What is Product Usage and How to Measure It for Your SaaS

SaaS Product Management
Jul 20, 2023
What is Product Usage and How to Measure It for Your SaaS

Data is the new currency of the modern age and there are no data points more important than the ones about your customers. The way your customers interact with your product can give you all the important info you need to make better decisions, improve customer engagement and ultimately drive more revenue for your business.

But what is even product usage and how do you measure it? Today, we’re going to show you everything you ever wanted to know about product usage in a SaaS app.

What is product usage?

Product usage data is the data from your SaaS product that shows you how your customers are using your product. For example, what kind of features they are using, where they spend the most time, which features cause them to upgrade from free to trial and more.

Product usage data helps you understand your customers, upgrade your product and improve the customer experience, as well as unlock new revenue for our business.

It also helps your customers, as they can more quickly realize how your app helps them solve their problems. Furthermore, product usage data serves as a contact center solution between you and your customer behavior and helps you understand their wants and needs. This way, they are more likely to convert to a paid customer sooner, to upgrade to a higher plan, to stay as a customer for a longer period of time and you will have a higher lifetime value from them.

Why is it important to measure product usage?

The short answer is: to get an understanding of how customers engage with your product so you can make informed decisions about what to improve and what to build next. Here are some of the major effects of measuring product usage:

  • Better conversion rates
  • An improved product experience
  • Better user engagement
  • An easier way to prioritize features in the future
  • A better way to manage product roadmaps
  • More information for the product and marketing teams on how to improve onboarding and activation

In short, this data is massively helpful for everyone, from customer support, product, development, marketing and sales – every aspect of managing a project.

Defining product adoption

To better understand product usage and how to measure it, we need to define product adoption.

Product adoption is the customer journey that a user takes from first hearing about your product to becoming an advanced user and an evangelist. Depending on the source you’re getting information from, there are different numbers of steps in the product adoption process. Here are the basic ones:

  1. First contact - when the user first gets in touch with your product
  2. Activation - when the customer begins using the product
  3. Selection - the customer decides to use your product exclusively
  4. Payment - they start becoming a paying user
  5. Basic use - they use the basic product features
  6. Advanced use - the user learns about and uses advanced product features
  7. Advocacy - the user spreads the word about your product

Ideally, each customer should go through all of these stages. In reality, only a select few customers get to the final stage. However, with the proper user experience, a great onboarding process and lots of personalization, it is not impossible.

the product adoption curve
An example of a product adoption curve. Source

The most important product usage metrics to track for a SaaS product

It can be easy to get sidetracked with countless metrics to track regarding a product. Here are some of the most important product usage metrics that have an actual impact on your customer experience and bottom line.

The product adoption rate

While customer success definition varies from company to company, product adoption rate can be a more practical tool for assessing clients’ satisfaction and understanding how the product works in practice. With this in mind, measuring the product and feature adoption rate requires the product teams to define the different stages and assign values to them.

For example, you could define the adoption rate as the percentage of users that reach the “aha” moment in their customer journey.

If you run a messaging app, this could be the moment you invite your entire team to the app and start exchanging messages. If you have a fitness app, it could be the first time someone completes an exercise using your tool.

Product activation rate

The activation moment in the user journey is different from the “aha moment” because it’s the time when the user gets the value of the product and not just realizes it. For example, if you have an email marketing app, this is the moment when they send out their first campaign and start getting conversions from it.

A good product activation rate has an impact on all the associated metrics, such as stickiness, time to value, churn, and practically every other relevant product metric.

How to calculate it: divide the total number of users who reached the point of activation by the number of new users who signed up in a given period of time.

Time to value

This is the amount of time it takes for the customer to see value in your product. Some call it the “aha” moment - the moment when the user sees the reason why they became a paying customer.

time to value graphic representation

The shorter the time to value, the better. With a shorter period to see the product value, you get a whole host of benefits: improved product adoption, better customer retention, lower churn and a higher chance of upselling the customer later on.

