Adoption Rate

What is Adoption Rate?

In Product Management, adoption rate tracks the number of actively engaged users against the total number of signups for a product or feature. Essentially, this metric tells you how good your product is at getting customers to come back to it time and time again. 

As a Product Manager, you’ll be tracking multiple KPIs on a daily basis, but if adoption rate is not at the top of your list then you’ll want to keep reading!  Adoption rate is a core measure to help you determine how your customers are actually using your product, so it is super useful to keep an eye on. It helps you understand how successfully you’ve transitioned your users from initial engagement to habitual use. 

See, it’s not enough just knowing the number of people who’ve bought your product. It doesn’t tell you the whole story. 

Your product could have a ton of people signed up – let’s say a million. If you go to your investors and stakeholders and present this large number of customers, they’re going to get excited. As they should, because a million people are using your product, right? 

However, what if 800,000 of these signups haven’t logged on in months, or haven’t even touched certain features? Yikes, suddenly things don’t look so good at all. 

Your adoption rate shows you the truth about how your audience is engaging with your product. This lets you see if your product has experienced a significant drop-off you need to fix and also lets you know what features are the most popular. Essentially, adoption rate gives you deeper knowledge, so that you can make informed decisions to change the fortune of your product. 

There are many other adoption metrics you can track alongside adoption rate that can better your understanding of your product usage. Read our full list of 9 product adoption metrics you should be watching.

Why is Adoption Rate important?

Adoption rate is a very useful metric because it lets you dig below the surface. Although they’re nice to see, basing the success of your product or feature on top-level data like signups and revenue can be misleading. 

Think of these metrics as bushy carrot tops poking out of the ground. They may look nice and big, suggesting there’s a massive vegetable growing underneath, but you’ll only really know until you pull the carrot out and have a look at it. The adoption rate is a metric that lets you see if you really do have a prized vegetable growing under the surface. 

When you have a good adoption rate, it demonstrates that customers are enjoying your product and finding it useful. They haven’t just tried it, didn’t like it, and ditched it. A positive adoption rate suggests good customer satisfaction and points to an increased likelihood of customers renewing.

On the flip side, it’s dangerous to have a low adoption rate, as it can suggest that your product isn’t meeting the needs of your customers. If your adoption rate gets too low, it means most of your customers won’t have discovered the value in what you’re offering, making them more likely to move on to a competitor, increasing customer churn. 

You’ll want to spot any failures in adoption early on, making consistent tracking of the adoption rate even more important as it gives you a chance to make improvements before it’s too late.

Other benefits of tracking adoption rate include:

• Progress tracking: After a sustained period of tracking adoption rate, you’ll be able to see how your product is progressing over the weeks and months since launch. This helps you build a more comprehensive picture of how your customers are reacting to new features, updates, and changes. 
• Improvement opportunities: There’s a mantra every Product Manager will know: a product is never done. You should constantly be looking for areas to improve and enhance your product. Tracking adoption rate lets you find areas that may need attention. 
• Supports decision-making: It’s not always a bad thing to follow your gut instinct, but it’s definitely better to make decisions backed by data. Tracking adoption rate, as well as other KPIs, gives you information so you can make key decisions from a more informed place. 
• Trend monitoring: Tracking your adoption rate allows you to spot trends in how customers use your product. Noticing these trends can give you a leg up when it comes to adjusting strategies and determining tactics.
• Team alignment: Tracking adoption rate gives your team a target to work towards. This ensures your team is aligned in creating a product that matches customer needs to retain engagement and drive user retention. 

Of course, these are benefits for every KPI and metric your product team decides to track. To help ensure you’re monitoring the best ones, download our complete list of Product Management KPIs. 

Product Adoption Rate vs Feature Adoption Rate

There are two different versions of adoption rate, letting you measure the performance of two slightly different things when it comes to product usage. You can either decide to measure the overall customer adoption of your product as a whole, or focus on the specific performance of each feature within it. 

The difference between these two versions of adoption rate is how detailed you want to go. Product adoption rate gives you a more top-level view of the active users of your entire product, whereas feature adoption rate is more granular, isolating a feature of your product. 

So when would you want to use one over the other? Well, product adoption rate is great when you want to check the overall health of your product. If you’ve recently launched a new feature or updated one, it’s better to focus on the feature adoption rate in the coming weeks and months to see how it’s performing and if it’s a hit. 

When launching any new feature, it usually takes a few moments before the adoption rate starts to rise, so don’t fret if things take a bit of time. This can all be explained by the Product Adoption Curve. 

This is a framework that shows how willing different audience segments are to adopt new features or products over time. At the start of a new feature lifecycle, you can expect to only get a small percentage of innovators and early adopters until the larger early majority and late majority come aboard. 

Understanding the Product Adoption Curve can help you make better sense of your adoption rates. If things don’t pick up after a few weeks and the adoption rate stays stagnant, then it’s clear something isn’t resonating and needs to change. 

How do you measure Adoption Rate?

Adoption rate is pretty much always presented as a percentage. Like all good metrics, there’s a formula you’re going to have to plug some numbers into to get your rate. The good news is the math is pretty simple for this one. 

To find your adoption rate for a specific period, you need to take your new active users within this timeframe, divide it by the total signups between these dates, and then multiply the number you get by 100. 

This formula looks pretty easy on the surface, but can get a tad more complicated when you ask, what exactly are new active users? 

