Product adoption is the key to customer retention and brand loyalty. Customers who find immense value in products are likely to stick with them. However, getting customers to adopt and invest in your products as a viable solution is an uphill battle.
Suppose you have a great SaaS product that customers will love if only they start using it. But, helping them get over the learning curve is a challenge. Additionally, your potential customers are reasonably comfortable staying with your competition and the product they know and use. So, how do you get them to switch to your new product?
This article explains the product adoption process, its essence for SaaS businesses, which metrics help us analyze and measure product adoption, and how to improve the process.
What is product adoption?
Product adoption is the process of raising awareness of the new product and its value proposition to get your target customers to use it. A successful product adoption process is one that convinces users to move from trying it for the first time to adopting and investing in it as their solution.
Why product adoption matters so much
Product adoption is essential for any business (SaaS, retail, ecommerce, etc.) because it leads to customer success, reduces churn, improves customer retention rates, and leads to predictable revenue streams.
What's more, when you acquire loyal customers who love your product, you stand a higher chance of upselling and cross-selling them. You can also direct your focus to the expansion of your market footprint.
Often, businesses link product adoption to metrics such as the number of daily active users (DAU) or signups. However, these fall short of showing you the whole picture – measuring how customers incorporate your product into their lives. So instead, product adoption goes a step further to examine the loyal fans of your product who love and provide free word-of-mouth marketing.
Such product adoption is possible only when the value of your product outweighs the cost and effort users require to make a change. Therefore, it primarily caters to the needs of new and existing customers by continually improving the product and providing a fantastic customer experience.
5 main stages in the new product adoption process
Irrespective of the type of product introduced to the market, every user goes through the following five product adoption stages:
Awareness is the first stage in the product adoption process. Here, prospects come across your product to find out more since they don't know enough about it yet. Therefore, you have to educate them about the problem your product solves and create enough brand awareness.
Once prospects know about your product and like it, they will find out more about it. Therefore, ensure you have an easy-to-use website, a customer care desk (or chatbot), and a help center to answer queries and give out additional information. Get your marketing and product teams to collaborate on creating valuable use cases, tutorials/walkthroughs, etc. that could help them better understand your product and improve the overall customer journey.
At this stage, prospects evaluate your product and compare it with other similar products available in the market. Thus, make the messaging clear about how the product is different from its alternatives to help prospects choose your product. Publish several case studies that prove value and show potential users how others have already benefited from your solution.
Here, prospects are convinced about your product's value proposition and are willing to give it a try for a limited period or in a confined capacity. Deploy free trials and schemes such as money-back guarantees to nudge them into trying out the product.
5. Adoption or Rejection
By now, prospects are through with their trial period and are making a decision. If they determine your product has the value they want, they will invest, purchase, or subscribe. If not, they will reject it.
What is the product adoption curve?
The product adoption curve shows you the rates at which various customer segments adopt a product at different lifecycle stages. It helps segment users into different sizes and characteristics at each step, as explained below:
1. The innovators
Innovators are the first user segment to adopt a product. They represent 2.5% of the market, characterized by users who are excited about the new technology and willing to try it despite bugs and hiccups. Innovators give critical early feedback, and their interest lies in trying something new and not committing long-term.
2. The early adopters
Early adopters represent roughly 13.5% of the market, have a greater need for trying new products, and have more resources to spend on solutions. Their interest lies in innovation and not novelty, so they expect the product to work effectively to solve their problem. Capturing early adopters helps you establish a good reputation and iron out kinks.
3. The early majority
The early majority segment represents 34% of the market and is interested in established products with a solid reputation. They display risk-averse characteristics and require a solid relationship with the first two segments to build a sense of security. Fortunately, the early majority are looking for long-term solutions and will likely become loyal early adopters.
4. The late majority
The late majority also represents 34% of the market and overlaps a lot with the previous segment. However, this segment is more risk-averse than the early adopters and relatively intolerant of technical issues. They will only get on board once they feel entirely secure about your product.
5. The laggards
The laggards represent the remaining 16% of the market and are relatively resistant to new products. Instead, they prefer to stick to technological solutions they are comfortable with and only switch if it becomes a necessity.
9 metrics to analyze to understand & improve product adoption
ProfitWell Metrics allows you to uncover your segment's performance and find out those subscribing or detracting a lot. It also allows you to track customer engagement and identify those likely to convert or churn. Below are other essential product adoption metrics to use:
1. Time-to-value (TTV)
Time-to-value refers to the time it takes users to reach the "Aha! Moment" (when users realize a product's value for resolving a pain point) and start experiencing product value.
