What is Product Adoption: Meaning, Key Metrics and Tips

Product adoption is essential for retention and loyalty. If the customers find value in your new product and include it in their workflows, there is a great chance they will stick to it for longer. 

Still, managing to persuade your audience to try out your new product is not an easy task, especially in a SaaS environment where competition is as fierce as it gets. 

To be able to plan and execute product adoption properly, it is crucial to first learn what is product adoption. Ready to equip yourself with some valuable knowledge that can boost your brand awareness, retention rates and loyalty? Let’s go!

What is Product Adoption?

The simplest product adoption definition is that it refers to the process of a potential customer becoming aware of your product, trying it out, and, if everything goes according to plan, becoming an active user. 

Once the user incorporates your tool into their work routine, you are one step closer to bringing another long-term customer into your customer base. Now, to fully understand the term, let’s first differentiate it from the ones that they are sometimes confused with to make thighs as clear as possible.

Acquisition vs Adoption

These are two different stages in the customer lifecycle, especially relevant in SaaS. While acquisition focuses on landing new customers, adoption aims to ensure that new customers start deriving value from the product as soon as possible so that they can use it successfully. 

Adoption vs Retention

Although both components are crucial for customer success, retention and adoption focus on different stages in the customer journey. While the product adoption strategy focuses on encouraging customers to start using the product, customer retention aims to keep them satisfied and engaged so that they continue using it for as long as possible. 

Adoption vs Activation

Both product adoption and activation are essential concepts related to customer success and product usage. New product adoption or simply adoption refers to the comprehensive process of customers integrating a product into their everyday lives or work routines, while activation is defined as a certain milestone within the product adoption process where the customer has experienced that “aha” moment or the core value of the given product. 

What is the Product Adoption Process?

The product adoption process is a set of stages that customers must go through in order to become active users and advocates. Although the product adoption stages can vary depending on the industry, there are typically 5 different stages in the product adoption process:

Awareness

In the first stage, the customers become aware of your product through marketing efforts, word of mouth, or other channels. Since the new audience doesn’t know much about your product yet, it is important to present it adequately to create enough brand awareness. You can do that by creating informative and engaging content that emphasizes the benefits of your product, optimizing your website through SEO, creating target email campaigns, using social media marketing, and so on. 

Interest

Once the interest is sparked in the awareness stage, the prospects would like to learn more about your product and its core features. To facilitate and enrich their exploration, it is vital to have a user-friendly website, help center where you can answer all their questions, chat bot, use cases, tutorials, and any other resources that can help the prospects understand the product better. 

Evaluation 

This is one of the most essential stages of product adoption, as at this point the prospects usually decide whether your product meets their needs or not. Stay clear and consistent about how your product stands out from the competition to encourage interested parties to give it a try. 

Sampling/Trial – SaaS products often come with trial versions where prospects can experience the product firsthand and better understand its value. Include free trials to encourage them to try your product. 

Adoption

At this stage of product adoption funnel, the prospects have become new customers by purchasing your product or subscribing to it. Ideally, the user onboarding will go smoothly so that the new users can use the product with ease and consider using advanced and new features as well. 

Product adoption example

A good SaaS product adoption example would be Slack, a team collaboration tool adopted across various industries worldwide. 

Slack gained awareness through referrals from early adopters and word-of mouth. Also, they used social media and content marketing. As people became aware of Slack, interest grew instantly, and Slack promised to simplify collaboration and improve it, especially in remote teams. 

Slack offered free trials and various beneficial features for facilitating communication across teams, like file sharing, instant messaging, and integration with other tools, which were all appreciated by the prospects. In the end, Slack was adopted as the primary communication tool by millions of people worldwide.

What is the Product Adoption Curve?

The product adoption curve or product adoption model, describes the process through which innovations or new products are adopted by people over time. The curve demonstrates the stages of adoption that different prospects go through – from early adopters to laggards. The model is usually used by product teams and marketers to help them predict the new product’s adoption by the current market. 

Now, let’s see the five segments of the product adoption curve:

• Innovators
  • This is the first group of people to adopt new products, and they are often perceived as risk-takers who are willing to try new things and pay more for early access to new features or products. 
• Early Adopters
  • These individuals are opinion leaders within their communities and are often asked for recommendations as their opinion matters. 
• Early Majority
  • This group is more cautious than the early adopters, as they usually wait for the product to prove its success before they decide to try it out. 
• Late Majority
  • This group is skeptical about new products and innovations and usually adopts them after they gain popularity and become mainstream.
• Laggards
  • The last group on the product adoption curve belongs to those who are not so comfortable with change and may adopt a new product only when it is utterly necessary.

