Engaged customers are generally happy, and happy customers tend to spend more. But how do you know your customers are engaged?
Customer engagement metrics can provide answers, going beyond customer satisfaction by tracking and understanding user interactions throughout the customer journey. Tracking 10 key metrics helps you understand how your customers connect with your brand and allows you to measure customer engagement effectively.
What is customer engagement?
Customer engagement is how frequently and deeply customers interact with your business. To improve your customer engagement, you can educate and build connections with your audience at every touchpoint, from social media ads to product unboxing. This creates a positive customer journey that drives sales and boosts brand loyalty.
Measuring customer engagement can be qualitative (like feedback comments) and quantitative (like conversion rates). Combining these approaches provides a holistic view of your customer engagement strategies’ effectiveness.
Customer engagement vs. customer satisfaction
Customer engagement is not to be confused with customer satisfaction. The latter measures how content a consumer is with your products. While satisfied customers are typically engaged, engagement encompasses a broader view of the customer experience, including interaction frequency and interactions with potential customers.
10 essential customer engagement metrics
- Social media engagement
- Newsletter open rates
- Average review rating
- Referral rate
- Net Promoter Score
- Conversion rate
- Repeat purchase rate
- Repeat purchase frequency
- Customer lifetime value
- Churn rate
Here are 10 key customer engagement metrics that provide insight across all stages of the customer journey:
1. Social media engagement
Social media engagement varies by platform but typically includes:
- Likes
- Shares
- Follows
- Comments
- Video view duration
Monitoring social media engagement can reveal customer interactions beyond your website. Likes, comments, and shares indicate active interest in your content and a strong connection to your brand. High engagement also signals the potential for building a long-term community, fostering loyal customers over time.
Ashwinn Krishnaswamy is the founder of Forge, a New York–based branding and digital strategy agency. On an episode of the Shopify Masters podcast, he says founder-led companies can capitalize on social media to build long-term engagement for their businesses. One successful example of this approach is Marcus Milione, founder of apparel brand Minted New York.
“He’s building a really interesting community, getting people bought into his story and the product he’s creating,” Ashwinn says. “He creates a video and, because it goes viral, he’s going to drive a ton in sales. It’s a kind of long-term building a community that is, over the long term, going to purchase from you.”
2. Newsletter open rates
Newsletter open rates indicate the percentage of users who open your email. This data typically comes directly from your email service provider. A high open rate means customers value your emails and are interested in your content. A low open rate suggests your messages are not compelling enough for readers to engage with them.
If your open rates are low:
- A/B test different subject lines
- Create valuable content that encourages readers to anticipate your emails
- Optimize your emails for mobile devices
- Segment your lists to deliver content tailored to each group’s needs and interests
3. Average review rating
Customer reviews can be a powerful marketing tool. Your average rating, typically out of five stars, gives you clear insight into customer experiences and their fluctuations.
Beyond ratings, reviews demonstrate customer engagement because engaged customers are more likely to leave detailed feedback. These reviews enhance your brand’s credibility; even occasional negative feedback shows that customers are invested in your brand by sharing valuable insights.
4. Referral rate
Engaged customers are more likely to refer friends and family, demonstrating loyalty to your brand. The customer referral rate measures how often an existing customer refers new ones and is calculated as:
Customer referral rate = (Total number of referrals / Total number of customers) × 100
To increase referrals, reward customers with incentives like discount codes or unique links customers can share (and you can track) with apps like ReferralCandy and Smile.
5. Net Promoter Score
Your Net Promoter Score (NPS) shows how likely your customers are to recommend your brand. An NPS survey asks something like “How likely are you to recommend us to a friend or colleague?” with responses often scored from zero to 10.
Beyond the rating, NPS surveys often include qualitative questions about why respondents gave the rating and how you can enhance their experience. This offers clear insight into the scores without guessing their meaning and highlights areas for improvement.
6. Conversion rate
Conversion rate measures the percentage of visitors to your website who take a key action, like making a purchase or signing up for a free trial.
An above-average conversion rate indicates that your brand and products resonate with visitors and that they trust you enough to take action. A low conversion rate indicates issues preventing users from taking a key action. Some reasons for a low conversion rate can include:
- Lack of perceived value
- Lack of brand awareness
- Friction in your website’s user experience
7. Repeat purchase rate
Repeat purchases are purchases made by existing customers, indicating they value your product and are willing to continue spending with your company. They also demonstrate an emotional connection to your brand, fostering deeper customer relationships and advocacy. Repeat customers increase your lifetime value (LTV) and cost less to retain than acquiring new customers.
One way to measure repeat purchases is the repeat rate—the percentage of customers who reorder within a given time period, reflecting initial engagement. Here’s how to calculate it:
Repeat purchase rate = Number of repeat customers / Number of total customers
8. Repeat purchase frequency
Repeat purchase frequency measures how often the average returning customer makes a purchase within a specific month or year. This reflects their engagement level and product usage regularity. Here’s the formula:
Repeat purchase frequency = Purchases / Customers for a cohort during a period
Repeat purchase frequency also gauges the strength of your customer retention strategy. For example, if a skin care product has 30 uses, you’d likely want a repeat purchase frequency of once per month instead of once per quarter.
For instance, say a group of 120 customers made their first purchase in August 2023. By August 2024, they had completed 360 purchases, resulting in a purchase frequency of:
360 / 120 = 3 per year
9. Customer lifetime value
Customer lifetime value (LTV) estimates the total revenue you can expect from a customer over their entire relationship. The formula is:
LTV = Average order value (AOV) × Average purchase frequency × Average customer lifespan
LTV captures key engagement signals like repeat purchases and loyalty, directly linking them to revenue. It also reveals how changes in these factors can affect long-term revenue forecasts and the overall business outlook.
For example, if your average order value is $50, each customer purchases four times a year, on average, and remains a customer for five years, your LTV would be:
50 × 4 × 5 = $1,000
10. Churn rate
Customer churn rate measures the percentage of customers who stop purchasing from your business over a certain period. Here’s the formula:
Churn rate = (Customers at the start of the period - Customers at the end of the period + New customers acquired in the period) / Customers at the start of the period
Understanding your churn rate allows you to evaluate how effectively you’re meeting customer needs and expectations. Fluctuations in churn can reveal important insights, like dissatisfaction with a new pricing strategy or product feature.
For example, an ecommerce subscription box that suddenly raises prices without enhancing product value or quality might notice higher churn. This indicates customers feel undervalued or disengaged with the brand.
Customer engagement FAQ
What are customer engagement metrics?
Customer engagement metrics measure the quality of the customer experience and customer relationships with your brand. They go beyond customer satisfaction to understand how users see and interact with your company, areas of opportunity, and trends in user engagement over time.
What are the four Ps of customer engagement?
The four Ps of customer engagement are personal, proactive, prompt, and people. Incorporating these elements into all your customer touchpoints can create a stronger customer experience.
How do you evaluate customer engagement?
You can track customer engagement using both quantitative and qualitative methods. Quantitative metrics include web, brand, and transactional data like pages per session, social media engagement rates, NPS and customer churn. Qualitative methods include customer feedback from surveys or testimonials. Track customer engagement metrics regularly—weekly, monthly, or quarterly depending on your business’s needs—to identify trends and take action accordingly.
