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Anna Holopainen

SaaS reads this week: Key activation events in SaaS onboarding, Growing infrequent products, PLG flywheel

published8 months ago
6 min read

Hi friends,

Here's a quick reminder that sometimes it's okay just to give up. πŸ€·β€β™€οΈ

I took a few weeks off from writing this newsletter. October was one helluva month: new day job, new freelance gig (what was I even thinking), apartment renovation – and to top it off, I came down with a terrible flu. There was no way I was going to be able to juggle all that, so I did what any reasonable human being would do: gave up (new gig, this newsletter, social life) and started doing the bare minimum – and boy, was it 100% worth it! The moral of the story: Can we normalize prioritizing mental health without feeling guilty? K thanks byeee πŸ‘‹

Anyway, happy to get back on track slowly but surely. Here are some of my best reads this week:

  1. How to identify key activation events in low-touch SaaS onboarding
  2. The PLG flywheel for user segmentation
  3. Growing infrequently used products

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#1 How to identify key activation events in low-touch SaaS onboarding

Of all the actions a user can take in your application, only a handful lead to success and even fewer actions lead to payment. These actions aren't always obvious. For example, Groove, a customer service software tool, found that customers who emailed customer support during their trial period were nine times more likely to stick around. So where do you even start looking which actions are key to activation?

How to identify KAEs (Key Activation Events)?

  • Step 1: Identifying possible KAEs: Make a list of all the possible actions in your application e.g., updating profile, invite team members, number of team members invited, etc. To speed this up, use your product analytics tools for pulling out a list of user actions.
  • Step 2: Conducting cohort analysis to validate KAEs: Let's say you ran a business that helps small businesses build their own websites. One of the things people do is add their logo to their website. If you found out that users with a logo were three times more likely to convert than those without, adding a logo would be a key activation event.

How to activate users using KAEs? The three stages of activation are (1) pre-sign up, (2) first user experience, and (3) post-signup.

  • Pre-signup: Your pre-sign up communications need to prime your user to do what's required of them, e.g. if your application needs integration with a 3rd-party app, or a code snippet needs to be added to their application, let them know about it ASAP.
  • First user experience: Build your in-app onboarding flow around the key activation events in a sequence. If a key activation event is inviting a team member or adding a logo, make this part of the flow. Always give your users a clear and compelling reason to complete each stage of the workflow ("90% of users who add a picture sell their car in 2 weeks" or "Link your social media accounts to tell your customers how well they're doing")
  • Post-signup: Often, onboarding can not be completed in the first sitting. Maybe your application needs to crunch data, or your customer needs to speak to others in the team. Other times your customers just need a reminder of what they signed up for. In both cases, develop a strategy to pull them back to your application. Target new users depending on which key activation events they have (or haven't) completed. If users STILL haven't uploaded that elusive logo, (1) remind them they still need to (2) let them know why.

​Read the article​

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#2 The PLG flywheel for user segmentation

Unlike the sales funnel, the flywheel model builds momentum from one phase to the next, rather than leaking customers along the way. In PLG, this gives you a good way to segment your users.

Customer segment: Evaluators β†’ Your goal: Activate to become Beginners

  • Evaluators are usually testing and comparing solution to a problem they are trying to solve, usually in a trial phase and not using your product in their existing workflows yet.
  • Your goal is to activate evaluators, which can only happen when they see and understand your product's value and are willing to invest time, energy, and money. Pinpoint activation event and help users get value as soon as possible. Use your product onboarding experience to gather info about those goals and guide them toward the features that will help them reach those goals, and don't bury them in advanced details.
  • Note: Activation Customer segment: Beginners β†’ Your goal: Make them Adopt the product and become Regulars
  • Beginners are trying to get stuff done, incorporating your product into their workflows, starting to use real data and receiving tangible value, but not using advanced functionality or implementing sophisticated use cases.
  • Your goal is to help them form habits (e.g., defaulting to Slack rather than other available communications channels) and get them to associate your product with a specific task or solution. Help users build on the foundational knowledge they achieved as Evaluators, give them the freedom to do what they need to do, and reduce any possible friction.

