Data is integral to the product adoption process. If you don’t understand how to measure product adoption, you’ll have no real way of knowing whether or not your software is a success. You also won’t be able to prove the ROI on any of your sales, marketing, or customer education initiatives.

You’ll be flying blind. No insights into how customers are using your software, no knowledge of what your customers want, and no idea what needs improvement. That isn’t a sustainable way to operate.

You need to track how people engage with your software, especially during onboarding. With that in mind, here, in our opinion, are the fifteen most important SaaS product adoption metrics.

Product Adoption Rate

Product adoption rate gives you direct insight into your product’s stickiness and general level of engagement. It measures how many people become regular, active users of your software rather than only using it once or twice. It’s typically calculated over a set period of time – typically a month at minimum.

Sales Metrics

These product adoption KPIs are more focused on what happens prior to onboarding. Leveraging them will help you identify how effectively the customer journey progresses from prospect to onboarding to regular usage.

Acquisition Rate

Customer acquisition rate assesses the effectiveness of your company’s marketing and advertising efforts. It tallies the total number of prospects gained from a particular channel or campaign against the total reach of that channel or campaign. It’s frequently used to evaluate the performance of pay-per-click advertising.

Acquisition Cost

Also known as Cost per Customer Acquisition, customer acquisition cost is closely related to acquisition rate, and the two are often calculated side by side. It provides you with insight into how much your company spends, on average, to acquire a new customer.

Conversion Rate

Conversion is the next step in the customer journey after acquisition, indicating that a prospect has not only navigated to your site and interacted with your software but taken a desired action – such as making a purchase or creating an account. It can be calculated for marketing campaigns, individual sales channels, or your sales and marketing efforts as a whole.

Activation Rate

Activation rate directly measures your software’s user experience by tracking how many of your customers reach a specific touchpoint – typically engagement with a key feature or workflow. Identifying this milestone typically requires the assessment of several other product adoption metrics. Activation rate is also a key metric in evaluating your customer onboarding process.

Lifetime Value

Customer lifetime value measures how much revenue your business generates from an average customer throughout their relationship with your company. Calculating it is slightly more complicated than other sales metrics. In part, this is because there are multiple ways to do so – to keep things simple, we’ll just focus on one.

First, you’ll need to calculate the average value of each customer. Fortunately, this is relatively easy for most SaaS companies. Just look at your subscriptions.

Next, you’ll need to calculate the average customer lifespan. How many months or years does each customer typically stay active? If your company hasn’t been in operation that long, just look at the average customer lifespan for your industry/niche.

Finally, use the following formula:

Customer Metrics

Moving forward from the sales process, these KPIs take a closer look at your overall product experience and its impact on your users.

NPS

Net Promoter Score (NPS) is a customer experience metric that directly polls your users on their loyalty to your software and brand via a single question:

CSAT

Customer Satisfaction Score, or CSAT, indicates how satisfied people are with your company and its software, expressed as a percentage. As with NPS, customers are asked to answer a single question:

Churn Rate

Also known as attrition rate, your software’s churn rate is a measure of how many customers or users you lose over a given period. A high churn rate could signify anything from usability issues to a use case mismatch with your audience. A steadily increasing churn rate, meanwhile, indicates that there may be some underlying flaw with your software or business model.

Retention Rate

Retention rate is inversely related to churn, measuring the percentage of customers that remain customers over a given timeframe.

Usage Metrics

Usage metrics let you directly measure and evaluate how customers interact with your software. These metrics can help you identify usability bottlenecks as well as your most critical features. Many of them differ from the other metrics on this list in that they’re measured rather than calculated.

Average Session Duration

Technically, average session duration comes in two forms.

Traditionally, it’s a Google Analytics metric intended to provide an idea of how long an average user spends using a website or web app. Used alongside other search engine optimization metrics, it can give you an idea of which website visitors are likeliest to convert.

This metric can also be applied to assess how long an average person spends actively using your SaaS app, starting with sign-on. In both cases, it’s calculated the same way.

Usage Frequency

As the name suggests, usage frequency allows you to determine how often each customer uses your software. This allows you to segment your user base in terms of activity to target both upselling and support efforts. It’s determined by simply looking at how frequently a user logs in over a specific timeframe.

Feature Adoption Rate

Feature adoption rate tells you which features your customers frequently use and which ones they ignore. It’s calculated by feature and segment and based on a predefined usage threshold. A low feature adoption rate could indicate either that a feature isn’t useful or that your onboarding doesn’t adequately explain it.

Time to First Value

Time to first value takes an average of how long it takes your customers to reach full activation – the ‘aha!’ moment when they start making full use of your software. It’s typically measured in either clicks, sessions, or minutes. Leveraging time to first value can help you identify friction and onboarding issues.

Onboarding Time

Onboarding time is exactly what it sounds like: how long it takes a new customer to complete their training and start using your software.

Usage Depth

Usage depth is essentially a more complex version of feature adoption rate. To calculate it, you’ll need to determine which product features are key indicators for retention – these are the features your most loyal and engaged users spend the most time interacting with. From there, simply measure the usage levels of each feature.

The Most Important Detail About Product Adoption Metrics

If there’s one thing you should remember about your product adoption KPIs, it’s that no metric exists in a vacuum. Failing to connect and contextualize your metrics properly leads to incorrect assumptions. Incorrect assumptions lead to poor decisions, and poor decisions inevitably harm your business in both the short-term and the long-term.

Obviously, there will be certain metrics that are more important to you. If your software isn’t particularly complex, you’ll probably care more about usage frequency than usage depth. At the same time, if you rely on either metric without also looking at things like churn, retention, and customer satisfaction, you’re working with incomplete data.

And that’s arguably worse than not having any data to begin with.

Want to see how CloudShare’s powerful analytics dashboard can help empower your decision-making? Book a free demo today.

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