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May 31, 2022

Have you ever wondered how to measure product adoption? It’s a common question that businesses face, especially when launching a new product. After all, if no one is using your product then it’s not going to be successful.

But what exactly is product adoption and how to measure product adoption? Let’s take a closer look at the product adoption lifecycle.

How to Measure Product Adoption

There are a few ways to measure product adoption. One way is to track the number of new users over time. This can give you a sense of how quickly people are adopting your product.

Another way to measure adoption is to track engagement levels. This could involve tracking how often people are using your product, how long they use it, and what kinds of things they are doing with it.

You could also survey your users to ask them how they are using your product and how satisfied they are with it.

This can give you more detailed insights into how people are using your product and whether they find it valuable.

What is Product Adoption?

The process by which customers activate web or mobile apps is called product adoption.

Why Does Product Adoption Matter?

With the rise of SaaS licensing, the focus on getting users to adopt your product has become more important than ever.

Since software products are sold monthly, product managers need to focus on improving the customer’s experience early on.

Product Adoption Metrics

These product adoption statistics will help you measure how well your product is being adopted.

  • Stickiness: The number of users who log in to the app a minimum number of times, expressed as a count over time.
  • Feature Adoption: Measures how many users interact with the app at a given time.
  • Growth: Measures the net effect of your customer acquisition and retention efforts. Are you gaining new users faster than you are losing existing ones?
  • MAU: The average number of unique visitors to your product each month.

How to Increase Product Adoption

Improving user experience is the most effective way to boost product adoption rates.

Aside from putting together an on-boarding strategy that thoughtfully guides users through your app, there are other things you can do to improve product adoption:

  • Track data: You can’t improve what you don’t measure. To assess product adoption, you should track product engagement to understand where users are getting stuck and what opportunities are there to improve their experience with your software.
  • In-app communication: Talking to users within the app is the best way to introduce key features and encourage better use of your product.
  • In-app support: Adding support materials in your app allows users to fix a problem themselves. If they get stuck or have a question, they can simply access support instead of giving up and leaving the product entirely.
  • Gather feedback: Collecting qualitative feedback from users can help you better understand their experience with your product and anything they feel is missing. Run in-app surveys to ask users what they think of a specific feature.

Product Adoption Is Critical to Your Business

Adoption of your products is key to the success of your company. By understanding what constitutes adoption for your product or service, you can better understand how it’s impacting your customer’s lifetime value and your revenue. By increasing your products’ or services’ adoption, you can increase these critical numbers, helping grow your business.

As more users adopt the product or service, the influence it has on important business KPIs, such as customer LTV, ARPA, and Churn, increases. This is why product managers should focus on increasing the adoption of their product above other goals, such as retaining customers.

Even if your marketing team brings in tons of users, it won’t guarantee your product’s team will meet their user acquisition goal.

Understanding which actions provide new users value and get them to repeat them soon after the acquisition is essential for success. Creating a great first impression is key to ensuring customers continue using your product.

When users adopt your product successfully, it increases their value to your company. This value accumulates over a longer period, leading to more predictability in your income.

Product adoption rates are a measure of how likely people are to use a product. High rates of usage mean people stick around longer, spend more money, and can drive more predictable revenues.

Elements of Product Adoption Metrics

Tracking how customers use your product can give you great insight into how successful it is.

The adoption event is the event in your app or website that signifies that the user has gotten value out of it.

It can be tempting to only look at metrics such as page views as an indicator of a product’s worth. But, these are often misleading.

Measure how many people take actions that matter in your app.

Retention and usage of your product are far better indicators than the number of users who sign up.

A team can use a variety of metrics to track product adoption, including how many times an action is taken and how often it occurs. By tracking these metrics, the team can determine which actions are most correlated with retention or LTV.

Or, teams can look at combining different event types (e.g., purchases, signups, etc.) to see which combination provides the most value.

