It’s no news that keeping an existing customer is much more cost-effective than acquiring a new one, as the latter can cost five times more.
Furthermore, a 5% increase in customer retention can lead to a dramatic increase in profits, ranging from 25-95%.
The challenge of customer retention lies in getting customers to adopt your product.
It can be difficult to get customers to use your product or service. However, if customers can see the value in your product, they are more likely to remain loyal to your product or brand.
Customers are more likely to stay and use products they are comfortable with rather than take a chance with your new product. In other words, the comfort of the known is far greater than the excitement of the unknown.
However, it is possible to get these users to make the move and switch to your product, increasing your product adoption.
Talking about production adoption, what exactly does “product adoption” mean?
In this article, we will cover
What is product adoption?
What Is Product Adoption?
Product adoption refers to the process whereby new, occasional, or infrequent users begin to recognize the worth of your product and become regular users.
Users will adopt a product when they know it will genuinely help solve their problem or achieve their goals.
For instance, users will adopt new software, if they feel and are convinced that its value will outweigh the user effort and cost involved with making a change.
Product adoption is important at every stage in the user journey.
It should be noted though, that product adoption isn’t just about winning or acquiring new users or early adopters. As a startup, you also need to keep existing users motivated to use your product or service, especially when there’s a new feature or new update.
You can say a user has adopted your product when they’re regularly engaging with it and continue to get value after trying it out for the first time.
So why is Product Adoption important especially to early-stage startups?
Importance of Product Adoption
Product adoption is essential for early-stage startups because it is the key to gaining traction and growing the business.
Here are other reasons highlighting the importance of Product Adoption
- Helps You Establish Your customer base: Your customer base consists of individuals who regularly purchase or use your products or services. This group of customers forms the basis of the company’s customer relationships and is usually composed of customers who have had a long-term association with the business.
Startups are always looking for ways to grow their customer base. In addition to gaining new customers, it is important to also focus on retaining existing ones because the probability of upselling to an existing customer is 60-70% compared to the 5-20% chance of selling to a new prospect.
- Ensure Startups make Predictable revenue: Predictable revenue is a sales methodology that focuses on outbound sales and emphasizes the importance of building a predictable sales process.
Most SaaS companies rely on predictable revenue as their main source of income, as the cost of finding the right product/market fit can be high.
However, the high gross margins (90%+) that come with this cost make it a very profitable venture once a certain level of adoption is reached.
- Reduces churn: Churn is used to describe the rate at which customers stop doing business with a company or stop using a product or service.
Product adoption is a key factor in reducing the churn rate. When customers adopt a product, they become more engaged with it and are more likely to stick with it.
Key Product Adoption Metrics
There are several key metrics to monitor for product adoption, part of which includes:
- Product Adoption Rate: this is the number of new users divided by the total number of users.
- Feature Adoption: the total usage of a product’s specific features.
- Time to Value: This measures the time taken for users to upgrade from a free plan to paid, the time of adoption of new features, and the time to achieve desired customer ROI on your product.
Other important metrics to stay on top of are:
- Onboarding Completion: measures the time it takes to get users ready to implement your product across an organization.
- Conversion Rate: measures the time taken from signup to the first essential action taken.
- Frequency rate: divide the number of times the event occurs by the length of time.
How to Improve Product Adoption
1. Make the product easy to use: Make sure your product is intuitive and easy to use. If users can’t figure out how to use it, they won’t stick around.
2. Offer a free trial: Offering a free trial is a great way to get people to try out your product. It gives them a chance to see if it’s something they would like to use without having to commit to a purchase.
3. Improve Customer support: The level of customer support can directly impact your product adoption rate. Truth is that it can be time-consuming, but you can consider investing in tools that help you meet all your support tickets and improve customer experience. This improves support.
This might sound harsh but truth be told, sometimes poor product adoption is not due to poor onboarding or support, but due to a poorly built product.
However, creating, launching, and sustaining a product that is loved and used by millions of users is not easy but achievable.
At the end of the day, product adoption is all about understanding your customers’ needs and wants and giving them the solution that caters for their problems.