Customer Engagement Score (CES)

What is the customer engagement score?

Customer engagement score (CES) is a single quantitative metric that measures how actively customers interact with a company's products based on their usage patterns and behaviors.

The score adds up different customer activities, like how often they log in, use key features, interact with content, or contact support to give a clear picture of how engaged your customers are.

While this metric was originally developed for SaaS companies, CES is now used by companies in a lot of different industries. Any business with digital customer interactions can implement engagement scoring. 

CES is more of a forward-looking metric. A high score means customers are getting value from your product and are more likely to stay, upgrade, or recommend you to others. A low or falling score shows they may be losing interest, which could lead to churn. Tracking CES helps you spot these signs early so you can step in before customers leave.

It’s worth noting that while CES provides valuable behavioral insights, the metric should be combined with satisfaction scores, support metrics, and revenue data for a complete customer health assessment.

How does customer engagement differ from customer satisfaction?

Customer engagement is a step beyond customer satisfaction. Satisfaction measures a customer’s emotional reaction to a specific experience, while engagement tracks behavioral signals over time.

Here are the notable differences between the two:

How does customer engagement relate to customer retention and churn?

Customer engagement score is a leading indicator of retention and churn. It provides early warning signals that most traditional metrics miss. The relationship between CES, retention, and churn works through predictable behavioral patterns. Your highly engaged customers behave differently from disengaged or less engaged ones. 

Highly engaged customers:

• Use the core functionality of your product regularly;
• Integrate your solution deeper into their workflows; and
• Might also explore new features. 

In contrast, disengaged customers generally:

• Reduce usage frequency;
• Ditch key features; and
• Decrease interaction before making the decision to cancel.

CES helps you comprehend these behavioral shifts weeks or months before customers actually churn. This predictive capability enables proactive customer success interventions. Teams can identify at-risk accounts and implement targeted retention strategies while customers are still salvageable. 

How to calculate customer engagement score?

Calculating customer engagement scores can be complex and time-consuming because “engagement” means different to different businesses. The behaviors that define engagement in an invoicing platform won’t look the same in a CRM or an analytics solution. 

It’s also important to note that the specific customer behaviors companies track varies from business to business based on their needs and business models. 

Their measurement approaches can vary, too. Unlike customer satisfaction score (CSAT), which typically uses a 0-100 scale, there’s no real standard scale for CES. 

Using a scale of 0-100 is pretty common in SaaS, though. So that’s what we’ll use in the following example where we walk you through the calculation of a CES. 

Step 1: Identify factors affecting CES

Start with factors like frequency of usage, depth of usage, specific actions taken, clickstream information, and KPIs that correlate with customer value realization. Then, map your customer journey and identify moments where customers derive tangible benefits from your product or service.

Common engagement events include:

• Product usage frequency: Login frequency, session duration, feature adoption rates
• Value-driving actions: Completing onboarding steps, achieving first success milestones, using core features
• Revenue indicators: Subscription upgrades, add-on purchases, renewal behaviors
• Community engagement: Support interactions, feedback submissions, and referral activity

Let’s say a project management SaaS identifies the following events based on their correlation with customer retention and expansion: 

• Daily logins
• Project creation
• Report generation.

The important part here is to focus on activities that indicate the customer is getting value out of the product—events that predict true customer success. A customer who logs in daily but never completes core workflows may appear engaged but lacks true product value realization.

Step 2:  Assign weight to each event

Calculating CES requires you to combine multiple customer behaviors like logins, referrals, or email interactions, into one single score. However, not every behavior is equal. High-value engagement events like add-on purchases, subscription upgrades, and referrals carry more weight than low-value engagement events like basic login activity, account updates, etc.

While assigning weights to each event, use a scoring system where higher weights indicate greater business impact. In addition, implement a time decay system where recent actions carry more weight than historical behavior. 

The table below shows customer engagement metrics (i.e., different customer behaviors) that SaaS companies commonly measure to calculate their CES. Note that the metrics here and the weights assigned to them are just examples. The metrics you use and their weighted value will depend on your business and the measurement approach you’ve chosen.

Taking the example of our project management SaaS, assigning weights would work something like this:

• Daily login: 2 points
• Created a project: 15 points
• Report generation: 15 points 

Step 3: Apply the customer engagement score formula

Use the formula below to create a single numerical representation of customer engagement.

In the formula, 

• Wₜ = the weight assigned to event type t
• Nₜ = the number of occurrences of event type t within the measurement period

In our customer engagement score example, let’s say a customer:

• Logs in 10 times
• Creates 3 projects
• Generates 5 reports

Our customer engagement score would be:

Raw CES = (10×2) + (3×15) + (5×15) = 140 points

Step 4: Normalize the CES calculation

You may want to normalize the CES to a 1-100 scale. Normalizing is a common practice that makes it easier to benchmark your CES and provides consistency. Here’s the formula to use if you want to normalize your scores:

Normalized CES = (Raw CES ÷ Maximum possible score) × 100

In our example, the customer scored 140 points (raw CES) and the maximum possible score is 200, which gives us a CES of 70.

Normalized CES = (140 ÷ 200) × 100 = 70

It’s important to note that CES only provides one dimension of customer health. You should combine engagement scores with satisfaction metrics, revenue data, and qualitative feedback to build a comprehensive understanding of customer relationships.

Why should you measure customer engagement score?

Tracking customer engagement score periodically is essential because it allows you to:

• Evaluate PMF: When your engagement score is consistently high across your user base, it is usually a hallmark of strong PMF. High scores indicate that your product is sticky and customers are finding real value. 
• Optimize product functionality: Engagement scoring shows which features drive the most value for customers and which remain underutilized. By analyzing this data, product teams can prioritize development efforts on high-impact areas while identifying opportunities to improve or sunset low-engagement features.
• Mitigate risk of churn: Customer engagement directly correlates with retention, expansion ARR, and long-term profitability. When engagement scores decline, it’s often a sign that the customer is not finding value in your product. Teams can intervene timely and offer additional support or tailored onboarding. 
• Support referrals: Highly engaged users are more likely to become your “natural” product advocates. They refer your product to peers without any intervention and spread positive word-of-mouth marketing. 
• Align product development: With CES, you get objective feedback on what customers actually value versus what they claim to want. You can then focus on features that drive meaningful engagement rather than superficial requests. 
• Guide strategic planning: Engagement score equips finance leaders with crucial insights for strategic revenue planning, budget allocation, and market positioning. 

How to use customer engagement scores for segmentation

Monitoring CES across different segments helps you see how each segment is performing compared to others. 

For example, you might define three engagement score segments (the exact score ranges can be adjusted for your business needs):

• High engagement (e.g. scores 80–100): These customers are power users who renew at a very high rate. You can afford to spend less hands-on time here, as they’re already finding value and are likely to renew with minimal intervention.
• Moderate engagement (e.g. scores 40–80): These users have decent usage but could be at some risk (say around a 50% renewal rate). It’s wise to proactively reach out to this group. 
• Low engagement (e.g. scores 1–40): This segment has a very low level of activity and a high chance of churn. The focus here should be to re-engage these users.