Product adoption is a key piece of any successful customer acquisition strategy or onboarding program. Understanding how, when, and why (or why not) customers become power users or high-value customers can drive ROI, inform future product roadmap decisions, and lower customer acquisition costs (CAC).
So, what is product adoption? Product adoption refers to the way in which customers embrace and use a product. When product adoption is strong, that typically means the following:
- The product is the right market fit
- Effective onboarding helps make adoption seamless and fast
- The company has a feedback tool in place to gather feedback to identify and solve issues quickly
Product adoption is key to customer retention. If a company has a high product adoption rate, that’s a sign of the right market fit and a product that customers actually want. If a brand has a lower product adoption, this could be indicative of a myriad of issues from wrong market fit to a poor onboarding experience to product bugs and more. Better product adoption metrics mean higher customer lifetime value and therefore increased ROI and growth.
Benefits of high customer product adoption include:
- Lower customer acquisition costs (CAC)
- Increased retention rates
- Higher marketing and product ROI
- More customer lifetime value (CLV)
How to measure product adoption
Success metrics for product adoption will vary from company to company depending on your mobile app and ideal customer. It will also depend on the complexity of your product or the scope of the feature release. Regardless, metrics should revolve around speeding up the adoption process and making it more efficient.
Some of the KPIs product managers should measure when onboarding new customers or launching a new product include:
- Reach: Understanding how widely the new feature/product/offering is being used can help validate product decisions, identify high-value features, and highlight key areas for improvement. For example, if MAU (monthly active users) starts to plummet after the release of a new product, that’s indicative of a broken customer experience.
- Depth: It’s critical to understand the extent to which customers are using your product or new feature. Are they using it once and then never again? Are they using it how it was intended or in a new way you didn’t expect?
- Time: By understanding how long it takes customers to adopt a new feature and actually start using it can help you identify friction in the onboarding process quickly. It can also validate the need for your product or new feature if product adoption is speedy.
- Retention: How long do users continue to use a feature after learning about it? Do they just try it out a few times or continue to use it over the course of months and years? Duration aligns with retention and helps show whether a feature is providing real value beyond its initial novelty, and can signal when a feature needs a refresh.
5 ways to increase product adoption
- Understand your ideal customer: Identify what type of customer provides the most long-term value to your company and study how they use your product. Designing products for power users or high-value customers will continue to foster those relationships. When you understand your ideal customer, you’re able to create products they want and will likely adopt faster.
- Define success metrics: Without success metrics and continually keeping a pulse on these, you won’t have a clear understanding of the success or areas of opportunity for your new product. Check out the section above for how to measure product adoption and a few key metrics we recommend monitoring.
- Make onboarding a continual process: Onboarding should never be a one-time interaction. Throughout your product experience, make sure you’re continuing customer education and engagement through helpful tips, tutorials, and other in-product/in-app communications.
- Proactively communicate in-app: Investing in retention over acquisition has become a primary focus for many brands in 2021. According to our Annual Benchmark Report, companies that proactively engage with consumers at the right mobile moments are seeing their 90-day retention results double the industry average, which is between 20-30%.
- Consistently ask for customer feedback: Collecting, analyzing, and acting on feedback is critical to successful and fast product adoption. Understanding how customers feel and what they’re thinking about before, during, and after a new product launch will help you quickly identify pain points and solve them. This can also help inform future product releases and give insight into what should be next on your product roadmap.