Customer Success

5 Min Read

How does Customer Engagement predict Retention?

The leading indicators for customer retention and expansion tend to be around the level of engagement between the client and the vendor.” — Ashvin Vaidyanatham (Chief Customer Officer at Gainsight) and Ruben Rabago (Chief Strategist at Gainsight) in their book, ‘The Customer Success Professional’s Handbook.’

I am always quite sad when a customer is not renewing their contract. Luckily for us it doesn’t happen a lot, and most of the time we kind of know in advance. But of course—just like everyone here—we all want to renew the customer contracts we have under our belt. However, there are so many…how can we judge which ones are at risk?

One of the most important things you can do at scale is look at all the signals you can capture from your customers. This enables data-driven insights into how your customers are doing. Within the Customer Success industry this is typically called Health Scoring.

But what should be included in a health score?

Of course product adoption and sentiment scores like NPS are crucial to include in health scores. If customers are not using your product at all, or if they are not completely satisfied with the experience they receive from you, there is a high chance they will not renew the contract. We all know this—but this doesn’t give us the full picture to truly understand the bulk and nuance of all customer accounts.

Therefore, one thing is absolutely vital to add to your analyses and health scores: Customer engagement.

Retention & Health Score graph

Engagement interactions can be seen in two ways:

  • 1:1—where you directly connect with your customers through individual Customer Success Managers, support specialists, or executive briefings.
  • 1:many—where you provide tech touch interactions and highly relevant content in the customer journey.

Typically we see that 1:1 interaction is only a small part of engagement. Your direct customer interactions can only go so far, due to time and economic constraints. So if you’re only tracking email replies or customer support engagements this will not give a complete picture and you risk making decisions based on incomplete data. Customer engagement goes much broader than 1:1 interaction, and that is where we see a lot of Customer Success tooling miss the mark.

If engagement doesn’t flow through human contact, content is the main driver. Your Customer Success content must be available for your customers 24-7 and scale seamlessly in contact volume. And with Customer Success content we mean all content relevant for existing customers, as opposed to content for prospects only.

Another source of one-to-many engagement is peer-to-peer: Our customers connecting to other groups of customers, as a great source of valuable information. These interactions typically result in valuable content that can be reused to support the broader customer base.

So how do we define engagement?

Our definition of engagement is all interactions your customers have with (i) your employees, (ii) with other customers or (iii) with your Customer Success content:

What is customer engagement

All elements are worth tracking in your health scores. Apart from your regular 1:1 outreaches, these are some common examples of what to track:

  • Does your executive sponsor read your roadmap updates?
  • Do your admin users connect with other admins to share best practices?
  • Are your customers submitting ideas for your roadmap—yes, your product is never perfect.
  • Is there a drop in content engagement over time, e.g. are they reading fewer articles, best practices, inspirational case studies?

These are critical engagements you should take into account.

Add engagement data into your Health Scores and dashboards

You will find all of the above examples in the platforms your customers log into. Your community, your user groups, your self-service guides & tutorials and your ideation platform. Connect that data to your Customer Success Management platform, and you have your complete Health Score.

But what formula or data points should you use? We would recommend to start simple with the following rules:

  • Viewed at least one piece of content (discussion, question, guide, inspiration, education) last 30 days
  • Viewed at least 1 product update last 60 days
  • Submitted or voted on at least 1 new product idea in last 180 days

Consider grouping these rules under a single score, like “Community Health Score,” and make that part of your overall Health Score. Of course you can tweak the above interactions based on the engagement you have with your customers and the timelines based on the velocity of your business. But typically the above would be a good start.

Percentage of engaged customers Apart from adding these engagement metrics in individual account health scores, you could also create a dashboard across your entire customer base. How engaged are your customers? And is that increasing or decreasing month over month? How do the numbers differ per segment of customers or by ARR? This way you could start tracking engagement for each segment individually and target customers who score low(er) with a set of specific measures.

By tracking the full engagement you have with your customers, you will improve the relevancy of your health scores, increase overall visibility on how engaged your customer base is and increase overall retention rates. And if you don’t have a health score or Customer Success Management platform in place, you can still track and report on customer engagement. Just make sure you include the full scope of customer engagement to have a complete view.

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