What is activation rate?
Activation rate is a metric that measures the number of new customers who reached the activation milestone or performed a key action in your onboarding process. The activation milestone will differ from company to company, product, and business model.
Some examples might be – adding contacts, drafting the first email, creating your dashboard, sending the first document, etc.
How to calculate activation rate?
To calculate the activation rate, divide the ‘number of users who completed the milestone’ by the ‘number of users who signed up for your product’ and multiply by 100.
Formula for calculating activation rate
Real-life example of activation rate
Let’s understand the activation rate with an example:
Let’s say you run a team management SaaS company. You've determined your activation milestone to be: when the user invites their team members to the software.
Say, 500 users signed up for your product last month. Out of those, 200 completed the activation milestone during the month.
Now, your activation rate will be: 200/500 x 100 = 40%
What’s considered a good activation rate? (benchmark)
A good activation rate is considered to be at least between 25% - 30%. This means, out of the total signed users to your product, 25% to 30% of them achieved the activation milestone within your set time frame.
Based on survey results, the average activation rate is 34%, and the median activation rate is 25%. For SaaS products, the average activation rate is 36%, and the median is 30%.
Another survey revealed that the average activation rates of the top PLG (Product-led Growth) companies range between 20% and 40%, for freemium and free trial products, respectively.
Ways to increase your activation rate
- Ensure a frictionless onboarding process: If your onboarding process will be complex, the users will quit early. Try to simplify the signup process and limit the number of extra effort on the users’ part. To make the process interesting you can also include welcome screens and interactive walkthroughs.
- Include gamification to increase engagement: Gamification uses rewards as drivers for users to return and perform an action on an app, hence, encouraging the user to complete activation milestones.
Read this guide: Onboarding Gamification: The 4 Step Formula for SaaS Success In App - Follow-up email sequences: Once the users have signed up for your product, you can send them follow-up emails and reminders, encouraging them to complete the signup process.