The Most Effective User Adoption Strategies for SaaS Companies
Adoption is a critical process for SAAS companies, as it determines how successful their products will be. To ensure high adoption rates, SAAS companies must focus on creating a smooth and easy user experience. Additionally, they should ensure that their products meet the needs of their users. By doing these things, SAAS companies can improve the chances that their products will be adopted by more people.
This article discusses how SaaS companies can improve user adoption and some critical strategies you can use to improve adoption rates.
What is User Adoption in SaaS Business?
User adoption in SaaS is the process of transitioning new users into habitual power users of your product. Having a high adoption rate means that more people are using your product over a longer period of time. For many companies, this could be the difference between success and failure.
User adoption is important for SaaS companies because it ensures that they are able to keep their customer base and continue to grow the user base with new users. Without user adoption, SaaS companies will find it difficult to make a profit, as customers won’t stay with the product long enough to become paying customers.
User adoption strategies must be carefully planned and implemented to be successful.
User Adoption is The Key to More Profit for SaaS Companies
According to a recent study by Bain & Company, increasing retention by as little as 5% could result in a 95% increase in profits. And customer retention is ALWAYS less expensive than acquisition.
So, how do we retain current customers?
Don’t undervalue new user onboarding
Many companies do not think about how important new user onboarding is for getting new users interested in the product and making sure they know how to use it. When someone new uses your product, they are 100% engaged. Focusing on onboarding will help keep that engagement high and steer people towards becoming regular, power users.
Don’t just focus on acquiring new customers
Most companies have an organizational structure that focuses more on getting new customers. The marketing and sales teams work together to get people interested in the company’s products and then convert them into customers.
It can be easy to get caught up in trying to get new customers and lose focus on keeping the ones you have. However, it is important to do things like onboard new users well, provide great customer support, and keep making improvements to your product. If you do this, you will be able to balance your efforts between getting new customers and keeping the ones you have.
Increasing customer lifetime value is key for SaaS companies.
There are three important metrics for SaaS companies:
- Customer lifetime value (LTV): The average monthly revenue per customer multiplied by the average customer lifespan.
- Customer acquisition cost (CAC): The total expenses to acquire customers divided by the number of customers acquired.
- The LTV/CAC ratio: The lifetime value divided by the customer acquisition cost.
Having a high LTV/CAC ratio means that you can afford to spend more on customer acquisition because you know that customers will stick around for a long time. A strong user adoption strategy is one of the best ways to increase your LTV, which means that you’ll be making more money in the long run.
How to Measure/Track User Adoption
Of course, it’s impossible to know whether or not your adoption strategies are working if you don’t know how to measure them.
To track user adoption, there are specific KPIs to look at:
- Product Adoption Rate
- Feature Adoption Rate
- Daily Active Users (DAU) and Monthly Active Users (MAU)
- Time-to-First Key Action
- Net Promoter Score (NPS)
Let’s look into each more closely.
1. Product Adoption Rate
This is the first and most important metric that helps you see how well your product is doing. The number of people who adopt your product tells you how popular it is and whether more people need to know about it.
The formula for product adoption rate is:
Adoption rate = number of new users / total number of users
2. Feature Adoption Rate
The feature adoption rate measures how many people start using your product’s new features. This information can help you determine which features are easier to adopt and which ones need a little more encouragement.
You can calculate the Feature Adoption rate with this formula:
Feature Adoption Rate = Number of New Users of a Feature
Total Number of Users
3. Daily Active Users (DAU) and Monthly Active Users (MAU)
If you want to know how many people are using your product, you can count how many people use it in a day, and then multiply that number by the number of days in a month. This will help you figure out if people are using your product the way you want them to.
Consider these two scenarios:
- If your product is meant to be used frequently, then it’s normal for there to be high numbers of Daily and Monthly Active Users. Low numbers show that your users probably didn’t understand or like the product.
- If your users are supposed to log into the SaaS product less frequently, then having low DAU and MAU is normal. However, having high numbers for these values may show that some users are struggling to understand how they can save time by using your product.
4. Time-to-First Key Action
To use a SaaS product fully, users need to understand the key features of the product or what key actions to take within it.
The time it takes for your customers to take the first key action shows how long it will take for them to adopt the product. It is important that this time be as short as possible.
5. Net Promoter Score (NPS)
Ideally, the people who fully adopt your product will like it and promote it to others. Your NPS score can tell you how many people are using your product and how satisfied they are with it.
