Dear SaaStr: What are the most effective ways of increasing SaaS activation rates?
In the early and middle days in customer success, we tend to talk about several core goals and KPIs:
- Driving up NPS. This always works. More here.
- Logo retention. Important. Drive it up.
- Net revenue retention. This is the mathematical magic in SaaS!!
But sometimes, probably most times, we forget to add the #4 most important Customer Success metric, and it probably really is in the top 2-3: your activation rate.
What % of your customers go live with your product in the first hour, the first day, the first week, etc.
In fact, one could argue this is the most important CS metric of all. After all, a customer that buys but never really uses you is the highest risk customer of all.
Importantly, our “guts” here are generally wrong. CEOs and folks outside of (and sometimes, even inside of) the CS team are often shocked to hear activation isn’t in the 95%-100% range. They assume it is.
And they are often shocked to hear that the median time to deploy is much longer than they intuitively thought.
They just assume if a customer is willing to pay $5k, $10k, $50k, even $250k for a product … they will of course deploy it, and quickly. But so often, it doesn’t end up happening.
And sales often doesn’t really care. At least, not often that much. They’ve closed their commission, and have moved on. And they just assume the activation happens.
Sometimes even, customer success doesn’t even really care. This is usually when a CSM has a lot of customers to manage. They tend to just sort of move on when the basic onboarding doesn’t activate the customer.
So when for the first time, activation rates are finally carefully and consistently measured and shared with the whole company, and folks see it’s 70% or 75%, and not 95%+ … they are shocked.
They see that 25%+ of their hard work may go down the drain if those great, new, hard-won customers … never activate.
Now, just because a customer doesn’t activate quickly or immediately, that doesn’t mean you’ve lost them for sure. Sometimes, you’re part of a larger project that hasn’t gone live. Sometimes, there’s a lot of business process change involved. But it’s a big, lurking risk people don’t track carefully enough.
There are a lot of great tactics on increasing activation rates. More bespoke onboarding. Calling customers. Assigning a CSM immediately. Weekly webinars. Better documentation. Better customer support. In-app workflows and guidance. A personalized drip campaign. Lots of great ideas.
But in the end, I’ve found one thing is the most important. Measuring it. And setting driving it up as a core goal.
— Nick Mehta (@nrmehta) April 22, 2021
When I’ve seen a good CS team, together with help from Product, Sales, and especially the CEO, set a goal and make it a core CS goal, I see magic happen.
- Measure it. Do you even know?
- Share it. Across the whole company.
- Set a Core, Quantitative Goal Here. You really can drive activations up in 1 quarter or less, if you set it as a top goal.
Watch activations go up. And less of that hard work to close a customer, end up for naught.
Now, what’s the right goal? For most SaaS companies, you want at least 90% of your customers fully onboarded and live within 30 days.
Is it possible to do better? Yes, especially if you have a strong free trial or free edition. Is a slightly lower goal OK in the enterprise, where change management is part of implementation? Maybe. But oftentimes, you can get this going in part before the deal is signed, since sales cycles are so much longer in the enterprise. No matter what, you have to get things going ASAP in enterprise deals and make real, measured progress in the first 30 days. Or they’re already sort of … lost.
(note: an updated SaaStr Classic answer)