A Guide to SaaS Product Adoption: Everything you need to know

What is product adoption?

Product adoption is the degree to which customers have been influenced to use your software product to achieve their goals. Instead of signing up for your service only to never return to it again, customers who have adopted your product are actively using its features and gaining value.

It’s very distinct from customer acquisition. While acquisition is all about bringing in new customers to try your product, adoption is concerned with turning them into users. Even though acquiring new customers is important, it shouldn’t be at the expense of turning these new customers into product adopters.

Product adoption is a big part of Customer Success. For customers to adopt your software, they need to consider that it provides value and does what you said it was going to do. They must become a repeat user of your software and make it an indispensable part of their routine.

It’s the polar opposite of customer churn. Customers who churn decide not to use your product anymore and take their business elsewhere, while product adoption means customers have made the decision to use your software.

Why is the product adoption process important?

Product adoption is a critical part of convincing your customers to renew their monthly or annual subscription. It’s a driver of SaaS revenue, profit and growth. If customers aren’t adopting your product, then your business model withers on the vine no matter how many new customers you bring in.

Since customers decide whether to renew their subscription on a regular basis, the SaaS business must continue to sell the product to them. Product adoption means customers consider your software is worthy of their time and influences them to keep paying for it.

Product adoption is a strong influencer of customer retention. It costs five times as much to acquire a new customer than to retain an existing one. Product adoption literally saves your business money.

Read more: 5 Stages to the Product Adoption Process

How can I measure product adoption?

There are a number of different metrics you can track that tell you more about product adoption. It’s not all about collecting as much data as you can, but rather defining what is meaningful to your specific product.

• Identify your objectives – First of all you need to identify your objectives when it comes to product adoption. For a social media app, this might be uploading a post or following another account. You need to know exactly what it looks like when a customer adopts your product.
• Measure feature or product usage – keep track of the time it takes for the customer to start using a new feature, how many people in your customer base are actively engaged with using the feature, and how long that customers keep using a feature after they find out about it.
• Pick key metrics – Choosing the right metrics help you assess whether you are on track for product adoption. The important consideration here is to choose just a few metrics that will help you understand customers who are adopting your product. We’ll go through the most common product adoption metrics in the next section.
• Come up with a tracking plan – when measuring product adoption, come up with a tracking plan that will give you a process for understanding the information you’ve gathered. A basic spreadsheet should suffice for what you want to track, and events and actions that take place within your product.
• Look into most-used features – some features of your product will be more popular with your customers than others and tend to result in the most ROI. If customers have gone through the effort of learning your most powerful features, this puts them less at risk of churn.
• Spot usage patterns – measuring your product adoption means finding particular usage patterns among your data. Perhaps customers are using your product at a certain time of day or on a certain day of the week. Maybe customers on different subscription plans are interested in different types of content from your product.

Read more: 5 Steps To Forecasting The Adoption Of A New Product

Product Adoption Metrics

Time to value

Time to value measures how long it takes users to first reach the “Aha! Moment” with your product and considering that your product has value for them. Customers are excited about their new product and enjoying getting to know the new features. The shorter you can make time to value, the better.

Time to value is the point at which customers start to understand your product and how it can benefit them. It’s the end result of a successful onboarding process that teaches customers how to use the product.

Product activation rate

Product activation rate is the point at which customers become active users of your product, which takes place some time after your “Aha! Moment”. User activation is different for every SaaS product, but usually you will identify some sort of event or milestone that means your user has activated.

Product activation rate is calculated as (number of users who have reached the activation milestone / number of users who signed up) x 100.

Customer lifetime value (CLV)

Product adoption counteracts the number of customers who churn. When customers churn less, you have higher revenue per customer which translates to higher customer lifetime value.

The higher your customer lifetime value, the more money your customers are paying you over their average lifespan.

Customer lifetime value is calculated as average revenue per account / customer churn rate.

Product-qualified leads (PLQ)

Product-qualified leads are customers who are on the very edge of buying your product. PLQs haven’t given you any money yet, but they are about to part with their subscription fee. These customers need just a little persuasion to adopt your product.

If you can collect more PLQs, then your sales team can speak with these customers to convince them to adopt your product. The more PLQs you have, the bigger the pool of potential customers available who are considering adopting your product.

