Last chapter, we discussed the “how” of viral addiction. Specifically how users form habits when using your product. Now that that’s settled, I’d like to talk about where those habits form.
It’s a mythical place where magical, wondrous things happen for your viral growth. And it’s found somewhere in your new user funnel, as long as you know where to look.
The New User Funnel: The Map to the Holy Grail
Before you get too excited about your new user funnel, let’s pump the brakes and get one thing straight:
You’re NOT Indiana Jones.
Also, I’m not going tell you where a mythological artifact that will grant you ever-lasting life is. Sorry to burst your bubble, there are just some things I need to keep to myself.
However, I do want to talk about the next best thing – creating the roadmap to user immortality!
[Cue thunderclap from above.]
Fedora hats and over-dramatizations aside, an incredibly common mistake I see in growth and optimization occurs during the pretty basic step of mapping out your new user funnel. This funnel can seem like your best friend, but if you set it up wrong or you use it incorrectly, it can be your worst enemy.
Making Enemies Out of Your User Funnel
Here are a few (possibly surprising) ways your funnel will end up being your worst enemy:
- If you didn’t run the proper QA on your analytics and you’re experiencing a reporting error, you’re likely making decisions based on bad data. Which results in bad decisions.
- If you set up your new user funnel analytics correctly, but you never actually use them to run or prioritize experiments, you’ve now got “vanity analytics” (i.e. analytics with the sole purpose of saying you have analytics to all your friends).
But arguably the sneakiest mistake of them all is:
- Ending your new user funnel at a user signup or a sale.
But wait! Isn’t our user funnel supposed to be a signup funnel, or a sales funnel? Shouldn’t it end at the signup or the sale respectively?
Yes, this is exactly what you should do – IF you want to FAIL or perpetually be mediocre.
Not All Users Are Created Equal
Let’s back up.
Maybe I’m being a little harsh. I don’t want to entirely discount the “partial” new user funnel above. It does tell you one very important thing. Namely, how many unique signups or sales you have.
However, long-term, repeat users and customers are the heart of your business’s success. So to judge them solely on when they first became a user, or made a purchase, ignores all the great stuff they might have continued to do afterwards. We’ve talked time and again about the fact that retention is the foundation of all growth, so this shouldn’t be a surprise.
So the critical question most people get wrong has to do with where the new user funnel should end.
They simply assume it’s when somebody becomes a user. However, people who poke their heads in and leave are relatively worthless. Those who instead decide to stick around are very valuable. So your funnel should end at the typical point in the journey where users hit the “aha” moment, and then never leave.
To decipher this – which is likely one of the biggest puzzles you’ll have as a growth engineer – you’ll need to have enough data coming through to answer two key questions:
- What, on average, does a user have to do, or not do, in order to get “hooked” on your product?
- What, on average, does a user have to do, or not do, in order to “die” (i.e. churn without the possibility of reactivation)?
Sound confusing? Let’s simplify a bit.
Where Your Funnel SHOULD End
Let’s say a user starts using your product, and takes their first action. What happens next?
A large percentage of users will take this action, and then a large chunk of those users will “die” at some point afterwards – many without ever taking their second action.
Now let’s say a different user takes their 100th action. Nearly all of these users are almost 100% certain to take their 101st action afterwards.
This is because over time, they have created a habit of using your product. We in the growth biz like to call this “product addiction.” Once this product addiction is identified, our goal is to work backwards to find out the exact moment that this addiction happened on average – which we call the “hook point.”
That hook point moment is where your user funnel should end.
The entire purpose of your activation experience is to bring as many users as possible to that exact moment.
This, my friend, is your “finish line.”
(NOTE: As a shortcut to pinpointing the exact moment of addiction – look for the moment where the “drop off point” is 5%. In other words, find the moment where 95% of people who get there WILL return.)
The AARRR Model vs. Your Viral Loop
If you look at the famous “pirate metrics” acronym (which I’m not the biggest fan of, but we’ll use here for simplicity), the letters AARRR stand for:
Notice the placement of the words.
This placement is strategic in that each is a phase of your user journey that ends at the exact moment that the next phase begins. Notably, the second and third words are Activation and Retention. Meaning that Activation ends as soon as Retention begins.
This fixed order is actually why I’m not the biggest fan of the AARRR concept. And it’s all because of the second R (referral).
