Which engagement rate to use
Engagement rate by followers is the standard for comparing accounts and tracking your own growth over time, because the denominator is stable. Engagement rate by reach or impressions tells you how compelling a specific post was to the people who saw it, which is helpful when the algorithm shows your content to very different numbers of people. Reporting both gives the fullest picture.
Improving engagement
Higher engagement usually comes from content that prompts a response: ask questions, encourage saves and shares, post when your audience is active, and reply to comments to keep conversations going. Track your rate over time rather than chasing a single number, and compare like-for-like by keeping the same measurement method.