Home Glossary What is Activation Rate: How to Calculate (with formula)

What is Activation Rate: How to Calculate (with formula)

June 24, 2022 Edwin Kooistra

Acquiring new users is only the first step to success for any SaaS company. Once you’ve acquired a new user, you must work to activate them – get them engaged with your product and use it regularly.

What is User Activation Rate?

User Activation Rate (UAR) is the percentage of users who take the desired action after completing a specific task. The desired action could be anything from signing up for a newsletter to purchasing.

To calculate your User Activation Rate, take the number of users who complete the task and divide it by the total number of users.

For example, let’s say you have an e-commerce website and want to measure your User Activation Rate for purchase. In this case, the desired action is making a purchase.

So, you would take the number of users who make a purchase on your site and divide it by the total number of users who visit your site.

Why does User Activation matter?

User activation is essential because it helps you understand whether people are using your product or service. If nobody is using what you’ve created, then there’s likely a problem with it. Maybe it’s not practical, or it’s too difficult to use. Either way, user activation can help you figure out what the issue is so that you can fix it.

Further, User Activation also has a significant impact on your business. If people are using your product or service, they’re more likely to buy things from you or use your service again. But if they’re not using it, they’re less likely to do either of those things. That’s why user activation is so important – it can make or break your business.

The Difference between Activation and Retention

User activation is getting a new user to sign up for your product or service. Once users are activated, they are considered active users of your product or service. Retention is the process of keeping these users engaged with your product or service, so they continue using it long-term.

There are many ways to measure retention, but one standard metric is “retention rate,” which measures the percentage of users who return to your product or service after a certain period.

So, in short, user activation is about getting new users, while retention is about keeping them. Both are of priority and important for the success of your business!

How to measure Activation Rate?

There are a few different ways that activation rate can be measured. The most common method calculates the percentage of people who take action after seeing an ad or being exposed to a marketing campaign. This action could be anything from clicking on a link to making a purchase.

Another way to measure activation rate is to track how often people use a product or service after being exposed. This method is often used to measure the effectiveness of loyalty programs or other customer retention initiatives.

Finally, activation rate can also be measured by surveying people about their likelihood to recommend a product or service to others.

This last method is known as the Net Promoter Score and is considered one of the best ways to gauge customer satisfaction.

Here’s how the user activation formula works:

There are two ways to measure activation rate. The first is by using the formula:

A = (P-N)/T

Where A is the activation rate, P is the number of times the behavior occurs, N is the number of times the behavior does not happen, and T is the total number of trials.

For example, if a person smiles ten times in 30 minutes, their activation rate would be ((10-0)/30) = 0.33. This means that they smiled 33% of the time during that period.

The second way to measure activation rate is by observing how often a person performs a behavior over a while.

For example, if a person smiles ten times in 30 minutes, their activation rate would be (10/30) = 0.33. This means that they smiled 33% of the time during that period.

Many factors can affect a person’s reasonable activation rate, including their level of motivation, how tired they are, and whether or not they’re distracted. However, by using the formula or observing a person’s behavior over time, it’s possible to estimate their activation rate.

No matter the method you use to measure activation rate, it is essential to have a clear goal before starting your marketing campaign. This will help you determine which metric is most important to track and how to interpret the results.

Activation rate can be a valuable tool for measuring the success of your marketing efforts and should be used as part of a holistic approach to evaluating your campaigns.

5 Ways To improve Activation Rate for SaaS

There are a few key things you can do to improve the activation rate for your SaaS product:

  1. Make sure your pricing is competitive. Research what other similar products charge and make sure your prices align with those.
  2. Offer free trials or money-back guarantees. This will give potential customers the confidence to try your product without any risk.
  3. Have a clear and concise value proposition. Potential customers should understand what your product does and how it will benefit them within a few seconds of landing on your website or app.
  4. Make signing up for your product as easy as possible. The fewer steps and fields there are, the more likely people will complete the sign-up process.
  5. Provide an excellent onboarding experience. Once someone has signed up for your product, please give them a clear and easy-to-follow guide on using it. Include things like video tutorials, walkthroughs, and FAQs.

By following these tips, you can improve the activation rate for your SaaS product and get more people to use and enjoy your product.

Wrapping up

To increase your chances of crossing the chasm and achieving long-term success, increasing your reasonable activation rate is essential. This can be done by measuring it effectively and then taking steps to improve it.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Edwin Kooistra - Product Marketer & Founder

Technology can be a huge differentiator but leveraging emerging technologies can be challenging. After my degree in Business Information Technology I decided to work on the provider side of Technology, because I believe Technology providers play an important role in guiding enterprises on their digital journey. Besides helping tech businesses to optimize their growth and go-to-market strategies, I also like to write about the topic. I hope you find it useful!

Related Content