6 Key Activation Metrics for SaaS Companies + How to Improve Them
What is user activation?
User activation occurs when a customer clearly understands and experiences the value that your product provides. This often involves completing a key action—a specific task that ties back to your value proposition—such as creating an invoice in an invoicing tool or setting up an automated email sequence in a marketing automation platform.
Activation can happen multiple times throughout the customer lifecycle, but there’s usually that one main event that signifies a user “gets” your product. Activated users—those who complete your key milestone—are more likely to convert from free to paying users.
However, it’s worth noting that the user activation process and milestones vary for different SaaS companies based on business goals.
Why is measuring user activation rate important for a SaaS product?
Users activate early in the customer journey, but this metric goes on to affect the rest of the customer experience. Quick activation sets the stage for better customer engagement and retention, which in turn leads to increased revenue.
For instance, a 25% increase in activation results in a 34% rise in monthly recurring revenue (MRR) over 12 months.
A strong activation rate signifies that your onboarding process is efficient and you’re acquiring customers who are genuinely finding your product useful.
Ultimately, user activation is a key indicator of product success. It reveals whether your product effectively solves user needs and delivers on its promises. By tracking and optimizing your activation rate, you can create a more engaging product experience and drive sustainable growth.
6 activation metrics to track for product growth
There are several user activation metrics, but we’ve selected six that provide deep insights into different stages of the user journey and contribute to overall activation success. Let’s go over them here:
Metric 1: User activation rate
The user activation rate measures the percentage of users who complete a predefined set of actions that show they’ve experienced your product’s core value proposition.
It’s important to tailor your definition of activation to different user personas because people come to your product with varying objectives. For example, the actions that indicate value for a “marketing manager” might be very different from those that matter to a “sales representative” using the same product.
Here’s a user persona example you can use as a template for creating yours:
For the project manager in our template above, some important activation events might be creating a project, inviting team members, and completing a specific workflow.
To determine the most important activation event, you’ll need to dig into your analytics tool to see which actions your power users:
- Perform more frequently.
- Engaged in when they first signed up for your product.
How to calculate this activation metric: Divide the total number of activated users in a specific period by the number of new users in that period.
For our 2024 Product Metrics Benchmark Report, we collected first-party data activation data from 62 SaaS companies and found that the average user activation rate was 37.5%.
Metric 2: Active users
The active users metric tracks the number of engaged users who regularly perform actions that align with your product’s core value. This distinction is crucial because simply logging in or visiting your website doesn’t necessarily indicate that a user is deriving value.
For example, consider a design tool like Canva. While logins are important, true engagement might involve creating and exporting designs, utilizing advanced editing features, or collaborating with others on projects. If a user consistently logs in but only views templates without taking further action, it could signal disinterest and potential churn.
To get a more nuanced understanding of this metric, try to track:
- Daily active users.
- Weekly active users.
- Monthly active users.
There’s no specific formula to calculate these metrics. It’s all about counting the unique users who engage with your product daily, weekly, and monthly. You can easily pull this data out from your analytics platform.
Metric 3: Feature adoption rate
Feature adoption rate tracks the percentage of users who adopt and use a specific feature within your product.
This metric provides key insights into user behavior, feature value, and overall product adoption. The data you obtain here can be used to identify popular features, note areas of friction, and spot opportunities for product improvement.
How to calculate this activation metric: Divide the number of monthly active users for that feature by the total number of logins in that period. Multiply by 100 to get the percentage.
Our report shows that the core feature adoption rate for SaaS is 24.5%.
Metric 4: Visitor-to-sign-up rate
The visitor-to-signup rate measures the percentage of website visitors who sign up for an offer on your site, such as a free trial, a demo, a newsletter, or a downloadable resource.
It’s a crucial top-of-the-funnel (TOFU) metric that reflects the effectiveness of your marketing efforts and the initial appeal of your product. A high rate suggests that your website is compelling, your call-to-actions are clear, and your value proposition resonates with your target audience.
How to calculate this activation metric: Divide the number of website visitors who sign up by the total number of website visitors and multiply by 100.