To calculate your NPS score, you need to conduct an NPS survey:
Ask your customers to rate how much they like your product or feature on a scale from 1-10.
- People who rate your product 0-6 probably didn’t like it. Try to understand why they didn’t like it and what would make them happy.
- A score of 7-8 means Some people might not like your product or feature, but they can be persuaded if you give them a good reason to change their mind.
- Your promoters are the people who rate you 9-10. They are loyal customers who want to use your product and will likely tell others to use it, too.
After you subtract the number of people who are unhappy with your product or service from the number of people who are happy, you get your Net Promoter Score.
By tracking these KPIs and metrics, you’ll know how successful your user adoption strategies are and be able to compare the growth of these numbers over time.
Understanding The 6 Stages of a SaaS Customer Lifecycle
The customer lifecycle is the process people go through to learn about, buy from, and be happy with a company. The stages are awareness, conversion, purchase, activation, renewal, and referral.
1. Awareness
Customers first become aware of your solution or brand by doing online research and finding your free resources, like blog posts, YouTube videos, or on social media. Building a solid library is essential to building awareness for your products.
2. Conversion
Now that your customers have learned about your solution, it’s important to keep them interested by providing targeted offers that are relevant to their needs. This will help push them closer to purchasing from you.
It is important that you help customers reach key milestones with your product. Provide helpful onboarding and educational resources to make it easy for them to adopt your product.
3. Purchase
Now that your sales team has successfully closed a new customer, it is important to keep proving and demonstrating your value. This includes providing dedicated onboarding, proactive customer success management, and asking for (and responding to) customer feedback.
4. Activation
It is not enough to just get a customer to buy your product. You also want them to use it often. Most SaaS products are sold monthly, so it is easy for customers to cancel and switch to a competitor if they are unhappy or not seeing any value in your product. Ensure you provide outreach, education, and resources to prevent common roadblocks that lead customers to churn.
5. Renewal
Your customers have to renew their use of your product after a while. Before this time, it’s important to stay in touch with them and find out if there is any possible reason they might not want to renew. Make sure your customers know about the benefits of being a part of your loyalty program so they can get rewards for being loyal customers.
6. Referral
Your customers have renewed their subscriptions and joined your customer loyalty program. They are happy with your product and tell their friends and colleagues about it. They also write reviews, serve as testimonials and case studies, and become affiliates.
How Can SaaS Companies Improve User Adoption?
User adoption is key to the success of any SAAS company. Without users, your product is nothing more than an expensive idea. So how can you improve user adoption rates for your SAAS product?
Try some of these strategies:
Optimize your customer onboarding process
We’ve spoken a bit about this, but it deserves repeating. A robust and complete customer onboarding process is essential to customer success. If they successfully use your product, they’ll be happy and have a solution to their problems.
They win. And you win.
Here are the important steps you should take your new customers through for successful onboarding:
- Sign-up
- Welcome email
- How to log in for the first time
- A brief introduction to integrations
- A full product walkthrough
- Email follow-ups
The goal of customer onboarding is to get your customers to keep using your product.
Think about your onboarding process. Are there any steps where people might have trouble? If you make it easier for people to do what they want to do with your product, they are more likely to keep using it. That’s why it’s an important user adoption strategy.
Create Emotional Appeal
Your customers use your product because they have a problem that your product solves. To understand this, you need to work with your sales team to determine your prospects’ challenges. This will help you understand their motivations and goals, which is important when you want to increase user adoption.
Many business owners make the mistake of thinking too logically about their products: “This solves X, Y, and Z.” But, what does solving X, Y, and Z really do for the customer?
For example, if a product helps someone automate their work, what are the emotional benefits? They can get more done, which leads to making more money. They can spend extra time with their families. They can go on more vacations and create lasting memories.
Typically, people don’t want to get more work done for the sake of just getting more work done. They want to get more work done for another reason. Find that reason and use it to create a lasting reason for them to use your product.
The best companies in the world find ways to emotionally appeal to their audiences and customers. As a SaaS company, you should do the same.
Offer a free trial
Offering a free trial can be a great way to get people to try out your product. Not everyone will want to commit to a monthly or annual subscription, but by giving them a chance to try out your product first, they may be more likely to do so. If you’re struggling with low user adoption rates, it might be worth considering offering a free trial.
