For the growth experts: a very granular example
See the original post for context.
Do you work on improving typical growth metrics like product activation? Check out the below example of how I connect the above prompt with activation, and more importantly, why you can ask questions like this to move Big Hairy Numbers like activation, retention, MRR, ASP, and more.
Here’s the problem:
You work at a SaaS company that makes a super-powered email inbox app that connects via IMAP. Users sign up, they connect their email source, and then can organize, analyze, and automate to their heart’s desire. They are limited in how much they can analyze or automate until they upgrade to a paid version of the tool. But a memo just hit your desk…
At your company, the cost to acquire users is pretty high. Someone calculated that you need at least 350 of every 1,000 to retain in order for enough users to buy things to break even on that high acquisition cost. In short, making a profit at your company depends on enough users sticking around. To add some pressure, the CEO has told you that it needs to happen by the end of the year.
So, you start with your app’s retention chart and break things down:
Increasing the “users acquired” number will cost our company even more money with out breaking even, so let’s skip it. If you manage to boost the retention rate from 96% to 100%, that will leave you with 300 users at the end of the month. No dice. We need 350.
All that’s left is “activation”. By doing some basic algebra, you come up with the a target activation rate of 36.5%. This means that we’ll need to boost the activation rate by at least 6.5% by the year’s end to retain 350 or more users.
At this point you move on to figuring out themes.
Looking at this chart we can ask why people don’t do the next step.
- Why don’t new users connect their inbox after signup?
- Why don’t connected users load the editor?
- Why don’t users who load the editor click “send”?
Now you move on to surveying your customers.
You also get some data from your analytics tools.
Finally, you start a brainstorm with the themes you compiled.
After the brainstorm, you start building! You can be confident that these ideas will contribute to a better activation rate because you broke down the relationships between activation and behaviors starting all the way at the beginning.