A new active user is someone who’s used your product during the timeframe you’re measuring. So, if you’ve had 1000 signups in the last month, the active users are those who have actually logged on to use your product in that period. For example’s sake, let’s say 350 are active. 

In this scenario, your adoption rate for the month would be 35%. 

Cool, so there you have it. But wait, this 35%, what does it actually mean? Well without OKRs or past measurements to compare it to, it means absolutely nothing. For your adoption rate measurements to have a purpose, you need to implement targets and goals to make them worth looking at. Without this, you can’t learn anything from them. 

Okay, say you’ve decided to have a goal of 70% adoption rate to align your product with your business goals. Well in that context, you learn that this example adoption rate of 35% is pretty low and changes may have to be made to help you reach this goal. 

However, in last month’s measurement, you had an adoption rate of 22%. Within this context, it shows that this 35% is an improvement and your previous month’s efforts are helping you get on the right track.

Who’s responsible for increasing your adoption rate?

If you’re a Product Manager, then the short answer is you. The slightly longer answer is, it’s you, plus a few other people. 

You’re the most important person when it comes to improving the adoption rate of your product and features. You do that by building the best product possible that matches the needs of your target market and that delivers high value. 

If you build it, they will come. A quality product sells itself to some extent. But adoption rate is all about keeping those people interested and engaged long-term. This isn’t so much about initial acquisition (there are other metrics for that), adoption rate is about sustained and repeated use.  

So, who can help you out when it comes to boosting the adoption rate? Your marketing team is pretty important, as it’s down to them to get your customers aware of not just your product, but its value proposition as well. Marketing helps raise awareness and gets eyes on your product. The more people that know about what you offer, the higher the chance of having a good adoption rate. 

Product Marketing, as a subset of marketing, is crucial here. You need these folks to be driving awareness across your customer base of new features, underused features, and reminders about cool stuff the product does – basically, you need regular communications to be going out to your users to keep the product front of mind and reinforcing the value it can bring.

Sales also play a part in engaging directly with potential customers, addressing their specific needs and concerns, and convincing them of the product’s value. They play a key role in acquiring the right users in the first place and setting them off on the right foot. You’ll never achieve a satisfactory adoption rate if the Sales Team is closing deals with customers who aren’t the right fit for your product, just to hit their targets. With this in mind, it’s worth encouraging the Sales Leaders in your organization to consider adoption rate (or something like retention rate) as a secondary KPI for the Salespeople. This should add some incentive to get the most appropriate customers onboard. 

Likewise, your Customer Support and Customer Success Teams are vital allies in your efforts to continuously improve the product based on customer and user feedback and market demands, ensuring it remains competitive and functional. These teams will also play a key role in driving adoption by helping to coach and train your customers to ensure they make the most of the product. 

But, what should YOU be doing as a Product Manager to drive up your adoption rate? If you’re scratching your head about where to start, we’ve got you covered. 

What can affect your Adoption Rate and how to increase it? 

As a Product Manager, you want your adoption rate to be as high as possible. When working towards increasing this metric, consider some of these common factors that can influence your adoption rate and how customers are using your product.  

The product value 

Customers are only going to continuously use your product if they believe it offers them value. By crafting a solution that meets their needs and wants, you’ll increase the perceived value of your product, enhancing the likelihood of improving your adoption rate. 

Of course, customers need to first learn about the value of your product. This is why the way you market and pitch your products to new customers is so important. Each department needs to know how your product solves the core problems of your customers. If they don’t, your communications could start to position your product in a way that’s not correct, leading to unhappy customers and worse adoption rates. 

First impressions

It only takes a few seconds to leave a lasting impression. As a result, what your customers think of your product when first laying their eyes on it can significantly influence the overall adoption rate. It’s vital you get things right when first showing off products or features, as bugs, bad customer service, or poor onboarding can lead to poor user adoption. 

Mitigate low adoption rates by using the best onboarding platforms. Check out our list of the best user onboarding software tools.

Customer experience

Strong customer service can positively impact your adoption rate, especially early on when users are getting to grips with your product. Enhancing this experience by offering self-service support, chat boxes, and more can help improve your adoption rate. 

Product improvements

For people to use your product for the long term, you need to show them you’re invested in making it better. Releasing updates and fixes demonstrates you’re evolving and innovating, increasing the perceived value of the product. Consider having a public-facing roadmap and communicating the longer-term vision with your customers 

When making improvements, try and gather useful feedback that can point you in the direction of what you can improve and change. There’s an art to getting better feedback from your customer teams, but it can enhance your product when you get it right. 

Your pricing model

As expected, one major factor that can turn users away from your product is your pricing. Cost is one of the core ways customers compare your product against your competitors. Simply put, if potential users think you cost too much for what you offer, they’re going to leave. 

You want to set a monetization strategy that matches the type of product you offer. Are all your competitors subscription-based but you’re not? That could be an issue. Don’t offer multiple tiers of service when everyone else does? That’s likely hurting your adoption rate.

Do I need to track Adoption Rate?

Less is more when it comes to KPIs. There are so many of them that you’ll likely go dizzy trying to keep track of them all. Follow too many and it’s easy to get overwhelmed with so much data that it’s hard to make a decision, so it’s okay to only focus on those that make strategic sense to you. Stick to what’s important to know. 

When selecting your shortlist of KPIs to track, adoption rate should be right at the top. In fact, we think it’s non-negotiable. As a Product Manager, you need to know your adoption rate. It’s fundamental to product success and is simply a metric you can’t ignore. You’ll never know how well customers are engaging with your product without it.