What is Activation Rate for Different Types of Online Businesses?
Activation is the point in a customer's lifecycle that marks the transition from a casual visitor to an engaged user. Activation Rate, therefore, measures the percentage of users who cross that threshold within a product or service.
However, the nature of this 'threshold' changes based on the type of online business. Let's cover them one by one.
Different Online Business Models and Their Activation Criteria:
☞ E-commerce: For direct-to-consumer or marketplace models, activation threshold generally is about making the first purchase.
☞ Consumer Apps: In non-commerce platforms like social media or utility apps, activation could be linked to the user experiencing the 'aha moment' -- the point where the app’s value is truly understood by the user.
☞ SaaS Businesses: For SaaS businesses, especially those dependent on product-led growth, activation could range from signing up for a free trial, to the first purchase, or reaching the 'aha moment' (using a certain feature or crossing a threshold of usage).
The Importance of Contextualizing Activation Rate:
Understanding the specific activation criteria for each business model allows for tailored strategies to improve this metric.
It is essential, especially for non-transactional applications, not just to define the activation threshold but also to recognize how it aligns with the overall user journey and business goals.
With a basic understanding of what Activation Rate means across different online business models, we will next explore specific activation metrics and strategies for e-commerce platforms, offering a detailed view of how to measure and optimize user activation in this context.