4 Actionable Tactics To Improve Your Product Adoption Rate in SaaS

4 Actionable Tactics To Improve Your Product Adoption Rate in SaaS

Wondering how you can improve the product adoption rate of your SaaS business?

Without product adoption, your new users will remain stuck in the activation stage, and there will be no growth. As users adopt more and more features down their journey and continue getting value from them, they become loyal and profitable customers.

So let’s look at how you can boost product adoption and drive growth.

TL;DR

What is product adoption in SaaS?

Product adoption takes place when your customers discover a new product and start using it with a purpose. They move from the trial stage to actually become customers who invest in your product to get desired solutions.

How to measure product adoption rate?

You can measure product adoption daily, weekly, monthly, or annually. To calculate the product adoption rate, divide the number of new active users by the number of signups, and multiply it by 100. Simply put,

Product adoption rate = (New active users / Signups) * 100

Product-Adoption-Rate.png
Product adoption rate

For example, if your total number of users is 400 and the number of new users in a month is 40, your product adoption rate is (40/400)*100 = 10%.

Why is tracking product adoption rate important?

Product adoption rate is one of the most crucial metrics for all SaaS companies. However, it’s often easily overlooked and confused with customer acquisition.

During customer acquisition, a user decides to try out your product for the first time. But they decide to purchase it only after they achieve customer success with your product that they decide to invest in it and, consequently, adopt it.

In fact, retaining an existing customer is between 5 and 25 times less expensive than acquiring a new one.

Product adoption is the complete opposite of customer churn. When customers churn, they are determined to leave your product because it fails to deliver value.

Therefore, it’s critical to give continuous value to customers, so they adopt your product and become repeat, long-term customers.

Thus, the higher the product adoption rate, the lower the churn.

Moreover, adopted customers are the perfect targets for your revenue expansion strategy via upsells, new features, and cross-sells.

Product adoption rate benchmarks in SaaS

Let’s look at some stats to compare your product adoption rate to other SaaS solutions.

  • Activation: It is the percentage of users who completed the key actions needed to reach the activation point and experience your product’s value for the first time. The median activation rate is 17%, while the 90th percentile rate is 65%.
  • User growth: It is the month-over-month growth in the number of weekly active users. The median growth rate is 4%, while the 90th percentile rate is 72%.
product-adoption-benchmark.png
Source: Mixpanel

5 product adoption metrics that you should track

Your product adoption metrics should be tied to particular business goals. This way, you can track these metrics and use the insights to develop a well-informed product adoption strategy.

Tracking product adoption is a crucial step to customer success. Instead of wasting your valuable time on metrics that don’t matter, track and optimize the ones that will help boost user adoption. Here are the 5 most important product adoption metrics that you should constantly track.

  1. Time to value (TTV)
  2. Customer lifetime value (CLV)
  3. Product activation rate (PAR)
  4. Feature adoption rate (FAR)
  5. Customer engagement score (CES)

Time to value (TTV)

Time to value measures the time it takes for a user to experience your Aha! Moment and start getting value from your product.

Your goal should be to decrease time-to-value as much as possible to improve product adoption. Tracking it will let you keep track of the trend in adoption within your product and identify potential points of friction in the product adoption process.

You can then remove friction from the onboarding flow and focus on nudging users towards the Aha! Moment to drive faster adoption.

product-adoption-time-to-value.png
Time to value

Customer lifetime value (CLV)

Customer lifetime value is the amount of revenue you can earn from each customer over the course of their user journey with you.

To calculate CLV, divide your average revenue per account by your churn rate.

A higher product adoption rate translates to less churn. This, in turn, leads to a higher customer lifetime value. Your customers stay longer with you, consequently becoming more profitable for your business.

product-adoption-customer-lifetime-value.png
Customer lifetime value

While it’s important to make users reach your Aha! Moment, it doesn’t necessarily mean users will adopt your product. The next important thing for you to ensure is product activation.

To start activation, you have to select specific in-app events that would encourage users to activate upon completion. Divide your users into segments based on the different user personas and measure the activation rate for each of them separately.

Activation rate equals the number of users who reached the activation point or milestone divided by the number of users who signed up, multiplied by 100.

product-activation-rate.png
Activation rate

This metric has the biggest effect on your revenue. A 25% rise in activation can boost your MRR by 34% over a year.

So, gather insights into this metric, especially for the most valuable customer segments, to formulate your activation strategy.

Feature adoption rate (FAR)

To adopt your product, customers need to find your product’s features useful. This is where the feature adoption rate comes in.

Some features may not be hidden, but customers can still find it difficult to notice where they are. This is why feature discovery helps improve your feature adoption.

To calculate the feature adoption rate, divide the number of monthly active users of a feature by the number of users who logged in within a specific period and multiply the result by 100.

product-adoption-feature-adoption-rate.png
Feature adoption rate

Along with other feature adoption analytics, you can use this metric to develop a successful feature adoption strategy. You can create onboarding experiences to guide users to an undiscovered or new feature.

