Turning new users into active users
Activation is the rate at which people get hooked after getting started with your product.
When should you care about it? When some users keep using your product for months after signing up.
If no one retains after signing up for your product, it doesn't deliver ongoing value. So you should go back to building new ideas. This is because you want to have a user base that keeps growing and compounding, not a user base that keeps changing entirely.
Most of the time, the users that keep coming back share a revelation moment.
By digging into your users’ behaviour you can reverse engineer the product milestone they have to hit to finally "Get it".
Getting users to that "A-ha" moment as quickly as possible and helping building habit will become the main goal of all your user activation efforts.
In this article we'll cover everything from how to reverse engineer your moment of revelation, how to measure how many users get to it and how to make more users get to it.
In this playbook, we’ll cover:
- Why activation is the main driver of retention
- When and how much should you invest on activation?
- It starts with users’ set up
- Build an “aha! Moment”
- Habit loop
- Putting things into practice
Why activation is the main driver of retention
The average app loses its entire user base within a few months, which is why only a few thousand apps keep getting used over time of the millions of apps in the App stores.
The graph below shows the average retention curve for Android apps, you'll see a slow decline from the 14 day mark.
You can notice that the average app loses 77% of its new users within 3 days after the install. Most users will only give you one chance to provide some utility or entertainment.
This moment in your user journey is called “activation”. It is the main way to improve your user retention:
Increasing your activation rate—the rate at which new users get to a specific milestone after signing-up—is often one of the biggest levers you have for increasing retention, and indirectly, growth. Figure out the earliest point your new users need to reach to experience the value that you provide, and then focus on getting as many of your new users to that point. Lenny Rachitsky, Product & Growth advisor
The easiest way to think about Activation is the Reforge approach which consists in breaking it into three phases:
- Set up moment
- “Aha! Moment”
- Habit forming moment or habit loop
How does activation make a difference?
Let’s say you have 1 million sign ups per month, if you increase your activation rate from 5% to 20% you can start growing 4x as much without any marketing effort:
When and how much should you invest on activation?
The right timing is once some of your users start doing what you want them to do in your product. At this point, you'll know what's the most valuable part of what you built and for whom. Your next step is to make this happen to as many users as possible.
Activation does not make sense before. For instance, optimizing your sign-up or onboarding flows and bringing more users into a product that people do not use is pointless.
Shaun Clowes - former Head of Growth & Analytics at Atlassian and expert of activation for early-stage products - wrote:
Your product problem is almost always going to be in activation first. If you have $100 in resources and you’re starting up, I’d bet $80 of it in the activation phase, because what happens is people fail to have their “aha” moment. And even if they have their “aha” moment, they can drop out before it becomes a habit. There’s a huge amount of value there
💡 Tips # 1: Manual onboarding calls
Suppose you have a product with a clear persona but bad activation. What can you do?
Superhuman value comes from mastering the tool and learning the shortcuts, so you can feel like a superhero. They found that the easiest way to get people there is a call with an expert. Superhuman runs dozens of onboarding sessions each day. These calls are also a great way to collect feedback about their product.
It starts with users’ set up
The first phase of the activation process is getting users set up.
This is usually done by asking users some questions. Think about a person going to the cinema. The setup consists in picking the seat category and finding your seat in the theatre.
With digital products there is one key rule: the more questions you ask people, the fewer people will answer them.
This can be visualized this way:
You want to pick the right balance of questions to make your setup a success:
- Enough to understand what the person came for
- But not too much so the person does not leave you before you’re done collecting answers
Before you ask a question you should ask yourself: do I really need to ask this? For instance, do you really need your customers' phone numbers? Most likely not.
Your audience's patience will vary based on your industry standard. For instance, mobile gamers expect access to games without signing up, but they may be fine answering 10+ questions to open an online bank account.
At N26, we were asking 15 questions during the onboarding phase as it was required by banking regulators. Even though this seems a lot, the setup was great because these questions were a lot less painful than going to a traditional branch to open an account. Having a great setup flow even gave us a competitive advantage.
Also, note that some products do not require setup at all, this is the case for Shazam.
Your product setup is like a first date with your customer. It’s the first impression people will have of your business. Don’t miss it!
Atlassian is an excellent example of how a company increased its activation rate with a smoother setup.
The company initially had an onboarding with 12 steps. Each step showcased the things that users needed to do to be successful. The onboarding worked quite well. The reason behind the 12 steps onboarding was to communicate to users that they could do the rest.