Metric 5: Onboarding completion rate
The onboarding completion rate measures the percentage of users who successfully complete your predefined onboarding process.
A smooth and engaging onboarding experience drives early adoption and contributes to customer retention. High onboarding completion rates often correlate with higher user activation rates.
How to calculate this activation metric: Divide the number of users who complete the onboarding process by the total number of users who begin onboarding and multiply by 100.
Our research shows fintech & insurance companies have the highest onboarding completion rate (24.5%), while CRM & sales and martech companies have the lowest—13.2% and 12.5%, respectively.
Metric 6: Trial-to-paid conversion rate
The trial-to-paid conversion rate tracks the percentage of free trial users who convert to paying customers.
This metric is arguably the ultimate activation metric for SaaS companies, and here’s why: it directly reflects the effectiveness of your overall value proposition and pricing model.
A high trial-to-paid conversion rate indicates that users experience significant value during their trial and are willing to pay for continued access, ultimately driving sustainable business growth.
How to calculate this activation metric: Divide the number of trial users who converted to paid in a given period by the total number of free trial users in that period. Multiply by 100.
Improve Your SaaS User Activation Metrics with Userpilot
Best practices to improve activation metrics
Now that you know the KPIs to measure, it’s time to explore ways to improve your overall user activation:
1. Provide a frictionless signup process
The signup flow is your first impression, and it can make or break a user’s decision to try your product.
A frictionless experience removes any unnecessary barriers or complexities that might deter users from getting started. This means minimizing the number of fields required, offering social login options, and ensuring a smooth and intuitive signup flow.
Here’s an example of how Userpilot keeps it simple:
2. Personalize your onboarding processes
Tailoring the onboarding journey to individual needs and preferences will increase your engagement and help users reach that Aha! moment faster.
How can you do this? Trigger a welcome survey that asks users about their roles, jobs to be done, and other relevant questions. Then, use that data to segment them and provide personalized onboarding flows.
That’s what the structural design and analysis platform Clearcalcs did.
They used Userpilot to create the welcome survey below to collect customer data and tailor their onboarding process. Combined with other onboarding tactics, this approach helped the company boost new user activation rates across various customer segments.
3. Use NPS and CSAT to discover customers’ pain points
NPS gauges overall customer loyalty and satisfaction by asking how likely users are to recommend your product, while CSAT focuses specifically on satisfaction with particular aspects of your product or service.
The qualitative data from these surveys will provide valuable context to your activation metrics. For example, a low trial-to-paid conversion rate might be explained by recurring complaints about a specific feature or pricing plan in your CSAT responses. This allows you to address the root causes of activation challenges and prioritize improvements that directly address user needs.
You can quickly build no-code NPS and CSAT surveys with Userpilot. Our platform can also analyze the survey results in real time for you!
4. Use heatmaps to identify friction points
Heatmaps use color coding to show where users click, scroll, and hover their mouse. This data is useful for identifying friction points in your onboarding flow, signup process, or key user workflows.
For example, a features heatmap might reveal that users are repeatedly clicking on a non-clickable element or struggling to locate an important button. With this information, you can know exactly where to make design changes or provide tooltips for better guidance—and improved adoption.
5. Deploy interactive walkthroughs for users to perform key actions
Interactive walkthroughs are a powerful way to guide users through your product and encourage them to perform key actions that lead to activation.
Unlike static tutorials or help documents, these walkthroughs incorporate tooltips, hotspots, and modals to provide step-by-step guidance within the actual product interface. This allows users to learn by doing and experience the value of your product firsthand.
Case in point: Talent connection platform, The Room, deployed Userpilot to create an interactive walkthrough that guides users through its features. This approach resulted in a 75% boost in user activation within just 10 days.
6. Segmenting users into cohorts
Divide users into cohorts based on shared characteristics like signup date, user persona, and industry. This will enable you to analyze user behavior patterns, identify trends within specific groups, and tailor your activation strategies accordingly.
For example, you could segment users by their signup date to analyze how activation rates have changed over time or by their in-product behavior to identify groups of users who are struggling with specific features.