As you create your own unique set of customer success goals, you’ll want to keep track of the following:

  • Conversion rate from signup to first key action
  • Time to value (TTV), or the time it takes to reach a major activation event.
  • Frequency of purchases
  • Churn rate
  • Net Promoter Score (NPS)
  • Customer Lifetime Value (CLV)

Metrics to Help Improve Product Adoption

Below are other key sales performance metrics to track to improve product adoption.

Time-To-Value (TTV)

Time-to-value is the time it takes for a customer to start seeing the benefits of your product or service.

Product-Qualified Leads

These are users who have shown interest in your products and are most likely to purchase them.

Average Revenue Per User (ARPU)

Your Average Revenue Per User (ARPU) is a measure of how much revenue you bring in from each user. This key business indicator can help you determine how well your product is doing compared to your competition.

Conversion Rate (CVR)

It refers to the percentage of people who visit your site and complete a specific action, such as making a purchase, out of the total amount of visitors. Any efforts made to increase this percentage will also increase the average customer value and revenue.

Customer Lifetime Value (CLV)

By increasing product usage, you decrease the likelihood of your customers churning. This increases their LTV or their value to your company over their lifetimes.

A higher customer lifetime value means that customers stay with you longer.

Product Activation Rate

Before measuring the user activation rate, you first need to identify a specific in-app milestone or event that indicates activation. This will vary depending on the product.

New Features Adoption

Measuring the feature adoption of your software is crucial to understanding how much value is left on the table by your customers.

Customer Engagement Score (CES)

CES is important because it measures how engaged a customer is with your product. If a customer is not engaged, they are at risk of churning (stopping their subscription). CES can also indicate expansion opportunities – if a customer is highly engaged, they may be interested in upgrading to a premium version of your product.

To calculate CES, you’ll need to identify relevant inputs such as specific user actions, usage frequency, or completed tasks. Once you have this information for each customer, you can then combine it to get their CES score.

Purchase Frequency

A product with a high purchase frequency indicates that it has a great user adoption rate.

How to Increase Product Adoption

There’s no magic bullet for increasing product adoption, but there are several strategies you can employ to help increase your company’s bottom line.

The following tips can help make your sales prospecting more effective:

1. Build Awesome Products

Offering something new and exciting, like a new product or service, is a great way to convince users to buy and try out your new product.

2. Improve Onboarding Experience

Your customer’s understanding of your product is a major factor in whether they’ll continue to use it.

One way to improve the onboarding experience for your product is to segment users into different personas and provide each with a personalized onboarding flow. This will help ensure that each user gets the most relevant and targeted information to help them successfully adopt your product.

3. Set Up Customer Service

Customer support helps you keep existing customers and get more out of them.

Providing exceptional support to your customers allows you to cultivate loyal users that refer other customers, help recover your acquisition cost, and provide reviews.

4. Engage With Users

In-app messages are a great way to prompt your users to take action, such as filling out a form or gathering their feedback on something.

You can also engage with users who have left the app by sending them email onboarding messages. This way, you can reach out to them and provide valuable information or feedback that they may need.

5. Improve Product Functionality

Customer feedback is an effective way of knowing if your product meets user needs. To get the most targeted and useful feedback, be intentional when requesting it from customers. This will help you avoid being overwhelmed by feedback that is not as helpful.

Businesses can gather feedback about specific features of their products by including short pop-ups or questionnaires when customers use these features.

What is the Product Adoption Lifecycle?

The product adoption curve shows the rate at which customers adopt your product at different stages of the customer journey.

The adoption curve helps categorize customers into different segments based on their size and behavior.

Product Adoption vs. Product Adoption Lifecycle

Product adoption refers to the rate at which your customers know about and start using your products. The product adoption lifecycle, on the other hand, shows the rate at which different segments of customers adopt products at different stages of the cycle.

Conclusion

How to measure product adoption? To measure product adoption, you need to track how many people are using your product and at what stage of the product adoption lifecycle they’re in.

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