Customer engagement score (CES)

If your users don’t engage with your product enough, they won’t find it helpful to their cause. Therefore, customer engagement provides vital insights into the ‘health’ of your customers.

The customer engagement score allows you to discover disengaged customers on the verge of churning and even find opportunities for product expansion.

CES needs to be calculated using a multi-step process.

First, find out the key events your customers must complete, which measure engagement directly. Second, assign action impact scores (on a scale of 1-10) to each of these events according to their level of importance.

Calculate the total event values by multiplying the action impact score by the action frequency (last x days). Then add each of the total event values to get the customer engagement score.

product-adoption-customer-engagement-score.png
Customer engagement score

The customer engagement score gives you a snapshot of your product usage metrics. You can track customers with low CES to find points of friction.

After cross-referencing CES with other usage metrics, you can collect valuable information to improve your product and customer engagement.

On the flip side, you can target customers with high CES to implement your revenue expansion strategy.

4 tactics to improve your product adoption rate

This last segment will talk about the tactics customer success teams can apply as part of your product adoption strategy.

A customer success manager’s efforts to improve the product adoption rate should include:

Personalize the onboarding process with welcome screens

Your users can’t adopt your product unless they activate it, and welcome screens are a perfect means of onboarding your users.

Welcome screens allow you to give warm greetings to your users, introduce yourself with a personal touch, and let them know what to expect next.

But more importantly, welcome screens help you segment users by using a micro survey like the one by Kontentino shown below.

product-adoption-rate-welcome-screens.png
Welcome screen built with Userpilot. Get a demo and start welcoming users to your app to improve your product adoption rate.

Segmentation lets you understand the needs of your users better and identify their jobs to be done. This helps you create a personalized user onboarding flow for each cohort to direct users to the shortest route to activation.

Based on the complexity of your product, you may have to target multiple different use cases that have different professional goals tied to your app.

Use interactive walkthroughs to drive users to adoption

Interactive walkthroughs are a great onboarding tool for driving adoption. Unlike product tours that provide a lot of information at once, walkthroughs make guides engaging for users by making them learn by doing.

Walkthroughs use a series of tooltips that guide users through engaging with your product. Thus, they shorten the learning path so users can quickly experience the value of your product and adopt it.

Onboarding is a continuous process of teaching customers how to make the best use of every feature in your product.

Luckily, walkthroughs not only help users reach activation and adopt your product but also discover and adopt secondary features at different stages of the user journey.

You can use walkthroughs during secondary onboarding to showcase secondary or new features relevant to a customer’s use case. In addition, this lets you drive secondary feature adoption.

Below is an example of a walkthrough by Kommunicate, a chatbot tool that instructs users to customize their chat widgets. Since its introduction, 86% of customers engaged with the walkthrough, which led to a 3% rise in the feature’s usage.

Here, Kommunicate uses tooltips to invite new users to perform all the actions needed to build a bespoke chatbot. This highlights the product’s value and helps users to activate.

product-adoption-rate-interactive-walkthroughs.png
Source: Kommunicate

Offer in-app self-service support to help users reach activation points effortlessly

In-app self-service support enables customers to solve repetitive problems by themselves so that they don’t have to wait for human agents to reply. This helps them resolve such issues faster and thus, reach activation points smoothly.

There are several self-service software you can use to help users find what they need readily:

resource-center-userpilot.png
Build an in-app help center without having to code. Get a Userpilot demo and see how!

Self-service support reduces the risk of churn due to delayed customer service. Ensuring Day 1 retention is a serious challenge for many SaaS companies.

If a user’s first experience with you involves them having to wait for 2 days to get an issue resolved, they might not stick around to activate and adopt your product.

This is where self-service support comes in.

Self-service support provides a practical opportunity to equip users with educational resources for continuous onboarding. Thus, it also helps to boost engagement.

In addition, when customers reach out to the support team less often, it can focus more on the unusual and serious problems that other users face.

Use customer satisfaction surveys to improve your product

Your users won’t adopt your product unless they are satisfied with it.

The Aha! Moment is only the beginning of the long road customers take to become brand advocates. For them to be thoroughly satisfied, they need to engage with and experience value from the different product features.

While the onboarding tactics above help you improve customer satisfaction, you also need to conduct micro surveys to track this metric and improve your product. Micro surveys help you collect just enough user feedback without losing the attention of your users.

One such survey is the NPS survey, which asks users to rate how likely they are to recommend your product to others on a scale of 1-10. Hence, it’s also a measure of customer loyalty.

nps-survey.png
NPS survey by Userpilot

To know why customers gave a particular score, add a follow-up question to collect qualitative customer feedback. It will help you learn what makes them happy and what not so that you can capitalize on your strengths and address your weaknesses accordingly.

follow-up-nps-survey.png
NPS follow up question

Summing it up

Activation isn’t enough. Your new users need to adopt your product and keep finding value in each feature along their user journey.

Therefore, you need to track adoption metrics regularly and use tactics to improve product adoption simultaneously.

Want to know more about how Userpilot can help with product adoption? Book a demo today!

previous post next post

Leave a comment