8 Metrics to Track and Improve User Activation

User activation is like a secret recipe 🍳

It is the code for success in the world of products and services that thrive on user engagement.

It's all about turning curious newcomers into devoted, die-hard fans who can't get enough of what you have to offer.

Think of it as your superhero mission to convert users and keep them coming back for more because, let's face it, active and loyal users are the lifeblood of your business.

They bring in revenue, help you grow, and make your dreams come true.

In this article, we'll dive into the exciting world of user activation and explore the metrics that can help you unleash the full potential of your user base.

It's time to track, measure, and optimize: 

TL;DR

• Activation Rate - For tracking users who are turning into active users & engaged users.
  
• Sign-up Conversion Rate - For tracking users who have converted to paying customers.
  
• Time to First Key Action - For tracking how long it takes for users to perform their first meaningful action on a platform.
  
• Retention Rate - For tracking users who are continually choosing to stick with your product.
  
• Referral Rate - For tracking referrals.
  
• Churn Rate - For tracking users who are choosing to stop doing business with you.
  
• User Engagement Metrics - For tracking how many of your users are frequently engaging with your product.
  
• User Satisfaction Metrics - For tracking how many of your users are actually satisfied with your solution.

Are you ready to embark on this thrilling adventure? Let's go!

Metrics to Improve User Activation

1- Activation Rate

The Activation Rate, aka Customer Activation Rate, measures the percentage of users who complete the user journey and take the initial key action on your platform.

This could be anything from signing up for a free trial to completing onboarding to making their first payment.

By improving the activation rate, you ensure that more and more users are becoming active and engaged with the platform each day. 

The activation rate is critical because it is directly linked to revenue growth.

If users do not activate and become active users, that means they are unlikely to keep on using the product and paying for it.

Therefore, paying close attention to increasing the user activation rate is a key goal for anyone requiring to improve their SaaS businesses. 

There's no doubt that it is effective when understood and improved, but what are some possible advantages and disadvantages of this metric, or are there any?

Yes, there are.

While there are both advantages and disadvantages associated with this metric, I'd say the positive aspects take precedence over the drawbacks.

Still, here they are for you to make up your own mind:

☘️ Advantages

✅ Increased revenue

By improving the user activation rate, businesses can guarantee to drive revenue growth as more users become active and consistent in using the product. 

✅ Improved user retention

Active users are definitely more likely to stick with a service and continue paying for it, which ultimately helps improve user retention rates and reduce churn.

✅ Enhanced product feedback

Active users have a better likelihood of providing valuable feedback on the product, which can help enhance the product and better meet user requirements. 

✅ A better understanding of user behavior

By tracking user activation rates, businesses can gain insights into user behavior and identify specific patterns that can improve product development and marketing efforts. 

❤️‍🩹 Disadvantages

❌ Higher acquisition costs

On the other hand, to improve user activation rates, teams may need to invest more than they think in marketing and advertising to impress new users, which can lead to a slight increase in acquisition costs. 

❌ Increased pressure on onboarding

Businesses are likely to feel a bit under pressure to deliver a seamless onboarding experience to make sure users are keeping on track, which can be time-consuming and resource-intensive. 

❌ Potential for false positives

Some users may activate but never become truly engaged with your service, and I know that sounds like a nightmare.

This situation can lead to inflated user activation rates that do not necessarily lead to revenue growth. 

Better be careful about this one. 

❌ Difficulty in measuring effectiveness

It can be challenging to measure the impactfulness of user activation efforts, specifically when it comes to identifying the particular factors that lead to increased activation rates.

This can make it difficult to optimize and refine activation strategies for your product teams over time. 

👉🏼 To improve user activation rate, businesses often focus on improving the overall customer experience.

This involves making it easier for users to sign up, offering clear instructions on how to get started, and guiding users through the most vital features of the product.

Also, providing incentives such as particular discounts or free upgrades can help encourage users to become active and persistent. 

But most importantly, a great onboarding user experience can help.

2- Sign-up Conversion Rate 

This metric focuses on the percentage of visitors who sign up for a product after landing on the website or landing page.

By monitoring this metric, you can identify possible bottlenecks in the sign-up process and work on them, thus optimizing the conversion rate. 

To calculate the sign-up conversion rate, you need to divide the number of users who successfully sign up by the total number of users who visit the sign-up page, then multiply it by 100. 

For instance, if 100 users visit the sign-up page, and 20 of them successfully complete the sign-up process, the sign-up conversion rate would be 20%.

Sign-up conversion rate is a crucial metric to track, given that it offers insights into the invaluable user experience of the sign-up process.

A high sign-up conversion rate indicates that the sign-up process is attractive, user-friendly, easy to understand, and efficient in communicating the value proposition of the product. 

On the other hand, a low sign-up conversion rate indicates that there may be some problems with the sign-up process, such as a complicated factor, unclear instructions, or a lack of trust in the service.

3- Time to First Key Action 

The Time to First Key Action measures the time it takes for a user to complete the first key action on your product after signing up.

It is often used to evaluate the effectiveness of a product's onboarding process and to identify areas for enhancement.

By reducing the time to the first key action, you can easily improve user activation and retention. 

The key action or task can vary depending on the type of product or service.

However, it typically conveys the core value proposition of the product and is vital to user engagement and retention.

Generally, they are things like:

👉 Coming up with a new project,

👉 Sending a message,

👉 Uploading a file, or

👉 Making a purchase

To calculate TTFKA, you need to measure the time between when a user signs up and completes onboarding and when they complete their first key action.

