Activation Metrics – How To Measure And Increase Activation Rate in SaaS
Want to know the key activation metrics for SaaS?
Although difficult to measure, activation is one of the most critical SaaS metrics to track and optimize. It has a lasting effect on customer success, satisfaction, retention, and revenue.
So how do you get a hold of these elusive metrics? In this post, we will see how you can improve activation and drive product adoption.
TL;DR
- User activation is when users perform key actions in your product, experience its value, and convert from a trial to paying customers.
- Activation is one of the key metrics of the Pirate Metrics framework that drives SaaS growth and has the biggest impact on revenue.
- Activation rate determines how many of the users who signed up during a period ended up reaching the activation point.
- Top PLG companies maintain an average activation rate between 20% and 40% for freemium and free trial users, respectively.
- Visitor-to-sign-up rate, product stickiness, trial-to-paid conversion rate, and feature adoption rate are the 4 most important activation metrics to track and optimize.
- A friction-free sign-up flow creates a good first impression upon users and collects relevant data for serving authentic customers.
- Window screens are perfect tools for not only greeting users but also segmenting them based on their user personas to create personalized onboarding flows for them.
- Checklists, a form of in-app messaging, break down a complex task into simpler activation events to lead users to the activation point.
- Interactive walkthroughs guide users step-by-step by engaging them with specific product features to drive activation and feature adoption.
- In-app self-service support enables users to quickly solve their issues themselves and activate, which reduces pressure on the support team as well as support costs.
What is user activation?
User activation is what really activates your users and makes them perform key actions in your product that lets them experience its value. It is when a user finally converts from a trial to a premium user.
Note that this is different from the Aha! Moment, where the user realizes the value of your product but doesn’t necessarily get any benefits from it. For example, a potential user can experience an Aha! Moment when they read your blog or check out your website.
On the other hand, user activation is directly tied to key activation events and results. User activation events provide tangible values to users by helping them reach their desired outcomes. Users need to actually complete these events and get benefits from your product.
Why is user activation important in SaaS?
If your users don’t activate, they would not have any reason to stay with your product and would leave it. Activation is one of the key metrics of the Pirate Metrics framework that drives growth for SaaS companies.
Amidst all the metrics above, activation has the most significant impact on monthly recurring revenue (MRR). A 25% increase in activation brings about a 34% rise in MRR over a period of 12 months.
Moreover, successful activation shows how efficiently you spend money on customer acquisition. The higher the user activation rate, the greater the efficiency.
How to measure user activation rate?
The user activation rate, also known as product activation rate, determines how many users that began a trial reached the activation milestone or point.
To calculate the activation rate, divide the number of users who reached the activation point by the number of users who signed up. Finally, multiply the result by 100.
To measure activation rate, you need to define the in-app events that have to take place for a particular user persona to gain value from your product. Next, you need to know the number of users who completed these events within a given period.
You need to divide your new users into distinct cohorts according to their user personas and calculate the activation rates for each cohort separately.
It can help you better understand user behavior and improve in-app experiences to boost activation.
For instance, if a specific cohort lags behind the others in terms of the activation rate, you can boost the cohort’s rate by modifying your strategies to improve the onboarding process.
What is a good user activation rate?
As more SaaS businesses have shifted their focus to product-led growth, maintaining a good user activation rate has become more important than ever.
A benchmarking survey by Openviewpartners revealed that the average activation rates of the top PLG companies range between 20% and 40%, for freemium and free trial products, respectively.
What are the most important activation metrics that you should track?
You can monitor activation metrics using analytics tools that collect behavioral data to help you detect patterns in user behavior. There are multiple metrics you can use to track activation.
- Visitor to sign up rate
- Ratio of DAU (Daily Active Users) to MAU (Monthly Active Users)
- Trial to paid conversion rate
- Feature adoption rate
A visitor to sign up rate
The visitor-to-sign-up conversion rate is an activation metric that indicates the proportion of visitors visiting a website to visitors converting to sign-ups in a given period.
The visitor-to-sign-up rate allows you to measure your marketing campaign and website’s ability to convert visitors. You can encourage users to sign up for trials via several channels, including call-to-actions, sign-up forms, pop-up forms, and trial buttons.
You may find that some pages have higher sign-up rates than the rest of your website. Find out what makes them the most appealing to your target customers.
For instance, if your product page with video guides has a high visitor-to-sign-up rate, it could be because your best-fit users prefer use cases of your product and visual content.
Daily active users (DAU) to monthly active users (MAU) ratio
Product stickiness, also called the DAU to MAU ratio, is a measure of how often customers return to your app.
A high stickiness ratio suggests that customers are benefitting from your product repeatedly, which, in turn, increases customer retention. Thus, stickiness is a great way to measure the value of your product to users.
You can measure stickiness by dividing the number of daily active users by the number of monthly active users.
DAU is the number of active customers who interact with your product on a daily basis. On the other hand, MAU is the number of active customers who interact with your product on a monthly basis.
