One of the problems startups face is to retain customers over time. In order to retain customers, it is important to engage them consistently. Here’s a method that helps measure user engagement over time. It helps know whether user engagement is actually getting better over time or is only appearing to improve because of growth.
To begin with, we group users based on their month of sign up. Users who signed up in January make up the January group, the people who joined in February make up the February group, and so on. Next we find out how each group stays engaged over time. Engagement for a given month can be measured by simply checking if user logged in during that month. You can also keep a condition like at least 3 logins a month. We compare the groups against each other. E.g, we can see if people who joined in February are more engaged than those who joined in January. Here’s a simple table that will help you measure user engagement over time.
Measure user engagement over time
We look at number of signups every month under Month1 and number of those users who came back to log in later months (Month2, Month3, etc)
What it means
Engagement is growing every month. Of the January group (1,200), 25% (300) were engaged in month 2. Of the May group (2,000), 50%(1,000) were engaged in month 2.
This helps to separate growth from engagement. It’s important because growth can easily hide engagement problems. If you’re successfully adding lots of users to your service, your overall engagement numbers will look positive because new users are relatively well-engaged, spending lots of time on the site in the beginning. If you only looked at overall engagement numbers then you would think that your service is continuously getting stronger.
The reality may be that people stop being engaged after a couple of weeks on your service. They might leave for any number of reasons: it’s not useful, the novelty wore off, they added all their friends and now have nothing to do, etc. But the lack of activity of these users is being hidden by the impressive growth numbers of new users. There are enough people being added to your service that the lack of engagement for old users doesn’t show up.
By grouping people into the month (or week) they started using your service, you can measure user engagement over time. You can find out if the February group is engaged better than the January group. If your numbers are flat month on month, then you have not improved user engagement over time. This may happen even in the face of impressive growth.
To understand this method in more detail, you can look at Cohort Analysis.
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