Overall, it can be measured in seconds, minutes, or hours, depending on the context and the product's expected user behavior. 

4- Retention Rate

The Retention Rate is a metric used to measure the percentage of users who continue to use a product or service over time.

It represents the ability of a product to retain its users and to keep them engaged and loyal for the long term. 

To calculate the retention rate, you first need to measure the percentage of users who return to the product or service within a particular time frame, such as a week, a month, or a year. 

For instance, if a product has 1,000 users in March and 800 of them return a month later, the retention rate for April would be 80%.

👉🏼 Retention rate is an important metric to monitor because it indicates the overall health and growth potential of a product. 

👉🏼 A high retention rate means that the product is meeting the requirements and expectations of its users, providing value that keeps them needing you and coming back.

On the other hand, a low retention rate suggests that users may be dissatisfied with something, disengaged, or out there looking for better alternatives.

5- Referral Rate 

The referral rate is a metric used to measure the percentage of users who refer others to a product or service.

It indicates the ability of a product to generate word-of-mouth marketing and to acquire new users through the suggestion of current ones.

This one's an important metric for SaaS businesses, given the fact that it can be a solid indicator of customer satisfaction if it is understood and implemented right.

A high referral rate means that customers are happy with the service you are providing for them, and they are willing to suggest it to others.

This can lead to a steady stream of newcomers who are already primed to trust and appreciate your product, which can, in turn, lead to a great boost in customer lifetime value and a decline in customer acquisition costs.

👉🏼 To increase referral rates, SaaS businesses can pay attention to offering brilliant customer service and consistent support, building a positive UX, and providing incentives for referrals.

'Cause who doesn't love a reward, am I right?

👉🏼 It's also equally important to have a clear and seamless referral program ready to go so that it becomes simple for potential customers to refer others and see their rewards.

6- Churn Rate 

The churn rate is a metric primarily used to measure the percentage of users who discontinue using a product or service for a specific time period.

It represents the rate at which users are leaving your product and is a crucial metric for evaluating the long-term sustainability of a business. 

A high churn rate means that a large percentage of customers are currently leaving the service, which can be an indicator of:

👉 Dissatisfaction with the product,

👉 Poor customer service, or

👉 A lack of engagement

Churns can be specifically damaging for SaaS businesses simply because they heavily depend on recurring revenue from subscriptions to maintain a stable and predictable revenue stream. 

To reduce it, you should focus on improving the product and addressing any possible concerns or issues that customers may have.

This might include offering better customer service and support, providing the customer with new product features or functionality that speak to the customer's needs, or enhancing the overall UX to make the product more appealing and user-friendly. 

7- User Engagement Metrics 

User engagement metrics are a set of metrics that you can monitor to measure how frequently and actively users interact with your product. 

They can provide you with valuable insights into how your customers are using the product and how engaged they are with it.

By increasing them, you can improve the likelihood that users will complete core actions and become activated. 

Some common user engagement metrics include:

👉🏼 Monthly Active Users

The number of users who have used the product or service at least once in the past month.

Monthly active users are a good indicator of how many customers are actively engaging with the product on a regular basis.

👉🏼 Daily Active Users

The number of users who have used the product at least once in the past day.

These users are a more granular metric than Monthly Active Users. They can offer in-depth insights into daily customer engagement concepts. 

👉🏼 Session Length

The amount of time that users spend using the product during a single session.

Session length can be a great indicator of how engaged your users are with your product, as longer sessions mean that users are finding value and are more likely to keep coming back.

👉🏼 Session Frequency

The number of times your users reach the product during a given period of time, such as a week or a month. 

Session frequency can tell you all about how often your users are using your product and how frequently they are engaging with it.

👉🏼 Feature Usage

The percentage of users who are actively using particular features within the product.

Feature usage can help you focus on which parts of the product are most important or valuable to users and where certain improvements might be required. 

8- User Satisfaction Metrics 

User satisfaction metrics can, too, indirectly help you measure user activation by providing you with excellent insights into how effectively a SaaS product is meeting the needs and expectations of new users.

Metrics like the Net Promoter Score (NPS), Customer Satisfaction Score (CSAT), and Customer Effort Score (CES), can help you understand how satisfied and active customers are with the service they are given by you.

These metrics can be specifically valuable for assessing the impactfulness of the activation process.

This is because they can provide insights into whether users can drive value and achieve the desired results from their interactions.  

By focusing more on user satisfaction metrics alongside the core activation metrics, you can gain a more comprehensive understanding and outlook on how effectively your business is acquiring and retaining new customers. 

👉 For instance, if your users are giving high NPS or CSAT scores after their first few interactions, this may indicate that the activation process is efficient and that the product is sufficient to meet their needs. 

👉 Alternatively, if users are giving low scores, this may indicate that the activation process has a lot to improve and need to be reconstructed to meet needs and be more effective. 

Final Word

User Activation is a crucial step in the customer lifecycle for any SaaS business out there.

It determines whether new users become engaged and interested or churn out of the service instantly. 

By tracking and optimizing user activation and paying enough attention to what it can do for you, you can drive product-led growth, long-term retention, and overall success.

By monitoring the key activation metrics we mentioned above, your teams can gain valuable insights into how efficiently they are activating new users and driving ongoing engagement as a result. 

Just make sure the metrics clear things out, not confuse the process.

Good luck!