User engagement measures whether users find value in a product or service. Engagement can be measured by a variety or combination of activities such as downloads, clicks, shares, and more. Highly engaged users are generally more profitable, provided that their activities are tied to valuable outcomes such as purchases, signups, subscriptions, or clicks.
User engagement is highly correlated with overall profitability. User attention is a finite resource and if users choose to spend their time on a particular app or site, they’re signaling that they find value in it. This allows businesses to make money from the product or service with ads, subscriptions, or sales.
Highly engaged users are more likely to buy, return, and share the product or service with friends. Product and marketing teams that measure user engagement can use product analytics to understand the factors that contribute to higher engagement. By improving engagement, teams can improve the product’s profitability.
No two definitions of user engagement are alike. Hard metrics such as daily active users, cost-per-acquisition, and ROI are fairly straightforward while engagement always depends upon the company’s business model. High engagement via views or clicks might be good for a news site but not for an insurance app, where more usage might suggest that a user is about to file a claim.
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