What is Product Adoption & How to Measure and Increase It for a SaaS Product?
Although SaaS product trend is growing exponentially, there is one big problem every SaaS businesses have: “Customer Retention Rate”. It is a metric that demonstrates whether your marketing and customer care efforts are wasting your time and money or boost your business. Here is the situation that “Product Adoption” steps in to offer an effective way to improve your business’s retention.
Let’s start with a short definition of product adoption, then continue with some exclusive clues that will help you increase it.
Sounds good? Let’s go 👇
What is product adoption?
Product adoption, by definition, is a process by which customers hear about a new product or a service and become recurring users of it. It is a crucial aspect of customer health and plays a primary role in customer success.
Increasing SaaS product adoption encourages your customers to detect new items and elements. And also, your customers can discover new features of an existing product. Plus, it enables them to become long-term users. For the most successful companies, higher adoption is indispensable for higher revenue.
Especially, SaaS start-ups are highly familiar with the term of product adoption. Because they continue to struggle with low retention rates, users not coming back after signing up and always looking for a solution to keep their users for a long time to increase lifetime value.
You know, it’s the fundamental of a SaaS business model. You have to sell your SaaS product every month to your customers. Product adoption process provides a more advanced customer success by increasing the average lifetime value and the conversion rate of trial to subscribed user and free to paying user.
Amazing, like a swiss knife for product teams, isn’t it?
Let’s dive into how to measure product adoption first, and then to how to increase it.
How to measure product adoption?
There is an obvious fact that most software people do not actually have adequate knowledge and understanding of adoption.
Apart from classical visitor to user, user to customer rates, there’s a whole different area to measure new feature adoption.
Let’s think about a scenario which you are really familiar with:
You worked for weeks over a new cool feature and finally launched it to all of your users. How many of them could actually reach it? Did they really start to use it? How actively did they use it? Did you actually do a good job working on that new feature, instead of something else?
You need to attentively detect the areas that users drop off and exit. If drop-off and exiting rates are high, it is an obvious indicator of something going wrong and an urgent call for fixing it.
3 Product Adoption Metrics
It is the percantage of number of new customers to number of total customers. There is a simple mathematical equation to calculate the adoption rate. Number of new user / Total Number of Users x 100. For example you have 22 new users and number of total users is 200: Your adoption rate is 22/200 x 100 = % 11. It can be calculated in daily, weekly, montly or yearly basis.
Time-to-first key action:
The avarage time it takes a new customer to use an existing feature, or an existing customer to use a new feature for the first time
Percentage of users who performed the core action for the first time:
Name of this metric clearly reveals its definition. It is the percentage of customers have performed a core feature for the first time in a given period of time.
Using a tool as a backup can be helpful.
To monitor and measure adoption rates, you can employ some tools which are able to review the new user onboarding funnel to analyze the steps in which users are having trouble with.
Mixpanel is one of the best tools to measure product adoption with customizable funnels and lots of helpful resources.
How to increase product adoption?
We need to attract customers who tend to actively and consistently use our products or services. No matter what business model we have, we can only achieve success when we make users experience unprecedented moments which make them say “aha, this is what I’m looking for”. It suddenly takes our product or service to a core ingredient of customers’ work.
To clarify it, I want to define Product Adoption Process by 5 stages.
5 stages of the New Product Adoption Process:
Every user respectively goes through these stages no matter what kind of product it is.
To increase your SaaS product adoption;
- Follow the stages in the adoption process,
- Detect insufficient points in each step carefully,
- Enhance them immediately.
1 – Awareness (Introduction Stage):
In this stage, potential customers enter your website to know about a product but they don’t have sufficient knowledge about it yet.
Teaching Customers can be helpful: Prospects may not be aware of the existence or importance of a certain problem. On the other hand, customers may realize the problem but don’t know the solution. Educating customers about either the problem or the solution can help provide a strong awareness.
An important step is making a product more recognizable and making customers be aware of it. Bringing new and differentiated features, low price, sales, proposed quality into the forefront with a smooth onboarding process can be very helpful in this stage.