Userpilot can help you segment customers, perform cohort analysis, and trigger personalized experiences for each cohort:
BONUS: Other key activation metrics to measure
While the core activation metrics above provide a strong foundation for analysis, this section will show you other valuable KPIs you can combine to gain deeper insights into user behavior and activation patterns.
For example, you could pair feature adoption rates with user churn to see which features are driving the most engagement and which are potentially leading users to churn. This allows you to prioritize feature improvements and optimize your product roadmap based on data-driven insights.
User retention rate
The user retention rate tracks how many users continue using your product over a defined period. It’s a key indicator of your ability to keep users engaged and coming back for more.
How to calculate this activation metric: Subtract the number of users you acquired during a specific period from the number of paying users at the end of that period. Divide the result by the total number of users at the beginning of the period and multiply by 100.
The average 1-month user retention rate across the 83 companies we analyzed is 46.9%.
Stickiness rate
The stickiness rate measures how “habit-forming” or essential your product is to users. For example, a communication tool like Slack becomes “sticky” when teams rely on it for daily communication, file sharing, and project updates.
A high stickiness is a strong indicator of product engagement and user satisfaction. It suggests that users are finding value in your product and are incorporating it into their workflows.
How to calculate this activation metric: Divide your daily active users by the monthly active users and multiply by 100.
Time-to-value (TTV)
Time-to-value measures the amount of time it takes a new user to experience the core value of your product and achieve their desired outcome.
It’s the duration between signing up and reaching that “Aha!” moment when they realize the benefits your product offers. Shorter TTV often correlates with higher activation rates.
The average TTV for SaaS is 1D 12hrs.
Churn rate
The churn rate is the percentage of users who stop using your product within a specific period. It’s the inverse of the retention rate and a critical indicator of product health and customer satisfaction.
A high churn rate means that users are not finding enough value in your product to continue using it. This can be due to various factors, such as bad onboarding, lack of feature adoption, or unmet user needs.
How to calculate this activation metric: Divide the number of churned customers during a particular period by the number of customers at the start of the period. Multiply by 100.
SaaS activation metrics FAQs
How do you choose user activation metrics?
While the specific metrics you select will depend on your unique business and product functionality, here are some general principles to keep in mind:
- Strike a balance between setting the activation bar too high and too low: If your key metrics are too difficult to achieve, you risk discouraging users and underestimating your true activation rate. Conversely, if your metrics are too easy, you might overestimate activation and miss valuable insights into meaningful user engagement.
- Your chosen activation metrics should be predictive of long-term engagement and potential conversion to paid plans: In other words, they should accurately identify users who are likely to find ongoing value in your product and become loyal customers.
How often should you measure activation metrics?
The frequency of measuring activation metrics depends on your specific business needs and goals. However, it’s generally recommended to track them at least once a month. This provides a regular snapshot of user engagement and allows you to identify trends and areas for improvement.
For businesses with rapidly changing user bases or those focused on scaling, like a high-growth SaaS start-up, require more frequent monitoring—weekly or even daily—might be necessary. This allows for faster identification of issues and iteration of onboarding flows and activation strategies.
Ultimately, the key is to establish a consistent measurement schedule that provides actionable insights without becoming overwhelming.
What is a good activation rate for SaaS companies?
Defining a “good” activation rate can be tricky, as it varies significantly depending on factors like product complexity, target audience, and pricing model.
That said, the average activation rate for SaaS companies is around 36%, with the median hovering around 30%. This means that roughly one-third of new users successfully experience the core value of a typical SaaS product.
Remember, these are just benchmarks. Your specific business goals, industry context, and activation process should determine what a good activation rate is for your business.
Conclusion
User activation is not just a one-time event. It’s an ongoing process that requires continuous monitoring and improvement. So, regularly analyze your activation metrics and experiment with different strategies to enhance the onboarding experience and improve adoption.
Ready to begin? Book a demo to see how Userpilot can help you identify, track, and boost your key activation metrics!
Improve Your SaaS User Activation Metrics with Userpilot