Product Adoption Metrics to Track and Analyze

Tracking and analyzing product adoption metrics can provide valuable insights into customer experience, product usage, and areas that need certain improvements. Here are the key adoption metrics that every SaaS business should track regularly:

• Activation Rate
  • The activation rate measures the percentage of users who have finished a certain activation action or milestone within your platform. Whether it is profile completion, account creation, or any other crucial action that indicates that they are satisfied with your product and willing to continue using it.
• Usage Frequency
  • This metric shows how often the users are interacting with your product – daily, weekly, monthly.
• Feature Adoption
  • This metric shows the number of users who are using certain and new features within your platform. This is how you can identify the most valuable features and those that require some extra work to satisfy the customers. 
• Customer Lifetime Value
  • CLV is another valuable adoption metric that shows the total revenue you get from each customer during their entire relationship with you. This metric can help you understand the value that each customer brings to your company and streamline your efforts accordingly. With customer success platforms like Akita, you can perform customer segmentation and track each cohort’s KPI, set triggers for at-risk customers, get visualized data, among other things.
• Purchase Frequency
  • This is surely one of the most crucial product adoption KPIs, which, if high, clearly states that user adoption strategies are effective and well-received. 
• Product Adoption
  • The given metric measures the speed at which customers are adopting new features or products. It is presented as a percentage and is calculated by dividing the number of customers who have adopted the product by the total number of potential customers, which is then multiplied by 100. Now, let’s see how to measure the product adoption rate by using the product adoption rate formula:

It is valuable to have a product adoption dashboard, which is a visual representation of all adoption KPIs and data. It helps the product teams and managers understand how users are engaging with the product and which data-driven decisions might improve the adoption rate.

What Can Affect the Product Adoption Rate?

There are various factors that can influence the product adoption rate and some of the most potent ones include:

• Value Proposition
  • If the perceived value of your product matches its cost, there is a great chance that customers will adopt it.
• Product Fit 
  • If the given product can meet the demands of the targeted market, you can expect to have high product adoption rates. 
• User Experience
  • One and only, user experience! It is crucial to ensure each customer has a seamless user experience, as it surely affects whether they’ll adopt the product quickly or not. 
• Competition
  • If there are similar products available on the market that offer better value or have better reputation, it can be more difficult to drive product adoption. 
• Customer Education
  • Make sure to provide customers with all the information they need to understand the value and functionalities of your platform – this can increase adoption. 
• The course of the product adoption lifecycle
  • Adoption lifecycle describes the stages that a new product goes through from its introduction to its usually inevitable decline. There are four stages – introduction, growth, maturity and decline. If the natural course occurs and the maturity stage where the sales are stable lasts as long as possible to ensure substantial revenue, this can surely positively affect product adoption rates once more. 

How to Drive Product Adoption?

Driving product adoption includes combining a few strategies designed to improve awareness, user experience, and education among users. This is why it is crucial to create a product adoption framework that comprises principles and strategies aimed at driving adoption and maximizing the value that users get from the product. 

• Understand your audience
  • Take time to perform market research to understand the needs of your target market and tailor the messaging to meet the given needs.
• Create a powerful value proposition 
  • Emphasize the benefits and strongest features of your product clearly and transparently.
• Facilitate onboarding 
  • Onboarding new users is crucial for product adoption. Provide clear and simple instructions and tutorials, and never fail to support your new users along the way.
• Offer a demo or free trial
  • Give your prospects a chance to try out your product and experience it firsthand. 
• Gather feedback
  • Use user feedback to identify areas for improvement and make necessary modifications to improve adoption. 
• Encourage engagement
  • Encourage users to become more active through social media, user communities or forums. This is the way to boost customer loyalty. 

What is a Product Adoption — Conclusion

Product adoption is a process where customers become aware of, evaluate, and hopefully start using your new product.

If you focus on creating a powerful value proposition, seamless onboarding, and incorporating robust customer success tools like Akita into your workflows, you can eventually increase product adoption and drive long-term success and growth.