What is Product Adoption and How to Increase It

So you’ve spent months building an MVP of your SaaS product. After thousands of hours of work, countless lines of code, customer interviews, it’s finally ready to use. You start promoting it to your target audience, hoping for the zero on your account to turn into many zeroes, but then… Crickets. You forgot about one important issue - product adoption.

Today, we’re going to show you what product adoption is, why it matters, and how you can measure it and improve it.

What is product adoption?

Product adoption (or user adoption) happens when customers use a product or a feature to solve their pain points and meet their expectations. Product adoption could refer to existing customers trying out a new feature or new customers just getting started with your product.

​​

When it comes to product adoption, your users can be separated into five different groups:

• Innovators
• Early adopters
• Early majority
• Late majority
• Laggards

What does the product adoption process look like?

Let’s say that you have a chatbot application that helps ecommerce store owners resolve customer questions more quickly. Your customers would go through the following customer journey, i.e. the stages of product adoption.

1. Awareness - the potential customer is aware that they have a problem (customers are leaving their shopping carts abandoned because of a lack of support) and they are aware that there are some tools that can help resolve it
2. Interest - the customer is interested in how to resolve the problem they have so they start researching for potential solutions. They find the category of chatbot apps but they have not yet found you as their product of choice
3. Evaluation - the potential customer found a couple of chatbot apps that could be ideal for them. They are comparing different products: their features, pricing, support and more. Additionally, they may book a demo or a walkthrough with your team to learn more
4. Trial - the potential customer signs up for a (free) trial of your product to test out the different features and see how it works in action and what kind of value it brings
5. Adoption or rejection - at last, they either churn and stop using their trial or they convert to a paying customer of your product

As you can see, the lifecycle from being aware of having a problem to becoming a paying customer is long and winded, which is where an excellent customer experience and user onboarding can greatly help your workflow.

However, the process of adoption does not end when a customer decides to use your product and pay for it. The product adoption can vary quite a bit, as they can stop using after a few months, they do not use the right features to help them discover value, they may not get all the help they need with onboarding, etc.

Therefore, make sure to check in with your customers after they start paying and give them proper onboarding and help so they can get the maximum value from your product and stay as long as possible.

Why is product adoption important?

It doesn’t take much to figure out that product adoption is crucial for the most important metrics and goals in any SaaS product. 

The short answer is, customer product adoption influences the most relevant KPIs for any business: customer retention, customer success, lifetime value, daily active users, churn and overall revenue.

New users who happily adopt your products are those users that stick around and most importantly, continue paying and increase your revenue.

‍

How to measure product adoption: key metrics to track

Product adoption can be measured and there are multiple ways that you can do it. You can use some or all of the product adoption metrics below, depending on your product goals.

Product activation rate

A user is considered “activated” after they perform a certain activity within the app that makes them an active user, e.g. sending out the first few campaigns in an email marketing tool. The average activation rate for SaaS sits at 36%.

New feature adoption

If you just launched a new feature, a good way to determine if your customers have a use from it is to measure the new feature adoption rate. It is simply the percentage of your total users that tried out a new feature. If your adoption rate is low or flat, it means you need to guide first time users to where it is in the app, among other things.

Customer effort score (CES)

This is a common metric in customer success and product teams and it denotes the effort that a customer has to take in order to perform a certain activity. For example, how difficult it is to access a new feature within your product. Customers rank the difficulty of doing something on a range from 0-10. You can use in-app surveys to find out the CES score for specific actions within your product.

The great news is that you can calculate the CES score for literally any action, which makes it useful for testing out hypotheses and new features in your product.

Time to value (TTV)

This is the time that it takes for new product users to reach the “Aha” moment and start seeing the value your product brings. In other words, a point at which they figure out how it solves a problem that they have. For example, if you run a popup app, the time to value would be the time it takes for the customers to see the first conversions coming in from popups.

Customer lifetime value (LTV)

The lifetime value is the total amount in dollars (or whatever currency) that a customer is going to spend with you before churning for some reason. Ideally, you want as high of a lifetime value as possible as this means that customers are staying with you for longer periods of time.

Average revenue per user (ARPU)

This metric tells you how much revenue each of your users brings in on a monthly or annual basis. Naturally, the higher this number is, the better. A higher ARPU means that your customers choose higher pricing plans and you can upsell or cross-sell them with addons and upgrades.‍

Conversion rate

Conversion rate can be just about any activity on your website and within your product. For this precise reason, make sure you measure conversions at relevant touchpoints. For example, the conversion rate from a free trial user to a paid user is a relevant one for your product adoption strategy.

Top tips for improving your product adoption as a SaaS business

Poor product adoption can feel like a leaky bucket. As soon as you plug one hole, another one opens up, making you feel helpless. Here is how to improve adoption, one step at a time.

Create an amazing onboarding experience

The most crucial user experience that customers have is their onboarding process. Figure out the onboarding flow in detail - what should the customer see first when they sign up for your app and what kind of steps do they need to go through?

For example, Slack guides you to create your own workspace and once you log in, it shows you around the most important functionalities. Last and most importantly, it asks the user to send out invites to their workspace so they can start communicating.

Reduce friction in user adoption by tracking interactions in real time

Just like your website, a customer can drop out of your product at any point in time for some reason. They could just leave a page or even worse, not even reach the latest feature that you’ve been building.

Try using in-app analytics software (such as Hotjar) to find out the actions that customers take right in your app. You may find that your customer base gets stuck at a specific point in the user journey, preventing them to reach the new feature you’ve been working on.

Communicate product changes early and often

We often take messaging for granted, expecting the approach of “build it and they will come” to work out. However, customers will have a hard time realizing the value of your product unless you tell them how your product works, what pain points you solve, what is on your roadmap, what specific features you launched and more.

Communicate changes using various platforms - email, in-app notifications, social media, your blog and everything else where your user base spends their time.

Listen in on customer feedback

When something is broken or not working as expected, don’t worry - your customers will tell you. That is, if you give them the right channels where they can leave that feedback.

For example, you can allow public comments on your product roadmap to increase customer engagement. You can add live chat support options within your product to communicate feedback exactly when a customer thinks of something to tell you. Of course, you should set up a dedicated person or a team to respond to feedback and manage it, through phone, email and social media inboxes.

And just like that, your retention rates and product engagement metrics go through the roof.

Improve your customer support

64% of customers want to work with businesses that offer customer support in real-time. While this is challenging for most SaaS businesses (especially the bootstrapped ones on a tight budget), you can make great strides to improve customer support.

First, create an amazing handbook with a walkthrough of your product and features. Additionally, you can invest in a custom client portal and a client onboarding portal to offer tailored solutions and a unique experience for your customers, addressing their specific needs and concerns more effectively. Before you hire new customer support staff, try using chatbots to get customers’ tickets and tell them when you will respond.

Wrapping up

Improving your product adoption rate is one of the best things you can do for the overall health of your business. However, you can probably see that measuring your product adoption and finding ways to fix it is far from a one-off activity. The time invested in improving your product adoption curve will pay dividends by giving you more loyal customers and more revenue.

And if you’re looking for one way to increase product adoption and help users understand the value of your product, add an analytics dashboard to your product. It will help your existing users understand what they are doing and entice new users to sign up.

And with Luzmo, you can add an embedded analytics dashboard to your SaaS app quickly - without writing a single line of code. Sign up now and find out how!