In the 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 discuss 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.
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 won’t tell you where a mythological artifact that will grant you an 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 basic step of mapping out your new user funnel.
This funnel can seem like your best friend, but if you set it up incorrectly or use it incorrectly, it can be your worst enemy.
Here are a few (possibly surprising) ways your funnel will end up being your worst enemy:
But arguably the sneakiest mistake of them all is:
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.
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, which is 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 afterward.
We’ve repeatedly discussed that retention is the foundation of all growth, so this shouldn’t surprise us.
So the critical question most people get wrong is 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.
Your funnel should end at the typical point in the journey where users hit the “aha” moment and 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:
Sound confusing? Let’s simplify a bit.
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 afterward – many without ever taking their second action.
Now let’s say a different user takes their 100th action. Nearly all these users are almost 100% certain to take their 101st action afterward.
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, we aim to work backward 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.)
If you look at the famous “pirate metrics” acronym (which I’m not the biggest fan of, but we’ll use it 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.
This means 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 toward virality, the phases of a viral loop are a bit different. They are:
Your activation experience should begin when Prospects and Friends turn into Leads and end as soon as Users turn into Acolytes.
Now let's zoom out.
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 of the fluidity of the last phase in the loop – the Advocate phase.
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 product, and without good data science and analysis, you won’t know where your Advocate phase should happen.
Since we’ve established that our viral loop and retention funnel are not the same thing and must be measured separately in most cases, we need a way to connect the two 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:
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 becoming an Advocate, knowing that you must optimize Af to elevate K and ct is helpful.
If you’re like Skype, and you want a Lead to become an Advocate before they can become a User – let alone an Acolyte – you’ll know that you need to do the opposite and optimize K and ct first.
With that, you have a step-by-step process of all the actions a user must take to go from awareness to addiction.
But sadly, there is a 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 won’t take the awesome path you’ve laid out for them and get hooked on your amazing product.
Some of these users may be able to resuscitate, while 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.]
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.
It’s best not to needlessly exert your resources going after them and just move on.
SIDE NOTE: if you want to hear me talk about all things growth, startups, and inspiration, hit me up on Twitter, Instagram, and LinkedIn!