There is no single time to value or “aha moment” that works for all SaaS products. For example, one of my previous employers was a SaaS for sending out business proposals. The “aha” moment was not the point when they sent out the first proposal. Instead, it was the point when they received their first signed proposal from a customer.

Product stickiness

Even though it sounds a bit vague, stickiness is actually very easy to define. You simply divide the daily active users (DAU) with the monthly active users (MAU).

In other words, you want as many users as possible to use your product on a daily basis. A good stickiness rate is considered to be anything above 20%, while most SaaS companies have an average of 13%.

If a product is “sticky”, it means that it solves big enough of a problem for customers to use it frequently. The better the stickiness, the better the lifetime value and the more revenue you can expect.

Feature usage

This is a metric that shows you how much your customers use a certain feature in your app. For example, if you just launched a new feature or if you want to test whether an existing feature has value, this is the metric you would want to look at.

Feature usage can help product managers by showing them whether a feature that they worked on has actual value for customers. Moreover, they can use it to guide their roadmaps in the future and determine whether it is worth investing in similar features or integrations in future sprints.

It is important to remember that when analyzing feature usage, you should take a look at different user groups rather than looking at it in isolation. Certain types of user personas use some features more, and when you have this in mind, you can refine and develop new features just for that use case.

How to calculate it: divide the monthly active users of a feature by the number of logins for a specific time period, then multiply by 100.

Customer effort score (CES)

This is one of the most common metrics in customer success and it denotes the amount of effort that a customer needs to make in order to achieve something. Or in simpler words: it is a score from 0 to 10 that customers assign for taking an in-app action.

ces score survey

Let’s say you launched a new feature that many customers have been requesting. Within the app, you launch a CES survey for customers to ask them how difficult it was to use that feature on a scale from 0 to 10.

CES can tell you whether a feature you worked hard on is getting the usage frequency and ease of use that you anticipated. It’s an effortless way to measure in-product activities without being too intrusive and guide your future product development efforts.

Top tools to measure product usage

If you don’t have product usage analytics as a part of your tool, you can rely on various analytics tools to help you out. Here are some of the best tools that can help you measure your product usage and related metrics.


Our platform lets you create an embedded analytics platform within your app and pull the data directly from your product. This way, you can show your users their own product usage metrics and shorten the time to value, as well as improve product stickiness and ultimately, impact your churn rate and lifetime value.

Here is a good example. A customer of ours is called 24Sessions and they run a video communication platform. They show their customers product usage data and statistics. Through a dashboard, they were able to show that using their tool saved them 20 minutes per meeting compared to having meetings in person. 

Luzmo dashboard

Luzmo also allows you to add an embedded dashboard editor so your customers can create their own dashboards and customize them to their liking. Add as many KPIs and widgets as you want to show your customers what they are doing within your app, in real-time.


With Hotjar, you don’t need to make assumptions about what customers are doing in your app. You can use this tool to record user sessions and see how they interact with your app, one click at a time. For a birds’ eye view of the product use, you can also use heatmaps to show which areas of a page get the most use and which ones get neglected.

hotjar dashboard


In-app surveys can give you a wealth of information about the way customers use your product. You can use Survicate at different points of the customer journey and have it triggered after specific in-app activities. It includes various types of surveys, such as CSAT (customer satisfaction survey), CES, NPS (Net Promoter Score), and many others.


survicate dashboard

Wrapping up

Tracking product usage can unlock precious insights about the way users interact with your SaaS application. It’s not just nice to have, it’s a key element of a great product adoption strategy and an amazing tool for improving retention rate and decreasing churn.

And if you want to provide product usage information to your customers and not just for yourself, there is no better way to do it than embedded analytics dashboards. Sign up for your free trial today and create an embedded dashboard in your product in as little as a few hours!

Build your first embedded dashboard in less than 15 min

Experience the power of Luzmo. Talk to our product experts for a guided demo  or get your hands dirty with a free 10-day trial.