Growth doesn’t end at signup
On 3 November 2014 I had the wonderful opportunity to be one of the speakers at a growth hacking conference held in Tel Aviv. I received a lot of positive feedback on my talk so I decided to turn it into a blog post. The topic of the talk was the importance of user activation and retention and how it relates to growth in the long run.
User optimization is all about plugging holes in a leaky bucket
The most fundamental question that needs to be asked about user activation and retention is why are they important? Why should valuable resources be invested in these two areas instead of marketing or R&D? A great example that illustrates the importance of user activation and retention is that of SocialCam. SocialCam was founded in San Francisco in 2011 and quickly grew to over 16 million users. They managed this by leveraging Facebook’s social graph and by using a number of very aggressive tactics like forced sharing of user’s content on their Facebook walls. The graphs below show the number of visitors to SocialCam’s site. SocialCam was really good at gaining new users but very poor at keeping them around. A great analogy for the issue that SocialCam had is a leaky bucket. SocialCam had a really leaky bucket. I believe it is our job as growth and product hackers to plug the holes we have in our buckets and the way we do this is by focusing on user activation and retention.
SocialCam experienced massive growth thanks to smart growth hacking of Facebook’s social graph.
SocialCam was very good at gaining new users but poor at keeping them around.
In order for the rest of this post to have better context it is important for me to briefly mention the company I work for, Yotpo. Yotpo serves the B2B market and what we do in a nutshell is help online store owners generate reviews for their products, and then help them leverage these reviews to increase their traffic and sales. The company initially focused on reviews generation but today the product is jam packed with a number of tools for helping users maximize both the reach and effectiveness of their user generated content. We officially support 19 different eCommerce platforms and serve over 70,000 users.
The devastating effect of churn on growth
While preparing for my talk I wanted to understand the effect that churn can have on growth in the long run so I opened up excel and created a table which I turned into the graph shown below. In the graph you can see two lines. Both lines start at 100 and grow at 10% month-over-month for 14 months. The blue line has zero churn while the orange line has a consistent 3% churn rate. After 16 months there is a 66% difference between the final points of these two lines. That is a significant difference with only a small percentage in churn.
A small 3% churn rate can have a devastating effect on growth if not dealt with early on.
So lets look at an example from the world of Yotpo. The most important thing that we need our users to do when they have finished signing up to Yotpo is add our reviews widget to their product pages. This widget not only helps them generate more reviews from site visitors but also helps them increase their conversion rates. The main driver for store owners to add reviews to their sites is the hope of increasing their conversion rate. An added benefit that we get from users adding the reviews widget to their sites is exposure of our branded link which you can see at the top of the widget in the screenshot below. Each month we get thousands of clicks on this link which results in hundreds of signups. Less widgets out there on the Internet means less signups to Yotpo. So what do we do to help users get the widget on their sites?
Exposure of the reviews widget by tens of thousands of online stores results in hundreds of new signups to Yotpo each month.
One of the many tools we use at Yotpo for user optimization is Qualaroo. Qualaroo is a smart sliding survey which is shown in session to users. For an experiment I decided to prompt users right after they finished the installation process and ask them if they had in fact succeeded in adding the reviews widget to their site. Now here’s the interesting thing. Over 80% of qualified users finish all the steps in the installation flow within the product but according to the survey, only 60% had succeeded in adding the widget to their site. Many users were simply skipping the flow so they could get to their dashboard. If users select No, to the question, did you manage to successfully add the reviews widget to your site, then we ask them why and lastly if they would like help from our support team. If they select yes to the final question then we automatically send a ticket to our support help desk software, Zendesk. We are doing this with one of my favorite tools, Zapier which you can use to connect Qualaroo and Zendesk. Super simple for users and support gets all the details they need so they can handle the ticket professionally, everyone wins. Over 60% of users which open tickets in this flow end up becoming fully active.
My second example comes from one of the types of emails we send our users. Below is an example of the email we send users to inform them that someone has written a review of one of their products. We are sending close to 200,000 of these emails each month so its a great channel for communicating with our users. Notice the two lines of text at the bottom which are promoting one of our premium features? This message doesn’t fit all our users so instead of sending the same message to everyone we send different messages to different user segments. The second screenshot below is the version we send to users which haven’t yet installed the widget on their site. It’s subtle but still drives hundreds of users back to the installation process which results in more activated users.
An example of the email we send to users when they have a new review.
This example includes text to get users to install the reviews widget.
Strategy comes first
I hope I impressed you with these examples. The thing is these are just tactics, what about the strategy? There is a great quote by Sun Tzu, who said, “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat”. Strategy needs tactics and your tactics are meaningless without a strategy.
