer engagement strategy is doing - whether it's achieving your business objectives and giving you a good return on investment (ROI). If you haven't hit your goals yet, tracking customer engagement metrics and evaluating them should tell you whether you'll likely meet them in the near future. But that's not all. Other important reasons you should measure your customer engagement efforts include:
Giving you a push to revisit initial goals - and remain focused on them.
Checking the cost-benefit - and ensuring you're not overspending on budget.
Presenting you with solid evidence - if the metrics are poor, this indicates an underlying problem which you can then address. The numbers can tell a different story to how things appear on the surface, giving the proof needed to change direction.
Helping with stakeholder communication - seeing figures in black and white can help colleagues and investors better understand performance.
Can pinpoint exact issues quickly - for example, a low net promoter score suggests you might need to work on PR and getting customers to recommend your business.
Motivates you - to be more consistent with performance reviews.
Better decision-making - solid evidence helps you make the right decisions on customer engagement and retention strategies in the future.
Important customer engagement metrics and how to measure them
There's an endless list of the different ways you can gauge the success of your customer engagement efforts. Which metrics you choose and the method of measuring them varies from business to business. That said, here are the most common metrics to know about:
1. Conversion rate
Customer conversion is when an interested prospect takes a desired action, like signing up for a service or buying a product after seeing promotional content. Other examples are when someone:
Joins a newsletter, membership programme or webinar.
Downloads an eBook from a website.
Makes a phone call enquiry.
Clicks on an online advert link.
Conversion rate can be measured by dividing the total number of conversions (C) by the total number of leads or website visitors (TV). Then, it's expressed as a percentage.
Basic formula: C/TV x 100 = CR
Conversion rate is one of the most important online marketing metrics, telling you how successful your campaign or sales funnel has been. The higher your conversion rate, the better your ROI. Conversion rate is easy to calculate yourself, but several online calculators are also available, like this one from Upwork.
2. Customer retention rate
Customer retention is the rate of customers staying loyal to a business over a specific period. It involves calculating how many customers you have at the end of the time period (E) compared to the start (S), minus any new customers (N) you've acquired throughout.
Basic formula: E-N/S x 100 = CRR
Measuring customer retention rate will help you understand your business's ability to keep customers as opposed to lose them. This in itself gives you an indicator of short-term and long-term success. Again, you can work this out yourself, but there are plenty of calculator tools online to measure CRR.
3. Opt-out rate
This metric is often used in SMS marketing or email marketing where recipients 'opt-in' to receive campaigns. The opt-out rate indicates how many people want you to stop sending them messages via these channels. To calculate the opt-out rate, you divide the number of people who've opted out (O) by the number of messages delivered (D). Then, multiply that figure by 100 to get a percentage.
Basic formula: O/D x 100 = OOR
A high opt-out rate suggests that your marketing campaigns aren't hitting the mark. In which case, you'll need to discover why people are 'opting out' or unsubscribing. Common reasons include irrelevant content, too high message frequency, or sending campaigns at the wrong times (which can annoy recipients). Here's a calculator to use.
4. Churn rate
Customer churn or attrition refers to the number of new customers who fail to become repeat buyers. To measure it, divide the number of customers lost (CL) at the end of a set period by the number of total customers at the beginning (TC). Then, multiply the result by 100.
Basic formula: CL/TC x 100 = CR
Churn rate is slightly different from customer retention, as it measures the number of customers lost rather than those you still have. Customers who only make one purchase are expensive to acquire - much more so than repeat customers. Hence, churn rate is a vital metric to track. It's simple to measure with a regular calculator, but you can also download one here.
5. Engagement rate
Engagement rate measures the percentage of your audience that actively engages with your marketing content. You measure it by dividing the number of interactions (I) - views, likes, shares, clicks, comments, etc. - your content receives by your total audience number (A), multiplying this figure by 100.
Basic formula: I/A x 100 = ER
Engagement rate tells you how well your content is performing, irrespective of your total audience number (or followers). Hootsuite offers a handy tool for measuring social media engagement.
6. Customer satisfaction score (CSAT score)
CSAT is a key performance indicator measuring a customer's overall happiness with a product or service. Customers are often asked this question at the end of a survey and give a response on a 1-5 rating scale (such as 'unsatisfied' or 'very satisfied'). The CSAT score is the total of all positive responses (PR) divided by the total number of responses collected (TR), then multiplied by 100.
Basic formula: PR/TR x 100 = CSAT
The higher your CSAT score, the better, as it means more satisfied customers. A good CSAT score to aim for is 75-85%. While you can calculate this easily yourself, there are tools that specialise in customer insights which have their own calculator, such as ClientZen.
7. Net promoter score (NPS)
A net promoter score measures how loyal customers are to a business. It has a whole methodology behind it, developed by Bain & Company in 2003, which centres around this critical question: How likely are customers to promote your business to others? To calculate your NPS, you'll organise responses into three categories: detractors (D), passives (P) and promoters (PR). You'll then need to work out the percentages of both the promoters and detractors before getting your overall NPS.
Basic formula:
No. of PR/total no. of respondents = promotor score %
No. of D/total no. of respondents = detractor score %
promotor score % - detractor score % = NPS
NPS is a popular customer experience metric many businesses rely on today to enhance customer relationships, foster organisation-wide learning and grow customer lifetime value. It's a more complex metric to calculate yourself, but it's certainly possible - you must start by surveying your customers. That said, an easier option is to use software to conduct surveys and calculate NPS scores. An example is Qualtrics.