In a user’s journey towards virality, the phases of a viral loop are a bit different. They are:
- Prospect (non-virally acquired) or Friend (virally acquired) – People exposed to your product.
- Lead – Prospects or Friends checking out and learning more about your product, and therefore entering your Activation process.
- User – Leads who have decided to use your product by taking the early steps in your Activation process.
- Acolyte – Users who have completed your Activation process, reached an “aha” moment, and now love your product.
- Advocate – Acolytes who have reached a second “aha” moment, and now see the value of exposing Friends to your product.
Your activation experience should begin when Prospects and Friends turn into Leads, and should end as soon as Users turn into Acolytes.
Now lets zoom out.
How Activation Efficiency Fuels Virality
You might have noticed that the Activation process above only comprises 3 of the 5 steps in your viral loop. What about the other two? Shouldn’t these steps be added to the Activation funnel as well?
I know what you’re thinking:
Travis, shouldn’t it be our job to get all Prospects and Friends to become Leads, all Leads to become Users, all Users to become Acolytes, and all Acolytes to become Advocates?
My answer to that is “no.”
The reason why is because the fluidity of the last phase in the loop – the Advocate phase.
- The jump from a User to an Acolyte (i.e. a retained user) is a very specific “aha” moment. It cannot be reached unless somebody hits the prior three steps first. These must happen in order, or retention will not be achieved.
- In contrast, the jump to become an Advocate (i.e. a viral user) is a totally different “aha” moment where users become aware of your product’s viral value. In many cases, people do NOT have to hit the prior four steps in order. The Advocate step can happen in any order after the second step.
For example, a product like Skype would require the Advocate phase to occur as the third step in the process, right after a Prospect or Friend becomes a Lead. Because Skype used inherent virality, becoming an Acolyte could not happen without first becoming an Advocate.
For Skype, retention could NEVER occur without virality happening first because the Advocate phase was a requirement for addiction. Inviting friends was built right into their Activation funnel.
This won’t apply to most products.
The addiction process is different for every single product, and without good data science and analysis you won’t know where your Advocate phase should happen.
Connecting the Viral Loop and the Retention Funnel
Since we’ve established that our viral loop and our retention funnel are not the same thing and must be measured separately in most cases, we need a way to connect the two in order to derive maximum business value from both.
To do this, we need to boil down our Activation process (i.e. the process of getting users to hit the moment of addiction) into one metric that we can weigh against all the other viral data we’ve learned up to this point.
So let’s set three variables:
- Total Activated Users (Au) – which we’ll set as 1000
- Total Prospects and Friends Acquired (Nu) – which we’ll set as 1500
- Addiction Factor (Af) – which is what we’ll solve for
The equation then becomes:
Af = Au / Nu
Af = 1000 / 1500
Af = .67
This example equation is somewhat ridiculous because an Af of 67% is insane. But having this data point makes it much easier to create visualizations around virality and retention for your specific product. And in turn know what both mean for your business.
For example, if your product is a B2B SaaS company that requires a User to become an Acolyte before they can become an Advocate, knowing that you have to optimize Af to elevate K and ct is helpful.
If you’re instead like Skype, and you want a Lead to become an Advocate before they can become a User – let alone an Acolyte – you’ll then know that you need to do the opposite and optimize K and ct first.
With that you now have a step-by-step process of all the actions a user must take to go from awareness to addiction. But sadly, there is far more somber event that mirrors this journey. That’s right we’re talking about “user death.”
As hard as it might be to believe, some users just won’t take the awesome path you’ve laid out for them and get hooked on your amazing product. Some of these users you may be able to resuscitate, others will venture beyond saving.
To be able to predict when the latter might occur, and hopefully prevent it from happening as much as possible, we must learn The Formula for Death.
[Cue thunderclap from above.]
When Is a User Beyond Saving?
Sometimes we have to learn when to let go. Even when you’re a Viral Hero. Not everyone will come to their senses and get addicted to your product. So it’s best not to needlessly exert your resources going after them and just move on.
- Cycle Time: What the Primary Defense Mechanism of Rabbits Can Teach You About Growth - March 15, 2016
- Viral Infection: How the CDC Can Make You a Viral Marketing Savant - March 4, 2016
- Viral Communication Marketing – How Apple, MailChimp and Hootsuite Used Hotmail to Inspire Explosive Growth - June 25, 2015