2. Product-qualified leads (PQLs)
Product-qualified leads refer to users on the verge of buying your product.
3. Average revenue per user (ARPU)
ARPU offers a practical comparison of how your business measures up against the competition. A high ARPU means a high product adoption rate and increases the bottom line.
4. Conversion rate (CVR)
It refers to the percentage of your website's visitors who complete a desired goal out of the total visitors to the site. Any effort you make to improve product adoption also increases the conversion rate and average lifetime value.
5. Customer lifetime value (CLV)
Increasing your product adoption means less churn, which increases customer lifetime value. The latter refers to the customers’ value (in currency) over their total lifespans. A high CLV means your customers stick around for longer.
6. Product activation rate
Activation comes after the "Aha! Moment," and it's different for every product. First, you need to identify a specific in-app milestone or event that indicates activation before measuring the user activation rate.
7. New features adoption
Developers tuck much of a SaaS product's value into its features. Thus, measuring the feature adoption rate is essential to determine how much value customers get or leave untapped from interacting with your product.
8. Customer engagement score (CES)
Customers only get value from your product when they use it, hence the need to measure their engagement score. CES can indicate the risk of churn and opportunities from expansion. To calculate CES, identify relevant inputs such as specific user actions, usage frequency, or completed tasks and combine them for each customer.
9. Purchase frequency
A high purchase frequency for a product means it has a great user adoption rate and vice versa.
Things that influence the product adoption rate
When companies develop and market new products, some catch on quickly and fly off retailers' shelves, while others take longer to gain acceptance. However, certain things influence your product adoption rate, regardless of the specific product.
1. Product quality & competitive advantage
Quality products with a solid value proposition that solve a real problem positively influence product adoption rate. Products with relative advantage (superior to existing products) enjoy a fast adoption rate. In addition, users are more likely to switch from a competitor to a new offering if it is of better quality.
2. Ease of use
The degree to which new products are difficult to understand or use influences their adoption rate. Easy-to-use products with a solid value proposition have a higher adoption rate than those whose innovation is difficult to understand.
3. Product visibility
You must be present wherever your target audience is to increase your product's adoption rate.
4. Pricing strategy
The right pricing strategy can give you a competitive edge over the competition and help improve the adoption of your new product. ProfitWell's Price Intelligently helps SaaS companies build solid subscription pricing strategies using powerful proprietary algorithms, a market panel, and experts to help unlock more growth.
What businesses can do to improve product adoption
Companies can enhance their product adoption rate to increase their bottom line. Unfortunately, no simple tip can help skyrocket your product adoption. However, a combination of the following proven tactics can help improve it:
1. Build awesome products
A superior product offers more value, sells itself, and helps improve your product adoption. In addition, offering something new or better goes a long way in convincing new users to try, buy, and adopt your product.
2. Improve onboarding experience
Improving your user onboarding experience increases product adoption because customers tend to stick around products they understand. Additionally, you can use contextual onboarding where the product provides in-app guidance to users in real-time to help them adopt more features successfully.
You can also personalize onboarding flows to each user. To do this, segment your users into different personas, each with a tailored onboarding flow.
3. Set up customer support
Customer service helps retain new customers and extract more value from them. Exceptional customer support allows businesses to cultivate a loyal user base that refers customers, helps recoup their customer acquisition costs, and provides reviews and testimonials.
4. Engage with users
Sometimes users might need some help or nudge in the form of in-app messages that call them to attention or a particular action, gather feedback, or give valuable information. Alternatively, you can engage with users outside the product through email onboarding to reach those who leave the app.
5. Improve the product functionality based on customer feedback
Customer feedback is an effective way of knowing if your product meets user needs. Be targeted and intentional when requesting user feedback to avoid being overwhelmed. For example, feature surveys allow businesses to get focused feedback on particular aspects of their product, such as a short pop-up survey whenever a customer uses a specific feature.
Products adoption FAQs
What is the product adoption lifecycle?
The product adoption curve shows you the rates at which various customer segments adopt a product at different lifecycle stages. It helps segment users into different sizes and characteristics at each stage: the innovators, the early adopters, the early majority, the late majority, and the laggards.
How do you drive product adoption?
You can drive product adoption by creating a product adoption strategy using one or more of the following proven tactics:
- building excellent products
- improving onboarding experience
- setting up customer support
- engaging with users in-app and outside the product
- using customer feedback to improve functionality.
Product adoption vs. product adoption lifecycle: What is the difference?
Product adoption refers to users knowing about a product and its value proposition and beginning to use it. In contrast, the product adoption lifecycle shows the rates at which various customer segments adopt a product at different lifecycle stages.