The stickiness metric helps you understand the growth of your customer base and the effectiveness of your product in engaging users. When the ratio is 1:1, it indicates that your entire customer base is getting value from your product all day, every day.
Trial to paid conversion rate
The trial to paid conversion rate is the percentage of users who subscribe to a paid account after the trial period is over.
To calculate this metric, divide the number of free trial users who converted in a specific period by the total number of free trial users during that period and multiply the amount by 100.
This metric helps you understand whether your product provides real value to your users and if they would want to pay for it. A higher trial-to-paid conversion rate means faster growth for your SaaS business and, eventually, low customer acquisition cost.
Moreover, a high free trial conversion rate comes with Product Qualified Leads (PQLs). PQLs refer to all your active free trial users and are much easier to convert than Marketing Qualified Leads (MQLs).
A low free trial conversion rate suggests that you work on your customer engagement and product-led sales strategy.
Moreover, the trial-to-paid conversion rate allows you to determine the different user personas for your product. When you analyze trial conversion data, you can segment it using different user demographics like location or industry.
Therefore, the trial-to-paid conversion rate lets you discover the users who convert from free to paid customers at the highest rates plus their use cases, e.g., agency users vs. individual users.
Make sure you compare your visitor-to-sign-up rate with the trial-to-paid conversion rate to measure the quality of sign-ups.
Feature adoption rate
Feature adoption is a key user activation metric. It shows what part of the product users engage with, and find most relevant.
Feature adoption rate is measured by dividing the number of customers who are using the feature by the total number of users, multiplied by 100.
Tracking feature adoption helps drive your adoption strategy by focusing on what is needed: feature discovery or engagement. This in turn drives retention and reduces churn.
5 strategies to increase activation rate for SaaS
Now that you know the activation metrics, let’s look at the strategies you can use to improve activation.
- Friction-free sign-up process
- Welcome screens
- In-app checklists
- Interactive walkthroughs
- In-app self-service support.
Provide friction-free self-service sign-up
Frictionless sign-up aims to make things easier for the users and gather only relevant data to serve the authentic users.
Try to limit:
- The number of steps to complete the flow
- The number of fields to fill
- The number of additional activities a user must do to sign up, such as JavaScript installation, email activation, CAPTCHA, etc.
In addition, provide an SSO Single Sign-on (SSO) for an easy sign-up process.
Use welcome screens to personalize the onboarding process
A welcome screen is a great way of welcoming users. It wows users on their first interaction with you by making small gestures like greeting users by their first name, introducing yourself, and clarifying what users can expect next.
However, small gestures won’t make do for a poor user experience.
To help users meet their professional goals with your software, you need to use your welcome screen to segment your new users. It will help you find relevant information about the various user personas, such as roles and jobs-to-be-done.
You can then build the right personalized onboarding flow for them.
Use in-app checklists to encourage users to activate
Checklists are a kind of in-app messaging. Once you know what key actions a specific user segment must take, you can include the group in an in-app checklist to prompt them to take these actions.
Checklists great for guiding users on which steps they have to take to achieve specific goals. One such goal is the activation point.
Based on the complexity of your product, reaching the activation point requires users to take a set of key actions. Checklists help break down a complex task into a series of simpler ones.
At an early stage in their journey, users don’t have much experience with your product. That’s why it’s very useful to let checklists steer users towards the activation milestone.
Here is an example of Postfity’s checklist. Postfity is a social media scheduler whose key actions include:
- Creating an account
- Connecting a social media account
- Scheduling their first social media post
Use interactive walkthrough to push users to perform key actions
Interactive walkthroughs can help users complete each action in the activation funnel by directing them step-by-step through engaging with specific product features.
The activation events will vary based on the different user personas. Hence, you need to build walkthroughs that cater to each cohort.
Walkthroughs encourage users to interact with your product and not just watch while guides present each feature to them. Completing one action triggers contextual help for the next one.
Offer in-app self-service support to help users reach the activation point effectively
In-app self-service support provides users with the tools they need to solve their problems themselves without waiting for human agents to reply. It usually includes interactive walkthroughs, knowledge bases, chatbots, and resource centers.
Elements like help center widgets, welcome screens, and walkthroughs that pop up when users navigate a page for the first time can together create a comprehensive self-serve onboarding process.
Moreover, self-service support tools help users quickly address frequently recurring issues on their own. They take pressure off the support team so they can focus on unusual and more pressing matters. This, in turn, reduces the support costs.
Self-service support reduces friction between the signing-up and reaching the activation point, boosting your trial-to-paid conversion rate. Miro uses in-app guides that cover technical support, use cases, and features:
Wrapping it up
It is important to measure activation metrics regularly and optimize them because activation is the stepping stone for retaining long-term customers in the future.
Using a frictionless sign-up process, welcome screens, checklists, interactive walkthroughs, and self-service support are critical if you want to improve activation.
Eager to start tracking your activation metrics? Get a Userpilot demo and see how you can boost your activation rate.
