Improving your Retention: Defining the Activation Step

Hi Founder! This is Jorge Herna, Founder of NocodePM.

Winning a new customer for your Startup can be hard, so when the time of renewal comes, and the number of active users starts to drop, it's easy to start panicking.

• Would it have been possible to forecast this outcome?

• How can we identify if our product is having bad retention?

• How are we going to design our product to increase retention?

To start improving our Retention, we must figure out which one is our Activation step.

Step 1: Understanding Retention

Why is it important?

To keep it simple, Retention determines category leaders. Retention drives monetization, and acquisition, builds competitive muscle, and accelerates payback period. Therefore, even though your job as a Startup at the beginning is to start selling your product as much as you can, you need to keep Retention in Mind.

Because in short, retention is cheaper than growth.

What's exactly Retention?

It is the sum of three elements: Activation, Engagement, and Resurrection.

• Activation: the aha moment or that moment where your user understands the core value of your Product. i.e.: A user uploads a file on Google Drive for the first time.

• Engagement: the relationship your user has with the core feature of your Product. High engagement increases the chances of retention and casual retention can drive churn.

• Resurrection: the process of taking users from a dormant state to an engagement stage. I.e.: Users who downloaded the app, tried once, and never returned in 30 days.

Whether you have launched an App, a Web App, or a Website, these three concepts are true and present in every digital product.

As a Startup, the most important thing you need to do as soon as you can is to define your Retention Metric, and for that, you need to find out about your Activation Step, a healthy Engagement level, and the type of user who is going to benefit from your product.

Remember, if you can't measure it, you can't improve it.

Now that you know the basics, let's see how you can identify your Retention Metric.

Step 2: Identifying our Activation Step

Before discovering what a good retention level is; we need to identify our Activation Step.

The Activation Step will help us understand if our Business is going in the right direction. It will give us peace of mind since it is connected with the core value of our Product, and if it's in good shape we won't have to worry about the short-term future.

To do that, we have prepared a list of questions to help you figure out your Activation Metric.

Don't delay this too much, It's easier to identify your Retention Metric when you are starting since your startup doesn't have a complex product.

Identifying your Activation Step

Try to answer the following questions with just one sentence, it will help you not to overthink the process. By the end of the exercise, you will have a great 1-pager map to start.

I will follow the questions with an example so you can get the idea.

1. Problem - What is the core problem your product is solving? This will help you to identify the Core Behavior.

2. Persona - Who is the one who is going to benefit the best from using your Product? The target user you should monitor.

3. Alternatives - What alternatives exist that solve that same core problem? To know in case you see the engagement with your core feature drops.

4. Why - What is the main reason you think your users return to your Product? This will help you to spot the reasons why to validate during Discovery.

5. Frequency - What is the frequency they encounter the core problem? Not all the problems are the same and not all of them have the same frequency. Knowing this will help you to identify what's a good or bad retention.

Let's use Loom as an example to identify their potential Retention metric.

1. Problem: Giving long updates at work can be hard because of the lack of engagement.

2. Persona: Professionals who work with multiple stakeholders and need to communicate a lot with their colleagues and managers.

3. Alternatives: Schedule a meeting, Write a long report, and Record a video by yourself.

4. Why: The ability to record a video and upload it easily, so people can watch it and comment on specific seconds of the video in real-time.

5. Frequency: Mostly every day. Topics that are difficult to explain can trigger a meeting that can be avoided with a video.

So, What do you think is Loom's Retention Metric?

To get the metric you need to sum: The Core Behavior, the Frequency, and the Persona.

For Loom, we can imagine a Retention Metric that is: The Number of times a Manager has recorded a Loom video within a Day.

Step 3: How to use our Activation Step

Now that you have identified your Activation Step, you will be able to understand if:

1. Your users understand the Aha moment of your Product.

2. Your users are committing and engaging with the core value.

3. Your users pass from Active users to Activated users. (It will help you to measure the "Aha moment".)

And to do that it's just a matter of asking yourself the following questions.

• Is the Activation Step easily achieved?

• Can be this step completed quickly?

• Is the metric correlating to retention? (If the users that are retained have in common a big use of the core value of the Product).

Do not get obsessed with measuring the Activation step since you at least need one month of data to start having statistical significance. 😊

Conclusions

Activation is your Product's superpower so start measuring it sooner rather than later. 💪

The Activation step can mutate and change over time once your product gets bigger, but for early Startup pre-seed or Seed, you won't change it that much.

If you need help finding out your Activation Step for your new Product or want to learn more about how to improve the Engagement and Retention of your Product, check out our Startup Product Manager Program.

Hope to see you there!

Jorge Herna

Founder of NocodePM