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Activate New Users Like a Unicorn

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Drive your customers to the ‘Aha Moment’ like Slack, Clubhouse, Pinterest, Twitter, and More

Everyone that works in Product Management has likely heard of the AARM rubric. It stands for acquisition, activation, retention, and monetization and is a great way to hone down a quick picture of your growth funnel.

All of these points in a funnel factor prominently into a growth effort. But you can make an argument that “activation” is the most important piece (and is often closely tied to your retention metric). 

Your activation metric will look different depending on your product, your customer base, and your business model – but they all have one thing in common. Activation is the core action that users take, where they go from being a stranger to your product or app to an engaged user.  

You can drive all the customers you want to your site or app; if they don’t take the core action you want them to take, you will never have a viable growth effort.  That is why your onboarding needs to take your activation metric into account.  

Here’s a framework for optimizing your activation metric, and examples from how successful products and companies do it:

  1. Set your activation metric and KPI
  2. Make a hypothesis – measure a causal link
  3. Customize your onboarding based on channel
  4. Simplify your onboarding (reduce choice)
  5. Incentivize conversion
  6. Lean on your existing customer base
  7. A/B test and experiment rigorously 

 

  1. Set your activation metric and KPI

As mentioned above, activation is a very personal metric for each product and market. An e-commerce company and a social network will not have the same activation metric. Social networks will even have unique activation metrics all their own.   

Facebook has, perhaps, the most famous activation metric. Chamath Palihapitiya, then VP of Growth, declared Facebook’s “aha moment”—getting to 7 friends in 10 days—as Facebook’s North Star on the path to 1 billion users.

Why was this chosen? Facebook found that a user that took the action of connecting to a certain number of friends led to a significant bump in their engagement and retention. It also played into their long-term direct network effects (more usage and engagement led to a direct increase in value).

facebook-network-effects

Here are some examples of metrics that might make sense for a number of different apps in the marketplace:

  • Finance Apps

Robinhood – User successfully connects their bank account and makes their first deposit

Titan – User deposits a certain amount of money in app

  • Social 

Pinterest – Users save content weekly for four weeks minimum

Twitter – Twitter’s activation metric may be following five users and sending three tweets

Duolingo – Its activation metric is probably getting a user to pick a language and complete a lesson or two, so they wove that into their onboarding flow.

  • E-Commerce

Wish, Amazon, etc.. – Users make one or multiple purchases, add items to wish lists, buy Prime service (an anchor that keeps users coming back)

Some e-commerce conversion benchmark data for 2021: 

Format-e-commerce-conversion-by-industry-700x485

  • SaaS

Slack – getting companies to hit a milestone of 2,000 messages sent

Airtable – creating a workspace with a certain number of views; inviting a team member

Of course, be sure that your activation metric actually has causation with other downstream metrics like retention and monetization.

2. Make a Hypothesis – Measure a Causal Link

You need to make sure that your activation metric is serving overall retention and downstream purchase behavior. The best way to determine if that is the case? Measure your cohort-based retention.  

Are people sticking around longer when they reach your activation metric?  Are D1, D30, D90 retention metrics up for groups that reach this activation level? Then it probably makes sense to keep.

If it is not serving the improvement in your downstream metrics, then it’s likely you’ve just seen a correlation, not causation.     

3. Customize your onboarding

eventbrite-app-onboarding-2

One of the most impactful things you can do to increase the conversion rate for new users is to tie your top-of-funnel marketing to your bottom-of-funnel onboarding flow as much as possible.

This is why marketing and product teams have melded to form Growth teams – you can’t have a disjointed experience with your growth effort. Your messaging, targeting, and onboarding should all align.  

For instance, if you target a community of parents who have children in high school on Facebook and have an ed-tech product, you should have an onboarding flow customized for that audience.

On Airbnb Experiences, we did this by trying to approximate as best as we could the intent of a user visiting our platform and showing them relevant Supply. Someone from Paris visiting San Francisco would expect a very different set of things to do than someone who already lives in the city.  

At Tubi, we would try to determine the “mood” of a user before we showed them a specific show or movie to watch.

Clubhouse uses a very interesting mechanic where users are shown a completely different set of content depending on who invited them to the app.

4. Simplify your onboarding (reduce choice)

“Paralysis by analysis” is a phrase you’ve probably heard before. Despite what customers say, choice does not lead to higher conversion. Often, choice leads to confusion and churn.

If a user doesn’t know what action they’re supposed to take, they will not take any.

Simplifying your onboarding is a very important factor in improving your activation and leading more users to that ‘Aha moment.’  Reduce the number of actions it takes for a user to get there. 

5.  Incentivize conversion

Sometimes your customers need a little nudge before they become engaged or take the actions you want them to take. You’ve likely seen incentives laid out on a number of products already.  One of the most simplistic is an e-commerce company offering a discount for signing up with their email (allowing the site to better remarket).

Incentives can be more subtle, though. Uber, Lyft, and Airbnb mastered this with their referral programs. They offer a two-sided incentive (the user that receives the referral and the user that gives the referral both receive credit). Those credits are only available to use on the app – leading to more usage and engagement – moving users further towards their activation metric.

Even more subtle is what Clubhouse has done with its “wave through” referral system. Users are shown potential friends on the waitlist that they can boost into the app automatically. In return, the user gets to have their profile solidified with credit for inviting that user, increasing their reach.   

6.  Lean on your existing customer base

clubhouse-referrals

Leaning on your customer base is a fantastic way to get users through onboarding and to your ‘Aha moment’ even faster than if they came into your product cold.  

Besides the obvious social proof that comes with an invite from a user, referrals allow you to customize the onboarding experience further and drive users to activate.  

7. A/B test and experiment rigorously

Likely the most important piece on this list: You should be A/B testing and experimenting with your onboarding regularly to optimize your activation metric.

Some things to test:

  • Calls to Action
  • Value props
  • Personalization segments
  • Onboarding steps
  • Incentives 
  • Media
  • UI/UX  

Focusing on your activation metric will be one of the most impactful things you can do as a business owner or growth person. Like Stewart Butterfield of Slack, some CEOs feel that you should be focusing on just one metric as a product organization.  This is generally our activation metric.

For those of you thinking of taking this area seriously and investing in your growth, go ahead and reach out. I’ve been working on similar multi-step projects with many different clients with my company Format Agency. And if you want to chat, feel free to reach out in my DMs any time.      

~     

Interested in chatting about Growth? Reach out to me on Twitter Instagram  or LinkedIn.  

Or, do you have a growth problem? Format Agency is your solution for full-funnel growth from acquisition to transaction.  Reach out for a free audit and make sure you’re crushing whatever project you’re working on.     

Also, if you’re interested in getting a more hands on approach from me on how to build companies, both at scale and just starting out, reach out to michael@formatagency.co to discuss advisory services.

Check out more awesome content at the blog.

By Michael S

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