10 best practices to boost customers activation & retention
Boost your Growth with product engagement
👋 Hi Growth folks, it’s Pierre-Jean. Welcome to this new edition of The Growth Mind!
Every 2 weeks, I share Growth advice and strategies.
In today’s edition, you’re going to learn:
How to define and measure your Activation & Retention metrics
10 best practices to boost your customer’s Activation & Retention
Activation & Retention are two highly linked product engagement metrics that are critical to every business's health. Great activation and retention mean your customers are able to experience the core value of your product and find value in using it regularly over time.
Even with a top-tier acquisition strategy, you will not be able to significantly grow your revenue without being great at activating and retaining your users.
Those two metrics need then to be well defined, measured, and optimized.
Let’s first look at how we define Activation & Retention (Product Engagement metrics) by using the AARRR framework
Activation = When your user establishes a habit around the core value of your product or service. During activation, users should reach the “Aha moment”.
Retention = The % of customers who continue using your product over time.
Your retention is always strongly impacted by your activation. An activated user is more likely to continue using your product. On the other hand, a non-activated user is very unlikely to be retained over time as he did not experience the core value of your product. That’s why we cover those metrics jointly in this article.
How to define and measure your Activation & Retention metrics
Before optimizing your activation & retention metrics, your need first to define them.
Activation - How to define it and measure it?
Your activation metric should be an event:
Measurable: you can easily track improvements over time.
Predictable: you know when the activation event happens in the user journey.
Reflecting the moment your users get the full value of your product.
Having a significant impact on your Growth: activated users should be engaged users.
Each company has its dedicated activation metric. It could be the use of a specific feature, an experience, or a benefit understood. But it’s always specific to your product.
Some popular activation metrics examples:
Uber: 1st ride done
Facebook: 7 friends in 10 days
Figma: Collaboration in the same file with someone else within 24 hours
Slack: Team having a conversation of +50 messages within 7 days
Those examples show us one thing: activation reflects that users engage with the core value of your product, generally as fast as possible.
To measure your activation, you should always measure it as a ratio 👇
Activation rate = [activated users] / [signed-up users]
Measuring activation as a ratio help understand if you improve it relatively, not only in the absolute number of activated users. You can then track how your activation improves over time.
Retention - How to define it and measure it?
Measuring retention makes you understand the percentage of users/customers who continue using your product over time.
There are two types of Retention:
Revenue Retention: calculated on customers’ payments.
Usage Retention: calculated on product usage.
I advise calculating both retention metrics but focusing on improving usage retention. Great product usage leads to great revenue retention, not the other way around.
To define your Usage Retention, it’s very important to choose an event related to the core value of your product.
Many analytics apps, for web or product, calculate retention based on a website visit or a log-in, but this is not the right way to measure Product Usage Retention. Those events do not indicate that your users continue to deeply get value from your product over time. They only help to understand if users come back to your website or your app.
Your Product Critical Event, (the main event your users realize with your product) is the best event to use to measure retention.
If we come back to the example of Uber, doing a ride is the product critical event.
As for activation, retention is always calculated as a ratio 👇
Retention rate = [users who did the product critical event at the end of the period/ users who did the product critical event at the beginning of the period)
Your retention rate will answer the question: how many users continue using my product X days/weeks/months after performing their first product critical event?
To define your retention period, think about how frequently your ideal users should use your product:
A company like Airbnb will probably measure retention on a half-yearly or yearly basis, as people generally travel a few times a year.
An app like Strava, designed for people who regularly do sport, will very likely analyze retention on a weekly basis.
Your product has a natural usage and your retention period should be based on it.
10 best practices to boost Activation & Retention
📊 Analyze your power users to find which events lead to a better activation and retention
Your power users are your most active users, those who regularly and deeply use your product. Converting the maximum number of new users into power users should be your goal.
Analyzing which actions differentiate your power users from other users cohorts will help you understand what makes them more engaged.
Do they activate faster than the other users?
Do they use a specific feature of your product?
Do they have common characteristics?
By crunching your data, you’ll likely find what turns a new user into a power user.
Product analytics tools like Screeb, Amplitude, or Mixpanel will help you to identify your cohorts of power users.
🔎 Understand why users churn
According to Retently, 53% of users churn due a poor onboarding, bad relationship building, or poor customer service.
Understanding why your users churn is the starting point to improve retention. As every company is different, the reasons leading to churn can come from many sources. You need to discover the 2 or 3 reasons that lead to churn for your company. And then tackle those reasons with dedicated actions.
