The Metric Watched by Top Startup Growth Teams

It is easier to create technology products today than it has been in the past (and is only getting easier.) With more entrepreneurs building new products, the competition for people’s attention is accelerating. I used to think that building a great product would result in press and demand for your project; but I now know that is naive. Even if you build a wonderful product, it doesn’t mean that people will flock to use it. You need to be maniacal about understanding how many people are using your features, and improving your metrics over time.

Dave McClure’s pirate metrics are an invaluable model for analyzing SasS metrics, but little has been written about them. Each of the metrics are not all immediately valuable and actionable as you first start building a product, but one of the ones I think that is valuable (and critical to start measuring) from the very beginning is an activation event.

What is an activation event?

I like the KissMetrics definition of activation:

Activation is: The first point where you deliver the value that you promised.

 

Activation Examples

Some examples of activation (I don’t know if these are their real activation events):

  • Dropbox: Your first file is backed up from your computer into the cloud
  • Facebook: You connect with 7 friends within your first 10 days
  • Stack Overflow: Your question is answered
  • Instacart: When your groceries are delivered for the first time
  • Instagram: Someone likes one of your photos

Key Elements of An Activation Event

There are key elements of an activation event that make it so valuable:

  • It happens once.  Once someone has activated, they cannot activate again.
    • This defines cohorts (daily, weekly, monthly) analyzed over time.
  • It represents real value for users. It’s shouldn’t be a “bullshit metric”.
  • It gives you a sense of how efficient your acquisition funnel is / how well you do at getting people to see value in your product. This is the activation rate.

Not everyone who signs up for your service is going to be able to use it/get value from it. Over time, you should be optimizing for the percentage of people who can use your product, and then how many of these people come back and use your product in the long term. I have been using MixPanel to do this in my time on the Sidekick team, but any good analytics tool will be able to give you this type of insight.

 

Measuring impact based on activation

Some of the things that we track based off our activation rate:

  • What is our overall activation rate?
  • What is our overall activation rate by channel?For example: Paid Acquisition (platform, campaign, audiences), Content Marketing, Social Channels, SEO, Virality
  • What is the time it takes someone to activate? Can we decrease this time?
  • What is our retention of activated users over time?If a user doesn’t activate, I highly doubt they’ll keep using your product over time. By focusing on cohorts of activated users, you can optimize towards a ceiling that reflects an attainable goal
  • How does our activation rate improve over time?

When to start tracking activation

When you’re first building your product, you should be speaking with all of the people that are using it. Once you get past those first 100 users, it’s hard to speak with everyone. That’s when having an activation event will give you an indication of whether people saw value in your app, and whether they’re likely to want to continue using your product. Even in your earliest days, it’s important to have an idea of what you expect people to do in your app and how many of them accomplish that task. Since it is a percentage, it is valuable when you’re the size of Facebook or for your first 1,000 users. As you grow, you will learn more about your users, your business, and how to optimize for success and activation over time.

Dan Wolchonok

Written by Dan Wolchonok

Dan is a senior product manager on the Sidekick team.

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