User Activation: The Product Metric Everyone Needs But Can’t Define
Key takeaway
- For entrepreneurs: identify and track the "activation" metric for their product, which represents when a new user first experiences the core value proposition of the product. By focusing on optimizing their activation metric and rate, founders can understand if their product is delivering value, identify bottlenecks in user onboarding, and run experiments to improve activation which will ultimately drive growth through better retention and conversions.
- For investors: pay close attention to the activation rate metric when evaluating an early-stage startup. The activation rate measures the percentage of new users who experience the core value proposition of the product and become activated users. A strong activation rate provides evidence of product-market fit and validates that the startup's solution is resonating with its target audience. It demonstrates traction beyond just user acquisition and indicates the startup is on the right path toward sustainable growth.
Summary
The article "Activation: The Product Metric Everyone Needs But Can’t Define" by Sam Richard, published on OpenView Partners' blog, discusses the importance of user activation as a critical metric in product management. It emphasizes that while activation is widely recognized for its significance in predicting business growth and user engagement, it remains challenging for many companies to define and measure effectively. The article highlights that activation serves as a leading indicator of future user retention and engagement, making it essential for teams across growth, marketing, and sales to understand and optimize.
Insights
- Definition Challenges: The article points out that despite its importance, there is no standardized definition of user activation, which varies significantly across different companies and products.
- Leading Indicator: Activation is described as a leading indicator, meaning it can predict future behaviors such as user retention and product engagement, which are critical for long-term success.
- Impact on Teams: Effective measurement and understanding of activation metrics can empower growth, marketing, and sales teams to assess the impact of their strategies and experiments more rapidly and accurately.
Implications
- Need for Custom Metrics: Businesses may need to develop custom activation metrics that align with their specific products and user experiences to effectively measure and leverage activation for growth.
- Cross-Functional Collaboration: There is a significant implication for enhanced collaboration across various teams within an organization to align on the definition and strategic importance of activation.
- Focus on User Journey: Companies should focus on the early user journey, particularly the first interactions with the product, as these are critical for setting the stage for activation and subsequent user engagement and retention.