2 – Interest (Information-gathering Stage):
It is the stage that customers get attracted to the product and try to have more information about it.
Follow the steps of your customers instantaneously and make sure you have strong customer support. Sending segmented emails will increase product adoption at this stage as well.
3 – Evaluation (Consideration Stage):
At this stage, customers determine whether a product is worth to try or not.
Help your prospects evaluate your product objectively. Make them see the aspects that differentiate from alternatives to it.
4 – Trial (Sampling Stage):
Users try your product to see how efficient the product is for compensating customers’ need. It can be either the first purchase or free trial period.
Give free trials and a money-back guarantee to ensure your product is worth employing.
5- Adoption / Rejection (Buy or not Buy Stage):
Prospects determine if your SaaS product has the value and decide to adopt it or not. Customers proceed from a cognitive state (being aware and informed) to the emotional state (liking and preference) and finally to the behavioral or conative state (deciding and purchasing).
An Example Case of Product Adoption Process from Real Life:
Let’s assume that you walking through a street near your home:
- You saw a billboard that says a new pizza restaurant Alican Pizza has opened which located near your home. (Awareness)
- When you went home, you looked for some information on the internet to know more about Alican Pizza’s menu and prices. (Interest)
- You considered either want to try it or not. (Evaluation)
- You decided to try the pizza in small scale – one slice or a little size for trial – to improve or estimate its value. (Trial)
- You conclude that it is delicious and you want to be a long term customer of Alican Pizza. (Adoption)
Diffusion of Innovations Theory: The Product Adoption Curve
Have you ever noticed that some people adopt new products or behaviors sooner than others? In 1962 Everet Rogers a professor of rural psychology developed a theory called diffusion of innovations to explain this phenomenon.
Rogers found that individuals within any society fall into one of five different adopter groups based on how early or how late they adopt an innovation. Rogers theory tells us that if you want to promote the widespread adoption of a new product, you need to market each adopter group differently using distinct communication channels and messages.
The Innovators (2.5%)
Innovators are a small but very important group because they are always the first learn about and adopt an innovation.
The Early Adopters (13.5%)
The early adopters are also a small forward-thinking group and are often highly respected as opinion leaders.
The Early Majority (34%)
The early majority takes time to make decisions. They will observe others’ experiences and will only adopt a product once they are convinced it has real benefits and that it is the new status quo.
The Late Majority (34%)
The late majority is more resistant to change but they are very responsive to peer pressure. They want innovations to be very well tested.
Laggards are highly unwilling to change and they also can be hard to reach with marketing campaigns. Because they often have very minimal exposure to media.
2 Ways to Improve the Product Adoption Process
1 – Make Your Support More Supportive
Customers are having trouble figuring out how exactly your product works. They have limited time and there are a lot of alternatives in the market so they do not want to spend much time on understanding your product. It creates a huge obstacle for customers to retain.
Customer support has the power that can make customers proceed to the next step with your product. Offering in-app live chat, embed videos and creating interactive guides are great solutions to improve saas adoption rates.
2 – Improve Your Onboarding
Effective onboarding helps customers how to successfully use the product without any external effort. You can show the proposed value of your product through a successful onboarding and it also helps users to find their “Aha!” moments easily.
A “Product Adoption Software” can be a very effective solution
You don’t want your developers to work for hours to create product adoption guides. It takes too much time and undoubtedly considerable effort is needed to do it. Save your developer team’s time and don’t waste your budget.
A product adoption software helps your users reach the product in websites and web apps with interactive guides that you created for them. It is the easiest and cost-effective way. You don’t need a big team and a high budget to make guides, your interns can even do it in a couple of minutes.
Moreover, product adoption software permits you to follow the product adoption process stages and provides analytical information which allows you to make objective evaluations handily.
For a longer answer to your question “Why shouldn’t I build onboarding walkthroughs insource?”, check out our article: Onboarding Walkthroughs Are Hard.
Growth manager of UserGuiding.