When a client learns about, buys, and integrates a software solution into their work or life, it contributes to the rate of adoption in the SaaS industry. When a user decides to utilize a product as a solution instead of just testing it out, they are said to have adopted it.
The proportion of consumers who have accepted the SaaS product as compared to all other users or customers is known as the user or customer rate of adoption. Most SaaS firms begin monitoring just the behaviors that show if a customer meets the objectives for which they first enlisted the service in order to measure the User rate of adoption.
When a business is aware of what constitutes “adoption” in your product, it can observe how user adoption significantly affects almost every important growth measure, such as the Lifetime Value (LTV) of the customer, average MRR or churn rate per user, etc.
This impact simply increases with time; the greater your user base, the faster your users will accept your product. Adoption is nearly always the criterion for the achievement of new products or features, making it a top focus for marketing professionals and even customer service managers.
In general, a SaaS company wants to have a high adoption rate. As more users use the program, they will be able to appreciate its worth and are more inclined to continue using it. The following metrics affect the rate of adoption in a business:
The following formula can be used to calculate the Rate of Adoption of users in a SaaS business:
Let’s understand it in detail.
Using the above formula, a SaaS business can calculate the rate of adoption or percentage of new users for a given solution. Always compute the adoption rate over a predetermined time frame. It is possible to assess user adoption on a day-to-day, weekly, monthly, or yearly basis. It is simply computed with the number of new users divided by the total signups in that period. Since it is a rate expressed in percentage, multiply the ratio by 100 to get the program adoption rate.
You must take into account a number of elements in order to gauge user adoption in a manner that enables you to take steps to enhance it. These are as listed below:
Let’s look at an example of calculating the rate of adoption for a business.
Say a business named XYZ provides a CRM platform for businesses. By the end of August, they noted 400 active users. In that month, 40 new users signed up for the platform and started using it.
Now let us calculate the rate of adoption with the formula given below: Rate of Adoption of Users = (Number of New users in a specific period / Total Users in that period ) x 100
Here, The number of New users in August = 40 Total users in August= 400
Therefore, Rate of Adoption of Users = 40 / 400 x 100 = 10%
Let’s take another example:
A company named QPR provides a cab rental subscription platform. It had 10,000 users in January, with 800 new users who joined that month. In February, a thousand users unsubscribed from the services. However, 700 new users signed up for it.
Now let us calculate the rate of adoption for both months separately:
For January, The number of New users = 800 Total users = 10,000
Therefore, the Rate of Adoption for January = 800/10,000 x 100 = 8%
For February, The number of new users = 700 Total users = Total users of January + New users – Users who unsubscribed = 10,000 – 1000 + 700 = 9,700
Therefore, the rate of adoption for February = 700/9700 x 100 = 7.2%