When you design a product intended to address a particular customers’ need, you want them to actually use it. It is not enough to produce something extraordinary to win the market. You need to attain sufficient product adoption. You must have heard this term many times. If you are not sure about its meaning and implications for your business, this article will help you fill the gaps in knowledge.
Product Adoption: Concept Definition and Overview
Product adoption refers to how many people adopt the software and use it regularly in the software world. High product recognition and use indicate that customers find value in the product and use it as frequently as the company wants them to. Product adoption may be conveyed by the percentage of customers who perform a defined set of behaviors after getting acquainted with your product. However, identifying these behaviors may be tricky because actions people take may depend on multiple factors, such as the nature of the product, customers’ tech skills, personal preferences, etc. Later in this article, we’ll dwell more on these behaviors as components of product success metrics.
One should differentiate between the depth and breadth of product adoption. The depth of product use primarily relates to the number of active users. It can also be measured by calculating transactions, the volume of customer activity, hours logged in the systems, etc. The breadth of use, in turn, shows whether the product is accepted in full. When one breaks down the usage into categories, it’s easy to see what product functions are used more than others. If there are specific features rarely used, it means that the breadth of adoption is limited.
Two forces work against product adoption. These include:
- Anxiety and uncertainty of change. People get accustomed to using their old products and don’t want to spend time searching for alternatives.
- Existing habits and allegiances. Customers regularly using the product develop specific habits that simplify their work.
However, two forces may work in your favor when it comes to product adoption. Let’s list those as well:
- Problems with the current product. Customers are not satisfied with the solution and feel that it does not meet their needs and expectations. At this point, you can step in and offer something more appealing.
- Attraction to the new app or software. There are more attractive alternatives on the market (e.g., cheaper, more popular, technologically advanced, etc.). Convincing the audience that your product is exceptional may help drive adoption.
Thus, you need to be aware of the listed factors and ensure that the forces that work against you are recognized and addressed as soon as possible.
Why Should I Care?
Product recognition and use matter for one simple reason – they mean that customers stick around. In other words, it shows that you do everything right and that people value your product. Product adoption demonstrates that the product is good enough for people to become regular users. This is crucial because these regular users are the core user base of any tech company. The fact that they chose your product to integrate it into their tech stack and are willing to rely on it in their work or study signifies success.
Product adoption also matters because it ensures that money is not wasted. Let’s imagine a situation. Your team spent many months developing a product and coming up with a marketing plan. You spent money on top-notch design, quality content, advertising, etc. You launch a product and … nothing happens. The product adoption level is shallow, and you realize that the budget was simply wasted because you did not get the results you were hoping for. Working towards adequate product adoption helps avoid such situations and use financial and human resources efficiently.
How to Measure Product Adoption?
So, what customer behaviors or actions count as adoption? It’s a tricky question, and it poses the most challenges for customer success managers or anyone else responsible for product recognition. This recognition is typically understood as the action signifying that users appreciate the product. In other words, they use your software or product to accomplish specific tasks it was intended to accomplish. For example, if you offer a new messenger, you can not only calculate the number of users that signed up but also measure how much time they spend in the messenger, how much data they share, etc. In fact, there are many parameters that you can measure to understand the depth and breadth of adoption. Here’s a list of some of them:
Time to Value
This metric refers to the amount of time it takes people to start to appreciate your solution. The shortest the time to identify the short- and long-term benefits of use, the easier it is for the company to retain customers.
Time-to-first Key Action
This parameter is similar to the previous one. It defines the average time it takes new users to try a new feature or function for the first time.
This metric allows evaluating the number of people who performed a particular set of actions and are ready to move on to the next stage of product adoption. The leads are essentially the people who understand the product’s value and can be easily convinced that it’s worth using further.
Average Revenue Per User
Although this metric relates mostly to financial performance, it can also serve as an indicator of the product’s success. The high average revenue per user shows that people value the product and are ready to spend their money.
Number of Regular Active Users
This general metric helps determine how many people adopted the product and use it regularly.
Percentage of Regular Active Users
Unlike the previous metric, this one helps evaluate the proportion of customers who became active users after trying the product for the first time.
Average Time Spent Using the Service
It’s also possible to evaluate how much time a regular customer spends interacting with the product. The higher this metric is, the better the product recognition rate you achieve.
Determining product adoption does not require advanced math skills. A simple formula can be used, which looks as follows: adoption rate equals the number of new users divided by the total number of users and multiplied by 100. For example, if you have a total of 1,250 users, of which 386 are new, your adoption rate is 30%. It’s important to remember that the adoption rate should be measured for a specific period (e.g., once in three months). Tracking product recognition fluctuations over time may help you understand whether you do everything right.
However, this widely used formula has a significant flaw. It does not measure activation or utilization. There can be thousands of people signing up each month. However, most of them may never open your product again. Therefore, it’s essential to complement measurements with as many metrics as possible. This will allow determining the depth and breadth of product adoption.
Some metrics are not suitable for measuring product adoption. For instance, the frequency of purchases is not enough to understand whether people actually use the service regularly after paying for it. The number of new subscribers alone also says nothing about whether these new users are satisfied with the product and whether they are willing to continue using it.
Qualitative data can complement product adoption measurements. For example, you can study customer feedback to determine whether people are satisfied with the product. Customer criticism is valuable for identifying and addressing the remaining flaws. In addition, you can collect feedback from the customer service team. They know what questions and issues customers face most often. You can use this information to determine the breadth of product adoption.
What to Do If the Results Are Suboptimal?
Inadequate product recognition means that your clients do not perceive the product or service as convenient, suitable, affordable, etc. It may also mean that they experience some challenges when using it. At this point, you need to detect the flaws and address them to increase recognition. Start by evaluating the design-related aspects. What is product design? Well, this term refers to the product’s flow, usability, and accessibility. In other words, it’s everything that makes your solution valuable and easy to use.
The next thing you may need to improve is customer support. Some clients leave simply because they did not receive adequate support and lack information on using the product. Therefore, invest more time and effort into developing sophisticated onboarding strategies. Make it more accessible through the use of chatbots or online chats. Be sure to explain to the customers how to use your service as soon as possible. This will help decrease time to value and time-to-first key action metrics. It will also help new clients feel appreciated and valued.
You can also take advantage of the first click tests. These tests help identify how users perceive the product or service and which features or functions they search for in the first place. Knowing customers’ behavior and needs is the first step towards developing a valuable product.
Product adoption depends on your ability to decrease potential customers’ anxiety and fear of change. They may be well aware that their current products are imperfect. However, they may be reluctant to switch to something unknown. Your task is to alleviate these fears and explain why the offered solution will work. Don’t be afraid of criticizing your competitors. Highlight how your product stands out and why it is better than similar solutions available on the market. Tap into customers’ desire to keep up with the tech trends and simplify their work processes. Be creative but honest and ensure that you can deliver on your promises.
Achieving a high adoption rate as soon as possible after the launch is vital. The problem is that you only have one chance to make a good first impression. Even after you enhance your product and customer support, people who once checked your product and didn’t like it will probably not return. It means that thinking about product adoption in advance is the best strategy for your business.