I’ve read a lot about go-to-market strategies for every type of product (which has a lot of overlap with activation rate). I’ve consumed pretty much everything Jason Lemkin’s had to say about scaling sales on his SaaStr blog, immersed myself in Seth Godin’s thoughts on marketing, and more recently, became obsessed with anything Openview Partners or the Product-Led Institute has to say about product-led growth.
Product-led growth is a go-to-market strategy that places your product as your primary channel for acquiring, activating, and retaining customers. When done right — like we’ve seen with Slack, Twilio, and Shopify — product-led growth results in extremely low customer acquisition costs, generating some of the most profitable tech companies ever seen.
As the primary person accountable for paid subscriber growth at Routific, it was becoming very apparent to me that scaling sales and marketing this early was going to be bad for our company’s unit economics. Our route optimization platform had been getting an incredible response from small delivery businesses across the world, but we hadn’t built a product suitable for the Enterprise or larger markets yet. The deal sizes weren’t going to merit a large sales force or ad spend yet.
For a couple of years, I’d seen us struggle to figure out what the user onboarding experience should look like. The logistics space we’re in can be very complex with a huge disparity in use-cases, but our small business customers were immensely busy people. They simply didn’t have time to figure out how to import complex datasets and set up Routific’s software for their unique needs. On top of that, our user experience was supposed to be our main competitive differentiator...if you worked hard enough to figure out how to use us first.
Our activation rates for our free trials were low, hovering at around 40%. For Routific, activation meant that the user optimized a delivery route with their own data, and liked it enough to save or share it within their company. We called it their “first trusted route”. We’d attempted to lift this number before by building a demo wizard that would walk new users through what value Routific could bring, but it wasn’t involving our users’ actual data. Users saw potential for value, but never experienced that value themselves. The demo wizard barely moved the needle.
Having been responsible for sales, I knew the onboarding pains intimately. It was clear our product team had delivered incredible core value, but they were overwhelmed with other things to build. They were also so in-tune with great, modern user experience design, that they were sometimes too many steps ahead of the many technology laggards in the logistics space. First interactions with our software could be confusing and unfamiliar to someone who wasn’t familiar with modern software conventions. After the demo wizard flopped, our product team had to move on to new feature development. Focus on activation rates fell by the wayside.
While I had a good track record as a high performer in sales, I had zero credibility on the product side. Shaking the “sales guy” or “sales girl” image with product people is often a long-term effort, and I felt a little of that friction as I started to share a plan to take on product management duties and increase our activation rates. Fortunately, Routific’s founders gave me their full encouragement, and our lead PM reached out to share his personal support, as well as an engineer from his team. As for a designer, that would have to be shared.
After devouring through books like Hacking Growth, Product-Led Growth: How to Build a Product That Sells Itself, Inspired: How to Create Tech Products Customers Love, and The Lean Product Playbook in a matter of days, I hired an experienced product coach as a safety net and got to work. With only one frontend engineer and a “borrow-as-needed designer”, we had to be lean.
How to Send Your Product Activation Rate Through the Sky
The first thing we did was investigate the friction we saw from the moment a user signed up for a trial, to the moment a user reached that first moment of value in Routific — their first trusted route. The median time it took to get here was 75 minutes; the average time was 12 hours (requiring multiple sessions). It was way too long for a small delivery business owner or manager to commit to, just to see if our software even solved their problems.
For weeks I swapped out Netflix for Fullstory, where I’d watch the in-app experiences users were having during their trial. I watched hundreds of videos. My notes were recorded in an Airtable spreadsheet, where I’d assess which problems were hitting critical mass before cross-referencing the data with Mixpanel product analytics. I can’t recommend this step enough. While I’d had hundreds of customer conversations, nothing could have been more motivating or insightful than observing the footage, horror footage, of users spending an hour just to get in their first data point. No matter how great you think your onboarding is, there’s a video of a struggling user out there to humble you. It became clear to me that a lot of new users dropped off so early, and experienced such immense frustration, that I’d never get a conversation with them anyways.
With the help of our senior customer success manager, we started to map every step in the user’s journey on the way to their first trusted route in a Miro board, one screenshot at a time. Underneath each step, we listed the most common friction points. We had a simple system of listing critical problems with red sticky notes, potential hazards with yellow ones, and delightful user experiences (we didn’t want to lose) in green.
By this point we understood the problem space so well, that even though a designer hadn’t been discovering this UX friction with us, it would now be easy to communicate to them, both verbally and visually.