To have a clear comprehension of why your users churn, talk directly with them. 10 calls with churned users will give you incredible insights into what you can improve to reduce churn. And reducing churn will drastically improve your retention.
💡 Create proxies of your Aha moment before sign-up
Reaching the Aha moment can take some time for your new users. And that’s not bad, some friction in the onboarding process can be necessary to be sure you target the right people.
But letting users understand the core value of your product before they fully use it, by creating Aha moment proxies, can be a game changer.
Hotjar is doing it perfectly on its homepage, with an interactive demo of its main features:
Showing on your landing page an interactive demo of your product is a great example, but you can also create Aha moment proxies in-app during the onboarding. By doing it, you’ll increase your users’ motivation.
🏎️ Activate your users as fast as possible
Activating fast is key to improving your activation overall. As more you wait, as more your user loses motivation to complete the steps needed for activation.
To activate fastly your users, consider:
Reducing the number of steps between the sign-up and the activation moment.
Decreasing the duration of each step leading to the activation moment.
Making your activation event one the first step of your onboarding funnel.
🙋 Personalize product usage
Personalization is a great way to better activate and retain your customers.
It’s particularly worth it to use personalization if you’re targeting several customer segments and/or your product solves different use cases. To personalize product usage, gather data by:
Asking a few questions during the onboarding process.
Proposing to your users to choose what use case they want to solve with your product.
With this data, you’ll be able to adapt your onboarding funnel, your product tour, and the features you will advise to use.
Figma is doing well in product personalization. During their onboarding, they ask a few questions and guide you to the use case that best corresponds to you:
The templates proposed depend on your job and the use case you choose. A great way to boost activation.
💬 Use product & conversational bumpers
Using in-product and external communications is a must to:
Educate your users.
Explain to them which actions they need to accomplish to be activated.
Incentivize them to use your product.
The Bowling Alley Framework is a great visualization of all the levers you can use to help your users move from A to B.
Product and conversational bumpers, when used correctly, will drastically improve your activation and retention rates. Make sure to map your funnel and the bumpers used to move your users in the right direction.
🎮 Gamify your product
Gamification has become a major strategy to improve user engagement and create a more enjoyable user experience.
Some top-tier mobile applications, like Duolingo or Strava, use gamification as a key strategy of their growth engine to boost activation and retention.
Achievements, badges, rewards, status, or leaderboards are popular technics used for product gamification.
At BlaBlaCar, the world-leading carpooling platform, where I work as a Growth Manager, we use “Experience Levels” to gamify user experience.
Our members who regularly carpool, have good ratings and a great profile are rewarded for all the work they have done.
The Experience Levels encourage our users to travel with us, as they feel proud when they reach a new level.
🎯 Better target on top of the funnel
Activation and Retention are highly impacted by who is using your product.
Great activation and retentions start before the sign-up.
Feeding your funnel with quality sign-ups will improve your product engagement metrics. But, on the contrary, doing mass marketing campaigns bringing unqualified leads can destroy your engagement.
To understand which channels bring qualified users, consider analyzing how cohorts, with a split by acquisition sources or campaigns, engage with your product.
Customer profiles need also to be investigated.
☎️ Be proactive with customer success
Being proactive with customer success will help you not lose users. Give them an amazing experience by assisting them before they asked for it.
Tracking low usage signals can help you be proactive.
Do you detect that a part of your users or a big account has a low engagement? Send them a communication to help them or propose a call.
Do not wait that customers to contact you, the majority will not do it and directly churn. Sometimes because they simply did not understand how a feature works.
🧪 Experiment on product features and communications
To better activate and retain your users, experimenting is a must-do. By testing different product features and communications, you’ll be able to improve the efficiency of all the strategies we presented above.
Consider doing tests on your onboarding funnel, your communications (emails, push notifications, in-app messages), or your product features:
A/B tests or multivariate tests, which consist of testing variations of an existing asset, are a great way to generate metrics uplifts with a scientific approach.
Big bets, like a full revamp of an existing asset or the launch of a new feature, are also sometimes necessary to generate significant impacts on your activation and retention.
As experimenting is one of the foundations of Growth, deeply integrating an experimentation mindset and methodology in your teams in charge of activation and retention is key.
That’s all for today! Congrats on reading this article, you did it!
See you in 2 weeks for the next edition of The Growth Mind. 👋
Thanks for this masterpiece PJ! One question, can you recommend any product analytics tools that can help to identify cohorts of power users and analyze user behavior?