How to Use PES to Increase Product Usage and LTV?

Read time: 4 minutes.

Welcome to the 46th edition of The Growth Elements Newsletter. Every Monday, I write an essay on growth metrics & experiments and business case studies.

Today’s piece is for 5,100+ founders, operators, and leaders from businesses such as Shopify, Google, Sage, Hubspot, Zoho, RateGain, Zaggle, Servcorp, Apollo and more.

Happy Monday!

Is PES a new growth hack to increase product usage and LTV?

What is PES?

PES (Product Engagement Score) shows how users engage or interact with your product.

► This concept revolves around the frequency and intensity of user engagement with a product’s features.

► It’s quantifiable through several critical indicators.

[1] 𝐀𝐝𝐨𝐩𝐭𝐢𝐨𝐧 𝐨𝐟 𝐅𝐞𝐚𝐭𝐮𝐫𝐞𝐬

► Feature utilisation is the indicator that tracks how users utilise the product’s features.

[2] 𝐔𝐬𝐞𝐫 𝐑𝐞𝐭𝐞𝐧𝐭𝐢𝐨𝐧

► This metric gauges the consistency of user engagement over a period.

► A high retention rate is good for the product’s value, signifying that users find it beneficial enough to continue using it.

[3] 𝐏𝐫𝐨𝐝𝐮𝐜𝐭 𝐃𝐞𝐩𝐞𝐧𝐝𝐞𝐧𝐜𝐞

► Often referred to as stickiness, this metric measures how essential a product becomes to its users.

► When users rely on a product for their daily activities, it becomes an integral part of their routine.

𝐇𝐨𝐰 𝐭𝐨 𝐂𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞 𝐏𝐄𝐒?

Identify the values for each metric:

[1] 𝐀𝐝𝐨𝐩𝐭𝐢𝐨𝐧

► Avg number of core events adopted across all active users or accounts.

[2] 𝐒𝐭𝐢𝐜𝐤𝐢𝐧𝐞𝐬𝐬

► Avg percentage of weekly active users who return daily (DAU/WAU) or the percentage of monthly active users who return daily (DAU/MAU) or weekly (WAU/MAU).

[3] 𝐆𝐫𝐨𝐰𝐭𝐡 𝐨𝐫 𝐑𝐞𝐭𝐞𝐧𝐭𝐢𝐨𝐧

► Sum of new and recovered accounts or users divided by dropped accounts or users.

Combine adoption, stickiness, and retention metrics and average them.

PES = (Adoption + Stickiness + retention)/3

► By using these metrics in a Product Engagement Score (PES), businesses can obtain a detailed view of their product’s appeal to users.

𝐅𝐢𝐧𝐚𝐥 𝐖𝐨𝐫𝐝𝐬

► Aim for a healthy engagement rate of a PES between 70 to 80.

► If you want to improve your PES, focus on enhancing each element - adoption, stickiness, and retention to boost the overall score.

That's it for today's article! I hope you found this essay insightful.

Wishing you a productive week ahead!

I always appreciate you reading.

Thanks,
Chintankumar Maisuria