Feature adoption rate

Feature adoption rate is the number of users who are using specific features of your software. A customer will only be able to find value in your product if they know how to use its various features.

When customers are using all the features of your software, they are unlocking the full potential of your product. It may not always be obvious what features your software has to offer, so make sure you take your customers through a process of feature discovery.

Read more: Product adoption metrics you should be measuring

What 5 factors influence the adoption process of a new product?

In 1962, social scientist Everett M. Rogers (1931-2004) found that there were five factors that determine the adoption of any new product.

Relative advantage

Relative advantage refers to the fact that the new product is superior in some way to the solution it replaces. It could be cheaper, or the same price but offering more functionality. Customers can be motivated to adopt your product when it seems that might be more convenient for them than the way they were following before. Relative advantage is important because it is almost guaranteed that there are alternative solutions to your product.

Compatibility

Compatibility means your product fits in with the cultural standards and values that already exist within the society that you wish to adopt your product. You must think carefully about the way that you name your product and how you market it to your customer base to ensure compatibility.

Complexity

Complexity is when your product is seen as easy to learn to use. A product has too much complexity when the user interface is overly complicated, or the product requires too many steps to implement. Software is less complex when it matches up to what customers have been used to using before and integrates with existing applications.

Trialability

Trialability is the extent to which customers can try out your software without having to commit to buying. This makes it easier to find out about your software without having to make a big investment in a new product, when customers aren’t sure whether it will work for them. Trialability mitigates the risk that comes with moving to a new way of doing things.

Observability

Observability means your product can be seen to be used publicly by others, contributing to higher rates of adoption. If your product is used in private then it has lower levels of observability because the rest of the population can’t see the early adopters using it. Observable products tend to sell themselves.

Read more: 5 Steps to an Effective Product Adoption Strategy for Your Product

The Product Adoption Curve

The Product Adoption Curve is a model that shows how and when various groups of users adopt your product.

It’s based on a theory developed by Everett M. Rogers in his book Diffusion of Innovations. Rogers’ theory tells us how the adoption rate of new technology is determined by the unique characteristics of groups of people.

Innovators

Innovators make up 2.5% of the people who are likely to adopt your product and these are the ones who are excited about new technology. They don’t tend to mind if your product is less than perfect and are an important source of early feedback. Innovators pride themselves on being the first to try out a new product, but are unlikely to stick around in the long-term. They have technical know-how and appreciate having access to your product team.

Early Adopters

Early Adopters are just behind the Innovators when it comes to adopting new technology. Early Adopters are less tolerant of bugs in the software and want a product that works well for them, being motivated by positive reviews. They have a large amount of resources to spend on your products and pride themselves on being some of the first to try out a new product. To win over the Early Adopters, you need to provide top-notch customer support to reassure them they have made the right decision.

Early Majority

The Early Majority makes up one of the largest user groups so this is an important market to tap into. They are quite risk-averse and only want to adopt a product that has been proven to be successful. They will be influenced by the behavior of the Innovators and the Early Adopters who indicate that the new solution is worth investing in. The Early Majority has the potential to become one of your most loyal customer segments if you can persuade them your product is worth their time.

Late Majority

The Late Majority is another large customer segment that is very similar to the Early Majority. However, as the name suggests they are slower to adopt new technology and will not accept a product with any technical problems. You’ll have to work hard to convince these customers that your product is worth it, and having lots of existing customers to tempt them will help.

Laggards

Laggards are highly averse to change and don’t seek out new products to try. Nevertheless, at 16% of the product adoption curve, they are the second largest customer segment your business will want to reach out to. They often don’t adopt new technology until years after it has first become available and then only when they have no other option.

What SaaS businesses can do to improve product adoption

Support customers where and when they need it

The best way to improve product adoption is to provide comprehensive support to customers where they are in your app. This includes links to contextual help and a self-service knowledge base to answer common questions. It’s a mistake to ask customers to leave their workflow in order to seek help from a member of your support team.

Encourage customers to get the most out of your product by sending them automatic emails using email marketing software, providing messaging in-app, and offering a community forum where customers can get help. Your product is only as good as the support you provide to your customers.

