Onboarding: The Stairway to Growth

Issue 25

Good Morning 🙌🏻

Last week, we discussed how to build Flywheels — the unstoppable force of growth. It’s a very important topic on product growth and if you haven’t read yet, I will advise you to read it.

This week’s topic is Onboarding. It is one of the lowest hanging fruit in achieving your growth targets and building a great product.

For the new ones here, do check out the other posts that I have written if you haven’t

  1. Measuring Product-Market Fit

  2. Understanding Positioning: Through a Practical Lens

  3. How to Engage Users Through Gamification

  4. Referrals: The Holy Grail of Growth

  5. Decoding Growth: Where is the Growth Coming From?

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Off to the topic,

Imagine a mall with no human assistance. How would you design it such that a person coming for the first time there can find and buy what they want?

Imagine a clothing store with no human assistance and no tryout rooms. How would you convince someone new to buy clothes from there?

Imagine a park with lots of people. How would you design it in such that a person coming for the first time there can find my friends or other interesting people so that they can enjoy their time in the park?

All of these design problems have a commonality — how do you make the first-time users find the value in the situation quickly. In a park, the value lies in finding friends and family. In a mall or store, it’s finding the right item they are looking for quickly.

All the above happens today on the Internet. The 1st problem is solved by Amazon, Flipkart, and other eCommerce companies. The 2nd problem is solved by specialized eCommerce companies like Myntra and Shein. Facebook and other social media companies solve ‘the park problem’.

First Impressions Matter

We have been taught that "First Impressions Matter." In real life, it's often true but we all have one or more of those friends who had their first impressions wrong. But we met them again, understood them, and became friends.

When it comes to Internet products, the quote about first impressions is more accurate than ever. A store with no person to explain or correct first impressions — its a disaster. The user is never coming back in most of the cases.

Users onboarding is introducing your users to your product and making first impressions. It doesn't matter how strong your product is; if the Onboarding isn't great, and users fall off, people will never get to experience it.

Looking at some stats from the Hubspot blog,

1. 55% of people say they've returned a product because they didn't understand how to use it.

2. Acquiring new customers is between 5 and 25 times more expensive than retaining existing ones.

3. 74% of people will revisit your website if it's user-friendly, and 50% of customers will stop visiting it if it's not.

4. Over 90% of customers think that companies "could do better" when Onboarding new customers.

5. 59% of customers value personalization over speed when it comes to customer service.

6. 97% of people believe video is a useful tool to welcome and educate new customers.

7. 74% of people are likely to switch brands if they find the purchasing process too difficult.

8. 80% of people have deleted an app because they didn't know how to use it.

In the AARRR funnel, Onboarding ensures the activation of users. You won't get any retention, revenue, or referral if users fall at the activation stage in the absence of proper Onboarding.

Hopefully, I have convinced you of the merits of Onboarding. But since just knowing the merits won't help you, let's dig deeper.

The Spectrum of Onboarding

When it comes to Onboarding, the whole spectrum can be seen in terms of ARPU, i.e., average revenue per user. The information and assurance needed to buy the product are proportional to the money you ask the users to shell out.

Low ARPU products are often free to consumers, and the money is made through advertising. For the ad-based products to work, they have to maintain very high retention and engagement and address the mass market. They can't afford paid marketing, and which is why you see products with strong network effects and user-generated content like social media, classifieds, etc. here. Onboarding of such products is built within the product with no human assistance to the user.

Medium ARPU is an exciting category. Most products here are need/utility-based. You go to Amazon to buy items you need and go to Netflix to watch some movies available only there and not free of cost anywhere else. Onboarding of such products needs to be built within the product, but they do provide free trials. They also provide remote support through emails or calls, but the support emails or calls can't be considered part of Onboarding as they happen post-purchase.

High ARPU products like Salesforce or Hubspot offer a free demo or free trial. It is to ensure they get enough time to spend with the users and give them the information and the assurance needed to make the purchase. This is also why the products with high ARPU have an inside/ field sales team for Onboarding. Having a demo/free trial and sales team increases the CAC of the product, but they can justify the high CAC through the high ARPU. Most of these products are B2B SaaS as no one person can afford to pay so much.