Analyze product usage
User adoption is a challenge for many companies. They want customers to use their product often. This is why it is important to look at data on how people are using the product.
It is important to remember the idea of “at-risk” users. This is when a user gradually loses interest in your product. They might not log in as much as they used to or only use a few features. Another sign is if only one person ever uses the account.
If the amount of time someone spends using your product dwindles, it can be an early indicator that they’re at risk of churning.
It can be difficult to get a customer who has stopped using your product to start using it again. Analyzing how people use your product can help you identify which users have successfully adopted it and which users may need extra help.
Market to current customers
Remembering to market to current customers is important. Many companies spend their marketing money on getting new customers. However, you also need to take care of your current customers. Just like you work to get new leads, you need to work to keep your customers interested in your product and your company. This makes it more likely they will renew their contract for another year.
Ways to market toward existing customers include:
- Announce new features
- Make consistent product updates
- Create a touchpoint (email, chat, or message) when usage begins dropping off
Customer marketing is important because it helps you keep your product in people’s minds. You can also get them excited about new features and encourage them to finish the onboarding process so they can be successful using your product.
Use surveys
Surveys, when used sparingly, can provide that extra touchpoint you might need from your customers. Not only does it help them know that you’re still there thinking about their needs, but it helps you by providing vital feedback to your products and processes.
But, those surveys fall short if no action occurs.
After your surveys, don’t be afraid to follow up with the customers by sharing the results and getting them excited about upcoming new product additions. Even if the update is months away, telling them about it early can help them feel heard and know that the survey they willingly took actually matters.
Consistently add new products
After a while, everything grows a bit stale, especially in such a competitive industry like SaaS. You constantly have other companies trying to steal your customers by offering bigger and better services than you offer.
If a customer believes their problem can be solved somewhere else easier and cheaper, they become a churn candidate. But, if the value you offer is so great and you can consistently meet their needs, then they are more likely to stick around.
Everyone loves a shiny new toy to play with. Make sure you’re the one providing it.
Integrate with other popular products
As much as we’d like to think that our product is the most important product in our customers’ lives, it’s just simply not true. SaaS customers use a lot of different products to provide many different solutions. This means that if you can integrate your product into these other ones, then it makes yours more valuable to them.
Seamless integration takes extra effort and smarts. But it also reduces a lot of headaches. Find out which products your customers use most regularly and provide them with ways to use them along with your own offerings.
A one-stop shop is better than having to log in to multiple things and go back and forth between software and programs.
Utilize your community
Reddit is the most popular destination on the internet for a reason (statista). It’s teeming with activity and contains hundreds (maybe thousands) of micro-communities for like-minded people to find each other. Communities can be a powerful tool for your product and software.
If done well, they can also be an extension of your customer support team and provide you with valuable information about any popular (or unpopular) parts of your service. Many SaaS companies utilize their communities to create new products, demonstrate the usage of current products, and help with their onboarding process.
Consider all the time and money you could save by having a community that answers questions 24/7 for those users who are struggling as opposed to you (or someone you pay) having to constantly answer those questions instead.
These communities will help you improve user adoption and build long-lasting customer relationships.
Measuring the Success of Your User Adoption Strategy
It’s one thing to assume that your user adoption strategy is working. It’s another thing to measure its success and ensure that it’s driving the intended results.
Try these five steps to measure your adoption success:
1. Focus on your goal
What is the adoption rate your company should strive for? What will it take for you to have long-term success?
2. Find the right metrics
After you’ve chosen your goal, what metrics or KPIs will show you that you’re heading in the right direction? How will you measure them consistently over time?
3. Record baseline metrics
After a bit of time, record your baseline metrics to know where you’re starting from. These are especially helpful if you’re not fully sure what to set as your goals or which metrics are worth tracking.
4. Revisit and revise
As with any good software development, you must take stock from time to time to see if things are working correctly. Don’t be afraid to update your strategies or change course as needed if you find a better way.
5. Look for holes, set new goals
Where else can you improve? What parts of the process aren’t working out? Cut your ties with bad products or new additions and focus on consistently improving. Once changes are made, re-evaluate your goals and fill any holes.
Final Thoughts
Creating an environment for high-adoption rates doesn’t happen overnight or even in one fell swoop. Instead, it’s a constant process that needs measuring and tweaking. What worked yesterday might not work today. But, if you put in the work, and build a strong process of measuring your success, then you’ll be well on your way to more and more success tomorrow.