Once your SaaS business is up and running, it can take a while for customers to purchase. But with the right activation strategy, you will increase the number of sales that come from new customers. This blog post will summarize what the activation rate is all about and how to improve it using some simple strategies.
What is user activation?
User activation is the conversion of a registered but inactive user (or trial user) to an active, fully engaged, paying customer. For SaaS businesses, this can be one of the most important metrics because it reflects how successful you are at converting trial users into paying customers. There's no set definition for what constitutes "activation," and there isn't even a single metric that tells you if your conversion rate is good or not. But by thinking about activation in terms of lifetime value (LTV) rather than simple conversion rates, managers can better understand their company's strategy for bringing new customers on board.
What is Activation Rate, and why is it important?
Activation rate refers to the percentage of trial customers who convert into paying subscribers during their free period or within a set time frame if they don't have a free trial available. For example, if 50% of people with trials make it through to become active users, then that company has an activation rate of 50%. However, many SaaS companies will not see this metric since conversion rates and activations happen on different timelines. One may measure conversion over 30 days while another measures them in one week.
A high activation rate typically reflects engagement, i.e., customers are willing to pay for your services because they find value in using them often enough or deeply enough so as not to need a free trial. This conversion rate shows the conversion-rate optimization being done successfully, and customers are finding high value in your product.
Many factors can cause a low activation rate, including a lack of engagement with users or an inability to convert visitors into subscribers because they don't find enough value in what you're offering. Here, it's usually best to do additional research into what aspects might need adjusting before making any changes so that conversion rates will improve along with activations rates.
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How is Activation Rate calculated?
To calculate the activation rate, divide the number of activated customers in a period with all new and existing customers from that same period. We can break the activation rate into conversion rate and conversion speed. Conversion rates are what the company can achieve, whereas conversion speeds measure how long it takes for a customer to activate after signing up. This metric also helps understand which parts of the sign-up process need improvement so that more customers will get activated and stay active in an account.
It's important to note that conversion rates will vary depending on how long it takes for users to activate their accounts. We should not compare this metric against other companies or industries unless they're experiencing similar conversion speeds—or if there is no data available for conversion speed at all.
5 Strategies to improve user activation rate
1. Track analytics for your customer's actions
You need an analytics tool to track how many people are engaging with your business. You should know the number of newcomers and returning users, as well as their activity levels across different pages on your site. If you have meaningful knowledge about these numbers, you can use them to make adjustments in order for customers to remain engaged later on.
2. Showcase engaging welcome pages and emails
The first time a new customer encounters your page can be awe-inspiring. To make them feel at home, you could start the conversation by welcoming them to a safe space. For a good onboarding experience, show that we are open arms to all of their needs. So they don't have to worry about making a purchase decision.
You should let them know you are open to their feature requests, bug reports, and general suggestions. For this, you can send an automated personalized email when someone signs up. Thus, letting them know how easy it is to get in touch with customer service.
3. Introduce your product interactively
Once users sign up, you should have them engaged and let them know how to operate your product. You can add interactive product tours to your application or website. You can also have them actively copy and run a few sequential steps and gain a sense of achievement. Adding training videos and hosting sessions can also help customers actively engage with your product.
4. Offer trial periods
Offering trial periods is one of the best activation rate optimization methods available for SaaS businesses. Research has shown that offering a free trial or money-back guarantee can boost conversion rates by as much as 57%!
To increase the activation rate of your offer, try these growth hacks:
Offer an option to sign up with just an email address and password (avoid creating an account) to make it easier for people who are unsure about their purchase decision.
Include easy cancellation instructions on all pages, so there's no confusion if someone changes their mind midstream.
5. Provide great support service
Providing your customer with a great support service is very important. It's the only way to keep customers happy and satisfied, which ensures activation rates will stay high. Provide quick responses and helpful instructions that match their problems or inquiries about how to use your product. The more you can do for them, the better of an impression they'll have on your business!
The Bottom Line
So, activation rate optimization is important for SaaS businesses, and there are a few steps you can take to improve conversion rates as well. Ask customers for feedback on what features of the product they like most. This way you can make improvements based on their needs. Finally, don't neglect customer support! Customer engagement should start at the first point of contact—before the activation funnel. So that when problems occur later down the line, you can reach easily those customers, with little or no friction.