The diagram above can now be represented as

The Park with Lots of People

We started this post with 3 design problems. Facebook is a park with lots of people. They wanted new users to find friends and start using Facebook. Let me tell you the story of an onboarding feature that Facebook built that helped its users find friends and interesting people. From the book ‘Facebook: The Inside Story’ by Steven Levy,

The masterpiece of Growth at Facebook is a feature that became almost as much a part of News Feed as weddings, vacations, and political outrage. It’s called People You May Know, referred to internally by the acronym PYMK. Officially launched in 2008, People You May Know is a feature that identifies personally selected prospects for one’s friend list. It wasn’t a Facebook invention — LinkedIn did it first — but PYMK proved to be one of FB Growth team’s most effective tools, and also one of its most controversial ones, a symbol of how the dark art of growth hacking can lead to unexpected consequences.

On its face PYMK seems innocuous enough: a carousel of profile pictures on Facebook presumably connected to you, but somehow not your Facebook friends. Its impetus was to address an imperative that the Growth team’s researchers had unearthed: a new Facebook user is likely to abandon the service if he or she doesn’t connect with seven new friends — fast.

Thus PYMK was essential for Facebook. Exposing potential friends is a way to improve a member’s experience; it increases the chances they will share more, and, most of all, it makes people less likely to bail on Facebook.

People You May Know caused a lot of controversies around privacy issues. But it did solve the core deliverable of onboarding at Facebook — finding friends and activating users.

The Core of Onboarding

The core deliverable of Onboarding is also popularly known as the 'aha!' moment. It's pretty popular in growth circles, and I am not sure who invented the term. It's the moment when the user suddenly grasps the true value of your product and has an emotional reaction to it. For Facebook, it was finding friends whom you could chat and show them your social life instantly.

Onboarding is so crucial for growth that a growth team's most critical job anywhere is to make more and more users experience the 'aha!' moment of the product. So if you know your product's 'aha!' moments, they could form the basis of your activation/onboarding flow design.

I have listed below some popular products and their aha! moments here for you to understand the point well

A Mall with No Human Assistance

Amazon is a mall with no human assistance. So are other horizontal e-Commerce companies. If you go to Amazon, you can quickly see what strategies they employ for Onboarding.

A big visible search bar — usually, if you are going to a mall, you know what to buy. For this reason, Amazon gives you a big visible search bar.

Autosuggestions — When you try searching for a product, it offers you auto-suggestions. Auto-suggestion does 3 things — first, they show you a variety of products upfront matching the words you type. Second, they help you avoid typo on the go. Third, they make your life convenient so that you don't have to type the whole thing. Auto-suggestion reduces friction for users while searching.

Deals and best products in categories — If the user decides to scroll down, the best products and deals are displayed. This is like putting the best products on display when the user enters the mall.

Product descriptions, filters, and reviews — Filters help users in narrowing down to what they want. Descriptions help them understand if the product meets their requirement, and reviews offer social proof that they can trust and buy.

There is the replacement, warranty, return, cash on delivery, photos, etc. on the product page. All of these are aimed at proving the user assurance that they can spend their hard-earned money.

So we have answered how you will design a mall without human assistance where people can buy the product.

  1. Make it easy to find through search and navigation.

  2. Provide all the details about the products

  3. Assure the user by adding free-of-cost replacement, warranty, return, etc. Add reviews from other people who have bought and used the product.

These are the part of new user experience (NUX) or Onboarding for a complicated thing like shopping.

It isn't so complicated for other products, but you should give it a thought on how you are taking people to their 'aha!' moments.

A Clothing Store with No Human and No Trial Room

Surprisingly, whatever works for the mall also works for this clothing store as it is a subset of the mall. While designing this, you have the luxury of creating a more convenient NUX/onboarding. Examples include Myntra, Shein, etc.

Off to the questions

Q: You just described the whole Amazon product buying experience in its Onboarding. Isn't that a lot?

A: The jurisdiction of Onboarding depends on where your Aha! Moments lie. For Amazon, it is finding and buying a product you were looking for and getting happy with the experience. I would even go on to include 1st order post-purchase experience in Onboarding at Amazon. Because unless someone gets happy after receiving the first order, the job isn't done.

Q: What's the difference between NUX and Onboarding?

A: NUX and Onboarding are the same things, in my opinion.

Q: How do we design the Onboarding of our product?

A: I will cover it next week

Q: What are some of the good examples of Onboarding?

A: I will cover it next week

Gracias for reading! Please share this post with people who may find it useful and help build a strong growing community.

Adios! Have a good Sunday ✌️



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