Customer activation rate is a metric used to measure the number of customers who actually make use of a product or service after they purchase it. It measures the effectiveness of your customer onboarding process and is an indicator of how satisfied customers are with their purchase. Put simply, CAR measures whether or not customers become active users after they’ve made their initial purchase.
The formula for calculating customer activation rate is fairly straightforward: simply divide the number of activated customers by the total number of purchased customers during a given period (usually monthly). For example, if 100 people purchased a product in April and 50 activated it within that same month, then the CAR would be 50%.
$$\frac{Count\:of\:Activated\:Customers}{Count\:of\:New\:Customers}$$
Understanding customer activation rate is important because it allows businesses to track the success of their customer onboarding processes and identify areas for improvement. Knowing what percentage of customers are activating can help companies determine if their pricing structure or promotional strategies need to be adjusted in order to increase revenue. Additionally, understanding CAR helps businesses understand what products are most successful so that they can focus on those products or services when creating marketing campaigns. Maintaining a high customer activation rate can have a significant impact on a business’s bottom line by ensuring that more people use their products or services after initially purchasing them. This means that businesses stand to make more money from each transaction because more customers will continue using their product over time rather than just making one-time purchases.
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