Product engagement: your key to recurring SaaS revenue

Your SaaS business lives or dies on how often customers use—and get value from—your product. If you can’t score that engagement, you’re flying blind.

Why engagement scoring matters

As a founder, have you ever asked, “How are our accounts doing?” only to get blank stares?

As a product lead, have you wondered if your latest features really moved the needle?

As a customer success manager, do you wish you had a clear way to pick which accounts need attention most?

A solid engagement score solves all of this. It gives every team real visibility into which users are thriving and which need help.

Four steps to creating a Product Engagement Score

Step 1: Define what “engagement” means for you

Your product is unique. Engagement isn’t just logging in; it’s using the features that drive value. Sit down with your team and ask: “What does an engaged user do?”

Then list those activities. For example, you might track when users:

create projects

complete tasks

invite teammates

comment or share files

connect external apps

Step 2: Track those key events

Most SaaS teams already fire important events to an analytics tool. If you haven’t, pick a service like Segment and start sending events today. Once you’re capturing logins, invites and other actions, you have the raw data you need.

Step 3: Weight each event by its value

Not all actions are equal. Inviting a colleague matters more than merely logging in.

• List each engagement event in one column.

• Assign a point value to each event (for example, 1–10). Give higher points to low-frequency, high-impact actions.

• For each user, multiply event counts by their weights and sum the results.

The outcome is a raw engagement score for every user.

Step 4: Turn raw scores into something everyone can use

A score of 458 means nothing on its own. Normalize your scores to a clear scale—say 1–100—so anyone can see if a user is at 20 or 85. We recommend winsorising at the 90th percentile, then applying a simple exponential formula to spread out top scores. This makes big differences easy to spot.

Step 5 (Bonus): Put scores to work

Rank your users by engagement to spot power users and at-risk accounts.

Aggregate user scores at the account level to see which companies are most active.

Calculate an overall product score to track engagement trends over time.

Compare cohorts (new vs established, free vs paid) to find hidden insights.

Correlate engagement with metrics like retention, expansion or revenue growth to predict your business outcomes.

Keep improving

You can’t improve what you don’t measure. A clear, well-built engagement score is the first step to boosting recurring revenue. Tweak your model over time and watch your business performance climb.