The team talked with their power users (users interacting with their product most days) and learned they were constantly trying to beat that flow. It turned out that most people arriving at the software wanted to do one of three things. So the team changed their onboarding flow to something called “Choose your adventure.” It was one dialog box with three buttons, and it outperformed the 12 step onboardings by far.
💡Tips #2: Automated welcome emails
Send a personalized email within an hour of a user signing up. In the email, ask how you can help or if they’re confused about anything. New users get the chance to ask questions, and it gives your team an understanding of the problems new users face.
Build an “aha! Moment”
Set up users are now ready to get the unique value you have to offer. Your product should deliver the first peak of dopamine. When it does, it’s called your “aha! moment”.
Remember when the cinema goes in the dark and the loud music kicks in. What a glorious “aha! Moment” isn’t it?
The key to great activation is to deliver that "Aha! moment” as fast as possible to your audience.
How do you do that?
Easy, find the one thing that makes people want to test your product in the first place and remove frictions to reach it. A couple of examples:
- Cinemas = play movie
- Uber = books a ride
- Airbnb = rent a bedroom
Great products simplify and funnel the user's experience to reach their core value as fast as possible. They remove the blockers to reach it.
Most products don’t have an “aha! Moment” and this is understandable. Moments when you suddenly understand something that previously perplexed are not frequent. They require a new kind of solution to solve a deep problem you identified.
Companies without “aha! Moment” should expand on their solution and make sure it delivers a peak of value in one place in one seat (one session).
If your “aha! Moment’ exists, it will show in your retention curve.
If your “aha! Moment” is taking more time than what one can experience in one session, you may introduce a second one earlier.
For example, N26 is a mobile-only bank that has two moments of revelation:
- The first one is during the set up flow when users take a video call to prove their identity.
- The second one happens when users receive a push notification after receiving their credit card and making a transaction.
These moments of epiphanies make users understand what having a “real-time” banking app feels like. Users are more likely to stay now that the app delivered on its promise.
💡Tips #3: Onboarding flow
Creating a first-time-user onboarding tutorial can significantly improve your activation rate.
The “Aha! Moment” is a one-off experience for your users. For passive users to convert into active users, they need to formulate habits by establishing repeated behaviors. Creating this habit is often referred to as forming a “habit loop”, or “the magic number”.
Most startups stop before forming a “habit loop” which is a mistake. Instead they should craft the habit forming loop carefully, the same way they should shape their “aha! Moment”.
Elena Verna, entrepreneur in residence at Reforge wrote:
The biggest mistake companies make is stopping activation efforts too soon, often at set-up moment. Make sure you measure activation through first habit loop creation, meaning aha! moment has been repeated several times on the desired frequency of engagement. Only then you can be productive in your engagement & monetization strategies
The most famous magic number is probably Facebook’s “7 friends in 10 days”. Facebook realized that if their users added 7 friends within their first 10 days on the platform, they were significantly more likely to retain (aka activate).
Another famous one is Slack’s “2000 messages sent”. Once users reach that milestone their retention rate is 93%. To encourage this, Slack allows users to send their first 2000 messages for free.
Find your “magic number”
How do you find magic numbers like Facebook’s “7 friends in 10 days”?
a) Define your success metric
First, you need a way to evaluate the “success” of a user, based on their behaviors. You might define this based on something like:
- days they were active in the last 3 months (Consumer app)
- content uploaded in the last month (Consumer app)
- number of active colleagues (B2B SaaS)
- Whether the workspace is active after 3 months (B2B SaaS)
- revenue from purchases in the quarter (eCommerce)
- … or whatever else you want to define.
How do you figure out what success means? You have to pick one based on what makes sense for your business.
There’s no one-size-fits-all answer here - you need to tailor this based on what makes your product work. Since Facebook has ad-based models, they care a lot about frequency and engagement. A B2B SaaS usually cares about at least 3 months retention.
b) Explore you data
Once you have a way to evaluate the success of a user, then you want to grab a user and start creating columns of data for that user. Include the success metric and other stats you are tracking - maybe how many friends they have or how many comments they’ve given or received.
Eventually, you get a table like this:
Once you have a bunch of rows, you can run a couple of correlations and see which things tend to correlate with the success metric. And obviously, the whole point of this is to formulate a hypothesis in your head about what drives the success metric.
Here are three examples Brian Balfour from Reforge mentioned in a recent podcast.
A great way to build habits for your product is to tap into pre-existing habits. Let's take the example of Calm - the mediation app.
The team at Calm realized that establishing a meditation routine was much easier by tapping into a pre-existing habit. So the team tapped into the existing habit of sleeping after realizing.. we all have to sleep. They built a daily reminder right after sleep.
