Percentage of new users who are turned into active users.
About this metric
Activation rate is a key metric that helps you evaluate how effectively your product is turning new users into active, engaged customers.
Activation rate, sometimes referred to as onboarding rate, is a metric used to quantify the percentage of new users or customers who have taken a specific set of actions or achieved specific milestones within your product during a defined time frame. These actions or milestones typically represent key indicators of user engagement and value realization.
How to calculate the Activation Rate
The Activation rate is calculated using the following formula:
Key Elements of Activation Rate
User Actions or Milestones: To calculate activation rate, you first need to define the critical user actions or milestones that indicate a user has successfully onboarded or activated within your product. These actions should align with your product's value proposition and user goals. Examples of such actions might include completing a registration, setting up a profile, making their first purchase, or using a core feature.
Time Frame: You should specify the time frame within which users must complete these actions to be considered "activated." The time frame can vary depending on your product and industry but is typically measured in days, weeks, or months from the user's first interaction with the product.
Threshold: Determine the minimum percentage of actions or milestones a user needs to complete to be classified as "activated." This threshold is usually expressed as a percentage (e.g., 50% of defined actions completed).
Interpreting Activation Rate
High Activation Rate: A high activation rate indicates that a significant percentage of your new users are quickly finding value in your product. This is a positive sign and suggests that your onboarding process and product features are effective in converting newcomers into active users.
Low Activation Rate: A low activation rate implies that many new users are not engaging with your product as intended. This can be a cause for concern as it may lead to churn or reduced customer lifetime value. In this case, you should focus on optimizing your onboarding flow and improving user guidance to enhance activation.
Using Activation Rate for Decision-Making
As a product manager, you can use activation rate in various ways:
Product Optimization: Identify bottlenecks in the onboarding process and prioritize improvements to increase activation rates.
Segmentation: Analyze activation rates for different user segments to understand which groups may need tailored onboarding experiences.
A/B Testing: Experiment with different onboarding strategies and measure how they impact activation rates to make data-driven decisions.
User Support: Offer proactive support or guidance to users who struggle to activate, helping them get value from your product.
Long-term Strategy: Track activation rate trends over time to gauge the impact of product updates and changes in your onboarding approach.
In conclusion, the Activation Rate is a critical metric for product managers to evaluate user onboarding and engagement. By defining clear actions, time frames, and thresholds, you can measure how effectively your product is converting new users into active and engaged customers, guiding your efforts to improve the user experience and drive product growth.