8. Customer effort score (CES)
As the name suggests, this metric measures how much effort customers need to make to use your product or service, get an issue resolved or find information they need. A CES survey is used with a 1-7 rating to record customers' responses. CES can then be calculated easily by adding up all the individual CES scores and dividing it by the number of responses received.
Basic formula: Total CES scores/number of responses = overall CES score.
Customer effort is the leading driver of customer loyalty (or disloyalty). According to Gartner, 96% of customers who have a high-effort service interaction become more disloyal compared to only 9% who need to make a low effort. Put another way, reducing customer effort can significantly help increase loyalty.
9. Customer lifetime value (CLV, CLTV, or simply LTV)
Customer lifetime value is the monetary measurement of a customer's worth to an organisation while they remain a customer. The longer someone continues purchasing from a business, the greater their lifetime value. To calculate CLV, multiply the customer's value (CV) by the average customer lifespan (ACL). (The customer's value is determined by their average purchase value multiplied by their average number of purchases).
Basic formula: CV x ACL = CLV
CLV can help you identify your business's most valuable customers- you can then continue to nurture them through targeted campaigns. There are several more complicated ways to calculate CLV, for example, by segment or according to predictions. Learn more.
10. Customer acquisition cost (CAC)
Customer acquisition cost is the amount of money you need to spend to land a new customer. This might include advertising spend, marketing materials and any salaries or fees paid to marketers. You add up the total spend (S) of your campaign and divide it by the number of new customers (C) you acquire as a result - a straightforward calculation by all accounts.
Basic formula: S/C = CAC
Knowing your CAC helps you keep your advertising spend on track - and informs your marketing strategy in the future. If you don't monitor CAC, you might end up spending more money to acquire new customers than the amount of revenue your business brings in (not good maths!).
11. Average order value (AOV)
The KPI 'average order value' relates to the average amount spent per transaction. It's calculated by adding up the total revenue (TR) from sales and dividing this figure by the number of orders (O).
Basic formula: TR/O = AOV
Once you know your AOV, you can focus on getting customers to spend more than this threshold per transaction to increase your overall profits. You can work out AOV painlessly enough, but here's an online calculator for ease.
12. First response time and average response time (FRT/ART)
These KPIs measure the time a business takes to respond to a customer enquiry, either for the first time or as an average across all response times. Lead response time is a similar metric measuring the time taken to respond to prospect enquiries. You calculate response times by measuring the total time it takes to respond (T) divided by the number of enquiries (E) over a particular period.
Basic formula: Total T/E = FRT or ART
Response time data helps you understand how support agents are performing and whether customers and leads are being contacted promptly. Work out response times quickly with this online tool.
13. Website metrics
Bounce rate, page views, session times, number of visits and heatmaps are all examples of website traffic KPIs:
Page views - the number of times a particular webpage is viewed.
Visits - the number of total and individual visits to a webpage.
Bounce rate - the percentage of visitors who leave a website after viewing just one page.
Session duration - the length of time spent browsing a webpage.
Heatmaps - a colour-coded graphical representation showing user behaviour on a webpage.
Website metrics are vital because they help you understand how visitors are interacting with your website. If your bounce rate is too high, for instance, this could indicate that your website is slow to load or your content isn't engaging enough to keep visitors interested. Google Analytics is a free tool you can use to measure website metrics, or you can invest in more sophisticated software like Kissmetrics.
14. Social media metrics
Most social media platforms have built-in admin dashboards that show you all the data you need to manage your business profile efficiently. For example:
Meta Business Suite gives you an activity overview, audience reach data and individual post metrics (reactions, comments and shares) for both Facebook and Instagram. If you use the platform's advertising solutions, you'll also get data insights on total spend, ad impressions, clicks and conversions.
- On X (formerly Twitter), each post comes with its own basic statistics, like the number of views, likes, and retweets.
LinkedIn, Pinterest and TikTok also offer detailed analytics to help businesses understand their followers and the type of content they want to engage with.
Quick tips to improve your customer engagement success rates
For best results when measuring customer engagement metrics, first and foremost, ensure you choose reliable service providers, e.g., best customer engagement tools, email or SMS API providers, social media management solutions, or other third-party tools. You should also:
Improve organic SEO - to boost brand visibility and reach. This includes creating quality content for all channels where you interact with potential or existing customers.
Conduct A/B testing - to learn which marketing approaches perform best for your audiences.
Segment your audience - as accurately as possible.
Focus on personalised communications - these grab attention, making conversions more likely.
Listen to customers - take their feedback seriously.
Offer high-quality customer support channels - invest in the right tools and train your teams. Alternatively, outsource to a reliable provider or consider using tech to keep staffing expenses under control, e.g. by using automated responses.
Leverage AI - to streamline processes and make them smarter and faster. AI writing tools, for instance, can help you give almost immediate responses to certain customer conversations.
Use data to drive your customer engagement efforts
Customer engagement is a vital sales and marketing strategy if you hope to deliver meaningful experiences, build loyalty and retain customers for the long term. You can use many metrics to track customer engagement to ensure you meet your business goals and make evidence-based decisions. Consider using some of these above, along with our quick tips, to make your campaigns successful.