Customer segment: Regulars β†’ Your goal: Make them Adore the product and become Champions

  • Regulars are logging in, well, regularly, using your product to complete core parts of their job, defaulting to your product as a possible solution when new problems arise, and exploring deeper layers of your product to see what else your product can help them do.
  • Your goal is to help them adore your product by proactively delivering value (without bombarding them with information). Keep them excited about your product by reminding them how important they are to you, offering exclusive looks at new features, listening to their feedback, and following up with improvements.

Customer segment: Champions β†’ Your goal: Make them Advocate the product and invite more Evaluators

  • Champions are the loyal NPS promoters who actively participate in your product's future, push the limits of your product with new use cases, and wear your brand's t-shirt.
  • Your goal is to nudge them to advocacy because that's what creates the flywheel effect: inviting other users, evangelizing internally and externally, and leaving reviews drives awareness and new Evaluator interest in your product. Make Champions feel appreciated by offering advanced guidance, power use case features, and first dibs at beta versions.

​Read the article​

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#3 Growing infrequent products

All products have a natural frequency of usage: Slack – daily, Uber – weekly, SurveyMonkey – monthly, Thumbtack – yearly+, and so on. All these products fall into one of the two buckets: those within the "Habit Zone" (natural frequency of more than once per month) and those in the "Forgettable Zone" (infrequent = used less than quarterly).

The challenges of growing infrequent products

  • Managing an infrequent consumer product can be difficult, as the interaction window is limited: when customers use a product only once or twice in their entire lifetime and then never return, it's challenging to gain enough knowledge on the users.
  • Take the core definition of product-market fit. It posits that you've reached PMF when users are retained over a period of time. How does this definition apply to infrequent or episodic products that might be designed only to be used once a year or even less? It doesn't. This is why in the case of infrequent products, product-market fit is a function of market penetration rather than retention.
  • Rather than treating infrequent ("Forgettable Zone") products are treated as a bug as opposed to a feature and trying to copy product growth strategies from famous frequent ("Habit Zone") products like Zynga or Facebook, infrequent products need a different approach to growth.

ICED Theory (Infrequency, Control, Engagement, Distinctiveness)

ICED represents the different dimensions of an infrequent product. After mapping each of the four dimensions on a spectrum, the aim is to move from the left to the right side (more frequent, more control, etc.).

  • I = Degree of infrequency: The more infrequent the product, the poorer the product recall by the customer. The degree of infrequency informs key business decisions, such as monetization and the cost of traffic acquisition. For example, for a highly infrequent product, leaning toward a higher ticket size for increasing monetization is appropriate, given the limited interaction with the customer over a lifetime.
  • C = Degree of control over the user experience: TurboTax allows users to file taxes entirely within the product. Indeed.com, on the other hand, has no means of controlling the job interview experienceβ€”the most critical component of the job-hunting process. Inability to control the experience end-to-end makes winning the job seeker's loyalty challenging.
  • E = Degree of engagement before, after, and during the transaction: In an infrequent product, higher engagement ensures customer loyalty in the form of retention or advocacy. Engagement is determined by three things: 1) How complex a transaction is (complex like property-buying platform Zillow or simple like PayPal – the higher infrequency, the more the complexity), 2) Degree of touch (single touch like Tripadvisor reviews for a trip or constant touch like personalized shopping app Stitch Fix), and 3) Predictability of retention (predictable like tax products, or unpredictable like job-seeking websites)
  • D = Distinctiveness of the product: In an infrequent product, the story registered in the user's mind governs a strong brand recall that can, in turn, increase customer acquisition or repeat acquisition. In the case of infrequent products, a highly distinctive product such as Airbnb stands on one end of the spectrum (and enjoys a whopping 67% direct traffic), with a non-distinctive product such as Expedia on the other end (who have to rely on search engines and paid traffic). Failure to be distinctive and the infrequency of transactions can ultimately strain customer acquisition.

​Read the article​

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​That's it for this week. I'd love to know what was your favorite read this week!

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Cheers, Anna

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P.p.p.s. Connect with me on LinkedIn and Twitter! (Warning: I mainly post memes and rants about marketing, but if that's your jam, let's be friends. I'm also Head of Growth at an EdTech startup and a freelance consultant for B2B SaaS startups, but honestly, I'm more into shitposting than personal branding.)