Gather and analyze feedback

If you’re concerned about product adoption then you can reach out to customers for their thoughts on your product. If you don’t survey your customers, you won’t understand their pain points with your product and what you can do to make it better. Ask your customers questions about what the hardest feature of your product is to use, and what makes them log out of your software.

A great way to gather feedback from your customers is through the use of in-app surveys that catch your customers while they’re actively using your product. Keep your surveys short and to the point to encourage customers to fill them out.

Promote new features widely

Releasing new features to customers is a big part of continuing to deliver value with your product. When the product is regularly developed, customers are less likely to object to price hikes because they can see that the product is continually improving. When you release new features, make sure to announce new feature widely to your customers.

Update them in-app with tooltips or messages, proclaim your new feature on social media, your blog, or company email newsletter. If customers aren’t using your new features, ask them why not and make sure they have access to documentation explaining more about the new feature.

Treat all customers as unique individuals

Concentrating on metrics shouldn’t come at the cost of treating all customers as individuals. As much as you can, measure the adoption rate for each unique customer to see how engaged the user is with your product. This means establishing goals that tell you how far the customer has progressed with setting up your product, integrating it with other tools, and gotten to grips with advanced features.

If a customer is slow to adopt, you can reach out to them from your Customer Success team to find out more about what challenges they are facing with your product. When you proactively contact customers about using your product, this increases product adoption because you find out when customers are getting stuck.

Optimize the onboarding process

The onboarding process starts when customers are trialling your product and aims to move them towards the activation stage. Onboarding is a brief introduction to your software that gets customers set up and finds out a little bit more information about them. In your onboarding stage, you can include a welcome screen that segments your customers into groups, so you can offer customized onboarding.

Using things like product walkthroughs and checklists are a good way to get customers to learn about your product. It’s important to make these optional, however, in case customers have experience of using your product before.

Understand your churns and renewals

It’s important to keep track of those customers who decide to stop doing business with you. Consider including an exit survey to find out why customers chose not to renew their subscription. Sometimes it might be for a reason outside of your control, such as their budget not allowing for your software anymore, or they no longer have a need for your product. Other times, you might be able to gather valuable insight into why customers have failed to adopt your product.

The same goes for renewals. You can find out from these customers why they choose to continue renewing their subscription every month or year, and you can make sure to emphasize these features in your product.

Read more: How to increase Product Adoption?

Wrapping up

Product adoption is a critical concern for SaaS companies who are trying to earn engaged and loyal customers. If customers don’t adopt your product, churn will rise, and the very future of your company is at risk. Increasing product adoption requires an in-depth understanding of your customers, why they have chosen your business, and a commitment to Customer Success.

Of course, a great product is essential to any product adoption strategy. If your software can’t deliver what you promise, no amount of effort is going to convince your customers to stay. Product adoption is about helping customers to uncover the value that your product has to offer and encourage them to use it on a regular basis. Customers who consistently receive value are committed to your product and happy to keep paying their subscription fee. Product adopters are the lifeblood of any SaaS business, and key to long-term success and health.

FAQs

1. What is product adoption?

Product adoption is the degree to which customers have become active users of your software. They’ve chosen your product as a viable solution over your competitors, and it has become an indispensable part of their routine.

2. Why is product adoption important for SaaS businesses?

Product adoption is an antidote to customer churn. When customers are engaged in using your product, they enjoy the user experience and can use your software to accomplish their goals. Without product adoption, customers fail to see the point of using your software and cancel their subscription in droves.

3. What product adoption software is available to help me?

Consider using Product adoption software by Churn360 to drive product adoption in your SaaS business. Churn360 tells you whether or not your customers are funnelling through the lifecycle stages of Onboarding, Adoption, Renewal, and Upsell. If customers are bottlenecked, Churn360 prompts you to take proactive action before the customer has a chance to churn.

4. What is the Product Adoption Curve?

The Product Adoption Curve is a model by Everett M. Rogers that tells you what stage of the technology lifecycle a customer is in when they adopt your product. Different segments of customers require unique marketing techniques.

5. What are the biggest product adoption challenges?

• Educating technologically challenged users
• Customers think that the technology is too expensive
• Improving the customer experience
• Multiple decision-makers are involved in the sale of the software
• Measuring and analyzing product adoption