After learning about the correlation of daily reminders with retention, the team at Calm tried adding the daily notification feature to the onboarding flow, and retention shot up for all users.
The daily reminder feature was something an engineer added and was deeply nested in the app settings. By understanding user behavior, Calm turned a secondary feature into a central part of the onboarding. Now daily reminders have become a core part of the onboarding of every fitness and meditation app.
To achieve that kind of success, you need to understand the type of habits your users have.
Grubhub changed its pricing to improve its activation. The team asked their users “Why don’t you use Grubhub more often?”
Customers would say “it’s expensive” which was off because Grubhub doesn’t charge them at all. What they meant was that minimums and delivery fees were high, and it felt like they were spending a lot to get dinner.
So the team went back to their restaurants and said “people aren’t ordering as much as they would because your minimum and your delivery fee is too high. Why don’t you try a test where you drop those, and we can see if the increased volume you’ll receive will make up for the lower margins on those orders.”
At Pinterest, the problem was that the product itself had gotten too complicated.
The team drove some research and saw that they were throwing too many concepts at people and that users didn’t see content that they liked. So they went back to the product and stripped it down.
They removed all the advanced features for new users and said “the only thing that they’re going to do is connect to cool content. And then, if we understand that they get that, they like the content, and they start saving it, then we can start to re-introduce some of these other things.”
It’s important to remember the goal of making a pithy goal like “7 friends in 10 days” is to help your team drive towards a clearer objective. I’m sure “15 friends in 14 days” works well, too, as does “5 friends in 1 day” but pick something that makes sense and is easily memorable.
The fallacy and popularization of Facebook “7 friends in 10 days” has moved teams to focus more on things that stopped short of actually building the habit. Don’t fall into that trap.
To build a user habit, you need to form a proper qualitative understanding of what an actual habit looks like for your users.
💡Tips #4: Lifecycle emails
Lifecycle emails that introduce new features to a user — mainly if you can base them on actions a customer has already taken in your app — can have a huge impact on improving your activation rates.
💡Tips #5: Segment your users
Some types of users may not be successful with your product, others might be. To find out who gets the most value, you can segment your user into groups, and run again the same exercise.
Putting things into practice
There’s a common way to improve your activation.
It consists of including the actions that lead to activation in the first session of using your product.
📍 Step 1 - Track user behavior
Make sure you capture the main users' interactions with your product.
💻 Step 2 - Map out the ideal actions
Next, find the actions your most successful customer takes.
To get there you need to have a concrete understanding of what value your product delivers, and what are the motivations for your users to experiment with this value.
You can do that by using June Activation template:
For instance, after looking at the data, Facebook realized that users that invited 10 friends within the first week they signed up were 3x more likely to remain users than those who didn't.
🗺️ Step 3 - Map out the ideal customer flow
Once you know the actions your users should take to be successful with your product, the question becomes "in which order should they take it?".
To answer this question think about the narrative that will resonate with your users. Then start with the smallest questions, finish with the biggest one (you wouldn’t ask someone to marry you after you just met them, would you?).
Intercom is a conversational support tool and their core product is a chatbot. Here is an ideal customer flow for them:
- User signs up
- Indicates which programming language they use
- Installs and deploys a few lines of code in their app
- Captures their first conversation
- Reply to their first conversation
🔍 Step 4 - Identify the biggest drop
Once you have your customer flow, you can represent it with a funnel and identify where the biggest drops happen.
💬 Step 5 - Talk to customers
Next you need to find the root causes that lead to these drops. Maybe you don't support the right programming language? Or your interface simply isn't clear?
You can either blindly test different onboarding flows and other triggers to improve this activation step right away, or you can talk to people.
📈 Step 6 - Improve user's journey
a) Make things simple
To improve your activation, make things simple. Often, this means reducing the amount of friction a user encounters in your product.
Here is a deck with the most common frictions if you want to go further.
b) Re-engage users
Re-engaging users after they’ve fallen out of the funnel is another way to get them to activate. Email is a great way to do this.
🔁 Step 7 - Rinse and repeat
Measure the improvements, and repeat.
If there’s only one takeaway you get from this playbook is that you should focus on your activation as soon as you have a product that makes a first set of users “successful”, whatever successful means for your product.
Activation covers your product set up, your “aha! Moment” but also forming a habit loop. Forming a habit loop requires a deep understanding of your users.
It’s easier to fit into users' existing habits than changing them. In both cases it will require hard work from you, but it will be worth it.