Sure enough, when we pulled in our designer she was quick to align with us. Even though I was new to product management, I still knew enough not to propose too many of my own solutions. Our developer and designer came forward with one lean UX improvement after another that I’d consider remarkable work. Especially given their need to be extremely lean, and dodge some scary technical debt. All I needed to do was keep the conversations hyper-focused on our understanding of the problems, and their skill in finding solutions naturally surfaced.
Here’s where my only regret comes in: I was nervous I would fail, and wasted a couple of months A/B testing solutions. Sample sizes were small and setting up a testing platform took our one engineer a lot of time. Worst of all, I already knew what to do. The crucial work of understanding the problems on the road to activation was behind us, and I never doubted which solutions would work for a second. A/B testing is incredibly valuable when there’s uncertainty, but not when you have complete confidence in your solutions. I killed almost an entire quarter second-guessing myself.
When testing concluded, we prepared a lean roadmap where we’d continue to flesh out the successful solutions (the ones in the A/B tests were too lean), and push them into production all within one quarter. We created a very ambitious OKR of boosting activation rates by 20%, and yet we knew most development wouldn’t be done until near the end of the quarter. So, we got even leaner. Since I can’t code, I committed 2 weeks to build out a Product Tour using Chameleon. For any of the problems caused by a lack of user education or confusing UX, the Product Tour would guide them through it. Everyone chipped in to help make it successful — and it was.
We launched the product tour in early October 2019, and immediately saw our 20% lift from historical averages in user activation. It was incredibly validating for us all, and more importantly, more users were getting to experience the value of our product. People would write in raving “it’s so easy to use!”. We were ready to double-down.
Over the next few months we rolled out multiple lean, ease-of-use improvements. Much of what we built leveraged the average user’s familiarity with Google Maps and brought small elements of it into Routific, making the transition an easier one. To help prioritize each improvement, we used Mixpanel’s data to help us project the impact on our activation rates and MRR. Our engineer helped us consider each piece of work across an Impact/Effort matrix, and as we started to ship the high impact work into production, our estimates turned out to be pretty accurate. Activation rates rocketed to over 70%.
Not only that, the average time it took users to activate dropped by over 60%. The average was always skewed by users who gave up on the first try, but came back later with the help of our customer success staff. Now, hundreds of new users each month were activating within 10 minutes, without any help whatsoever.
The impact went beyond activation. Without the same need to support our users during their free trial, our customer acquisition cost reduced by around 25%. This would prove critical when COVID-19 caused an unprecedented surge in home delivery demand. Our industry boomed. With just 2 CSMs, and no sales reps, Routific acquired almost 300 new paying subscribers in the month of April alone. On top of that, we provided our software free to over 400 non-profits delivering mission critical goods throughout the pandemic. 70% of new subscribers upgraded before they had a single conversation with us — a direct result of the self-onboarding engine we’d just built and optimized.
What’s funny about it all is we still think our onboarding is clunky. I still watch videos of new users in Fullstory and cringe, but at some point you have to assess whether continuing to focus on activation rates will result in diminishing returns. For now, we’re moving on.
Here are the lessons we’ve learned about improving your activation rate:
- Obsess about problems. Misunderstood problems result in underperforming solutions. Well understood problems make for obvious solutions.
- Map friction. Find out exactly where it occurs, how many users are affected, and what the impact is for each friction point. Mapping friction across a user flow or customer journey will not only help your understanding of the UX issues, it will also help you stay lean and focused on what’s important. That, and having a visual makes it much easier to communicate the issues internally.
- Don’t over-analyze when you’re certain. There are times when A/B testing and analyzing is critical, and that’s when you’re unsure. Sometimes it’s important to self-reflect, and assess whether a feeling of uncertainty is truly stemming from a lack of knowledge. It could be a fear of failure.
- Build for them; not yourself. The solutions that didn’t work as well for us were often catering to our own tastes. We work in tech. We’re exposed to new software and designs all the time. Many of our users hadn’t tried new software in years, and were catching up to the layouts of newer user interfaces. Some of the solutions that worked best involved designing against our own tastes for the benefit of the user.
- Cross-functional teams can be magic. Having someone from sales, marketing, or customer success get involved with a product can completely change the game. You can expect communication issues (especially around jargon), and some really bad ideas stemming from a lack of domain expertise, but you’ll profit from the different perspective. And if that perspective truly represents the user, you will move the metrics.
What do you think about these tips? Will they help you reach your goals in regards to product activation rate?