Customer Activation Rate In SaaS: Definition, Benchmarks & More
What is the customer activation rate?
The customer activation rate is the percentage of users who reach the activation milestone. That’s when they experience the product or service value first-hand.
For example, by completing an action that shows them how the product can solve their problems and bring a positive change in life.
This sounds simple. As long as you know exactly what your activation milestone is.
The catch is that activation means something very else for each product. Worse yet, you may have various activation points for different user personas because they use the product to achieve different goals.
How to calculate the activation rate?
As long as you know what the activation events are, calculating the activation rate is straightforward:
Divide the number of users who have achieved the activation milestone by the total number of new users in a given period.
So if 1000 new users sign up for your product in June and 830 of them activate, the activation rate is 83%.
Why is customer activation rate important for SaaS companies?
The customer activation rate is one of the key metrics.
That’s because it has an impact on all other success metrics, including revenue: FairMarkit has discovered that a 25% increase in activation leads to a 34% rise in revenue.
It’s not surprising:
If users don’t see the value in the product, they have no reason to use it. Not to mention paying subscriptions.
Customer activation rate benchmarks 2024 across industries
Our 2024 Product Metrics Benchmarks report breaks down the activation rate data from 547 SaaS companies by vertical. Here’s what we’ve found:
- AI & Machine Learning: 54.8% (average activation rate)
- CRM & Sales: 42.6%
- MarTech: 24%
- Healthcare: 23.8%
- HR: 8.3%
- FinTech & Insurance: 5%
Interestingly enough, product-led companies had a lower average activation rate than sales-led ones. Curious why? Check out the report!
How to improve user activation rate in SaaS?
Now that you know how important activation is and what the benchmarks for your industry are, let’s look at a few strategies to boost activation rates.
Simplify your sign-up process
The sign-up process often sets the tone for the rest of the customer journey. If it’s easy for users to register and start using the product, they are more likely to experience the product value quickly.
You can optimize your sign-up flow by:
- Asking only for essential data (3-field forms convert best).
- Enabling single sign-on (SSO), so that users register with their existing email or social media accounts.
- Delaying the email address confirmation.
- Providing shortcuts, like buttons that take the users straight to their mailbox if they need to confirm their email address.
Collect customer data progressively to gain valuable insights
It may be tempting to start the onboarding process with a welcome survey with plenty of detailed profiling questions.
The question is: do you really need all this information? And if yes, do you need it right now?
Both questions are valid because such a survey can increase the time-to-value and even discourage users.
And in most cases, it’s possible to collect the data gradually over time.
For example, Miro uses only a short 7-question survey initially.
The rest of the information needed to customize the user experience is collected later on. For example, when the user logs in, they’re asked what they want to create first.
This triggers a bespoke onboarding flow that guides users through relevant features.
Personalize the user onboarding process to improve customer satisfaction score
Talking of customized onboarding flows, the main advantage of onboarding personalization is the reduced time to value. Instead of introducing all features, it focuses only on the functionality relevant to a specific use case.
For example, if a social management platform customer only needs it to manage their Facebook account, there’s no point showing them how to set up their Instagram account.
The Miro example above gives you an idea of how onboarding personalization works:
- The user completes a welcome survey.
- You segment users based on their use cases.
- You trigger a relevant onboarding flow that takes them to value along the most direct route.
Use interactive tutorials to guide users
One way to guide users to value is with interactive walkthroughs and product tours.
These consist of in-app messages, usually tooltips or driven actions, which show users the key features they need AND prompt them to engage with them.
The beauty of such walkthroughs is that users don’t have to complete all steps at once. If they don’t find a feature relevant at a particular moment, they can dismiss it. And return it at a more appropriate time in the future.
Use in-app onboarding checklists to guide users to the activation point
Onboarding checklists are much more structured and for a reason: they prompt users to complete a series of tasks that are absolutely essential to start using the product and experience its value.
For example, you can use the guide users through the initial setup, without which the product won’t work. Like adding different social media accounts to the hypothetical social media manager I mentioned above.
The best part?
Checklists are really effective at helping users achieve their goals. It may seem that people are programmed to follow checklists and find it difficult to move on until they tick off all the tasks. And the closer they are to the end, the stronger the drive.
A/B test different onboarding flows to see which one results in a higher activation rate
No matter how good the onboarding flow is, the odds are that it could perform better.
The challenge is identifying the elements that could be optimized and finding more effective alternatives.
To identify the underperforming in-app experiences, you can use analytics. For example, funnel analysis can reveal that lots of users drop off at a particular step in the flow. That’s your area of focus.
Once you design alternative experiences and flows, A/B test them to choose the best-performing ones. In such a test, you run both versions side to side and compare how well they drive user activation.
Use gamification to improve user engagement
Gamification can significantly enhance the SaaS B2B onboarding process by making it more engaging for users.
We’ve already covered one example of onboarding gamification: checklists.
How else can you gamify the onboarding? Common tactics include:
- Milestone celebrations.
- Points and badges.
- Leaderboards.
- Social sharing.
- Levels and challenges.
By turning the onboarding flow into a game-like experience, you make it more motivating and increase the chance that users complete it.
Want to see a good example of gamification? Check out Duolingo if you haven’t yet.
How to measure and improve user activation rate with Userpilot?
Userpilot is a digital adoption platform (DAP) built to help SaaS teams drive user activation along other essential growth metrics at different stages of the user journey.
Why don’t we have a quick look at its key features?
Benefit from no-code flow builder
The main Userpilot capabilities revolve around its engagement layer.
The tool offers 6 UI patterns (tooltips, modals, banners, hotspots, slideouts, and driven action) which you can use to communicate with users, provide guidance in-app, and prompt action.
These could be used individually or combined into interactive walkthroughs.
Userpilot also supports checklists, which can be used in conjunction with other onboarding flows. For example, each checklist task could be linked to a walkthrough for step-by-step guidance.
Finally, there’s a resource center where you can upload tutorials, how-to guides, and product documents. So that users can solve simple problems independently, without speaking to your agents.
And guess what?
Creating all these requires no coding. You do it from the front end with the WYSIWYG editor.
Track activation rate with an analytics dashboard
Userpilot offers pretty potent analytics features that allow user behavior analysis, onboarding flow performance tracking, and high-level product performance monitoring.
One of the stand-out features is custom analytics dashboards.
Thanks to them you can monitor key activation metrics from one place, without switching between reports or tools. There’s even a New Users Activation template so you get it up and running in no time.
Discover success stories from our customers who increased their activation rate
How effective are Userpilot features at improving user activation?
Our customers are pretty satisfied:
- Clearcalcs has used personalized onboarding flows to reduce time to value dramatically. Read the case study to learn more.
- The Rooms has increased new user activation by 75% in just 10 days within Userpilot implementation! Read to learn how they achieved it!
- Attention Insight boosted its new activation rate by 47% with Userpilot’s interactive walkthrough and checklists in 6 months. Read to learn more about their approach.
Conclusion
The customer activation rate is an essential metric to track because it affects all other product success metrics, including adoption, retention, and revenue. So it’s a good indicator of the overall product performance, current and future.
To learn more about Userpilot and how to use it to increase your customer activation rates, book the demo!
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