One of my favorite quotes at the moment.
Now everyone’s user activation strategy is going to be different but I want to share with you the process I went through developing Yotpo’s strategy and then spend some time covering the implementation process and the tools we use.
The first step is to decide on one main goal. For us it’s getting as many users as possible to upgrade to our premium plan. The next step is to work backwards from this main goal until you get right back to the first step in the entire process which is users signing up to the service. For us it meant looking at those which had already upgraded and understand what motivated them to take this step. I ran into a problem here because when I started working on this plan we had only just started monetizing the service and I didn’t have a very big sample size to work with. I couldn’t tell from the data what got users to upgrade. So what do you do to get around this problem? The way you get around this problem is to rank the importance of the value propositions you bring your users. You can do this internally if you have a strong enough understanding of what motivates your users or you can survey your customers with a tool like Qualaroo. Once you have this list you can start building an activation funnel and start implementing the plan.
The last step in building the strategy may not be relevant to all your businesses but it’s critical to Yotpo’s. This step is deciding as a company what is a qualified user. Your activation plan is only relevant for users which you can actually benefit. I’ll give you two examples. Lets say you have an app which helps Twitter users send tweets from their mobile devices. You can have the best onboarding plan in the world but its not going to help users which don’t have a Twitter account. Sending these users 3,4 or even ten emails asking them to connect their Twitter account is a waste and the wrong approach. This seems super obvious but once you are calculating everything based on the qualified segment only, your metrics are much more relevant. The second example is from Yotpo. Yotpo helps users generate reviews. Over 70% of reviews generated come via emails we send to the past customers of our users. Therefore, if a Yotpo user has no orders there is little we can do to help them generate reviews. Thankfully we know quite early on in the user’s life cycle if they have regular orders or not thanks to the way we connect with a user’s store. This allows us to put them in the right segment and start them on their journey to become an active Yotpo user.
Qualify your users early on so your analyses are accurate.
So let’s have a look at Yotpo’s strategy. Remember, our end goal is to get as many premium users as possible. We then wrote up a list of features which we believe will show our users the value we can bring them, and by them investing in these features and seeing the value the more likely they will be to upgrade. The next step is the most basic thing we expect our users to do, in our case its getting them to add the reviews widget to their sites. The last step is qualifying users as quick as possible so you can segment them correctly and start moving them down the funnel.
So now that we have the strategy how do we start moving new signups down this funnel? Email remains a very powerful channel for communicating with users and the bulk of our onboarding plan is around email. We use a really cool service called Vero. What’s special about Vero is that instead of going in and manually sending email campaigns to users, Vero allows you to automate the entire process. We have a huge amount of information on our users and we use this information to send specific campaigns to specific segments via Vero. In the events we send Vero which trigger the email campaigns, we are sending as many as 40 different data points on our users. This allows us to target users at a very high resolution for maximum effectiveness.
Email is great for getting your users back to your site but often that isn’t enough. User’s can get distracted easily within a dashboard with all kinds of info and options. To help out our users we use a service called Intercom which allows you to send customized in-session pop-ups to specific users. Similar to how we segment users in Vero, Intercom also allows you to build a set of conditions which need to be met before a pop-up message is shown. Below you will see an example of a pop-up we send to our users on the Shopify eCommerce platform asking them to review us in the Shopify app store. We want to avoid negative reviews so we target users which have orders, have logged in at least 8 times and have been users for at least 20 days. These reviews help us rank higher in the Shopify app store and this has been huge for our growth. This is another example of how to leverage your user base for growth.
Intercom is an amazing communication tool which I highly recommend.
The last tool we use in our onboarding process is Qualaroo which I mentioned a bit earlier. Qualaroo is a really powerful tool which helps you do two main things. The first is to gather information on your users really effectively. Some of the surveys I’ve set up have had conversion rates above 30 percent. The second thing is that it allows you to drive users to specific pages based on the answers they select in the survey. This is great for services like Yotpo which have a long list of features which users may not be familiar with.
So lets look at an example. One of the challenges we faced at Yotpo, and I think many companies have this same problem, is that we communicated with our users with the same language we used internally. The aim of the survey shown below was to introduce certain features to our users by communicating in a language they are familiar with. Very simple and inviting, “what would you like to do today?”. Based on what users selected we showed a number of recommended actions which are all tied to specific features. After selecting the recommendation we would forward the user to the dedicated page of the feature.
Use the same language that your users use. Plain and straightforward language works best.
Qualaroo is great for driving users to specific pages within your product.
