Lesson 1
8 mins

Define value

In our first lesson, Andrew shares one of the most important steps to improve your user onboarding experience—understanding what success looks like for new users.

Andrew Capland

Former Head of Growth at Postscript and Wistia

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Define value

Andrew Capland here, creator of this course.

I’m excited to share the 6-step "value-first" onboarding framework to turn new signups into successful, active users. 

I’ve used this exact approach to improve the user onboarding experience of Postscript, Wistia, and dozens of other product-led SaaS companies.

By the way, if you haven’t already completed the User Onboarding 101 course, you should learn the foundations and basics of user onboarding before jumping into this course. 

Let’s dig in!

Successful onboarding is all about delivering value to your users

You have to know what success looks like for new users if you’re ever going to have a chance at improving it.

Successful onboarding is all about one thing: delivering value. So before diving in, you should be looking to answer one specific question—“when do our users first experience value?”

The popular metric to measure successful onboarding is the new user activation rate

But what is activation? It’s a SaaS term used as a proxy to understand and measure if a user experienced the value inside your product, or not.

“Activation is when a new user receives value for the first time.”

The activation moment is the instance when new users first experience the value of your product. Typically, that leads to higher retention rates and more conversions to paid plans.

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So it makes sense that SaaS businesses found a way to define and track when new users receive value. They called it activation.

Every single account either activates (good) or doesn’t activate (not good)

How is activation used?

Before we dig into how to identify your activation moment, let’s first understand why it’s so important and how it’s used.

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Understand quality
Activation is a binary way to track the quality of your new signups. Have users experienced the value of your product and are using it in meaningful ways, or are they simply poking around and unlikely to come back? Activation is a strong signal here.

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Predict future purchase behavior 
Signups that activate tend to purchase at much higher rates than those who don’t. In fact, a 25% increase in activation yielded a 34.3% lift on MRR after 12 months. More activated accounts = more future purchases.

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As a North Star metric
A “North Star'' metric is a single shared metric that predicts a company's long-term growth. Activation is a great north star because it aligns every team around delivering value to your users.

This eliminates moving vanity metrics in functional silos. For example, this would prevent your marketing team from celebrating a month with more signups that never activate or convert into customers. And conversely, it would stop them from feeling down if they generated fewer total signups but more activated and purchased. That’s why having a shared “north star” that product, marketing, and sales teams can use is so important.

How to identify your activation moment

In a perfect world, you’d do quantitative analysis here. First, you’d look at all of your product behavioral data. Then, you’d look for correlation and causation to suss out which behavior led to higher retention and conversion. 

But for most SaaS products, there are 2 challenges with this approach:

Number 1

They don’t have access to the historical data they need.

Number 2

They don’t have enough monthly signups/users to get actionable data.

The solution? Start with qualitative feedback.

Ask when users first got value in your product.

You can do this via email, Zoom, or surveys. The key is to ask people that have recently become active users or paying customers some flavor of this question:

“When did you feel like you first got value from the product?”

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Use their answers and look for trends. Most people will use different words to say the same thing—and that’s good! You’re looking for the most common answer here.

Once you have it, use your available product data to confirm if the most common answer leads to higher retention and paid conversion versus those who don't. If so, you’ve found your activation moment.

Now let’s design your onboarding to get users to activate.