1. User Activation
User activation refers to the process of converting a user from a passive sign-up to an active and engaged user of a product or service.
It is typically measured by specific actions taken by the user, such as completing a profile, creating a dashboard, or anything that can show them the value of your product and arouse more interest.
To calculate your user activation rate:
- Identify the activation event that you want to use, it should be an action that makes users more likely to convert after taken.
- Select a time period and look up the total number of users and the number of users who went through the activation event.
- Divide the number of users who took the required action by the total number of users and multiply by a hundred to get the activation rate.
For example, if 100 users have signed up for a product and 40 of them have completed the required activation event, the user activation rate would be 40%.
💡 For SaaS products, the average activation rate is 36%.
2. Time to Value
Time to value (TTV) refers to the amount of time it takes for a customer to realize the full value and benefits of a product or service after signing up.
A shorter TTV can indicate a more successful onboarding process and a higher likelihood of long-term customer engagement, so measuring it and taking the steps necessary to improve it is a necessity.
To calculate your average TTV, you need to:
- Determine a criteria for value realization, you can talk to customers and look for common aha moments.
- Find the amount of time it took each customer in a certain period or segment to get to your determined value realization.
- Take the sum of the time it took each customer to reach value realization and divide it by the number of customers in the selected period or segment.
💡 Because each product is unique in their value realization period, there is no viable benchmark for TTV.
3. Net Revenue Retention
Net Revenue Retention (NRR) is a metric that measures the revenue generated from existing customers over a given period, relative to the revenue generated from those same customers in the previous period, accounting for lost revenue due to churn.
It provides insight into the product experience and company's ability to retain customers and upsell to them, which can be a major driver of revenue growth.
The calculation of NRR is a bit lengthy, but pretty simple:
- Determine the revenue generated by all customers, including new and existing ones, in a selected period.
- Identify the subset of customers who were active in the previous period.
- Subtract the revenue lost due to churn from the previous period's revenue generated by active customers.
- Divide the adjusted revenue from the previous period by the total revenue generated by the same set of active customers in the current period.
- Multiply by a hundred to get NRR as a percentage.
Trust me, it looks much simpler visualized:
.jpg?upscale=true&width=1120&upscale=true&name=Net%20Revenue%20Retention%20Formula%20(1).jpg)