Customer Activation: How It Works & How to Measure It

Customer Activation: How It Works & How to Measure It

In the previous article, we saw how there are seven stages to a happy customer’s journey, and we covered two of those stages – discovery and customer onboarding.

In this article, we will dive deep into the third stage – Activation.

What is Activation?

Activation can be explained as the stage where the curious visitor converts into an active customer of your product/service app. At this stage, the customer is clear that they want to use your product and takes that first step towards using your product, and is ready to derive value from your product for the first time.

This stage marks the beginning of what could be a long-term relationship between you as a product/service app owner and the customer. It is a significant win because it means that you have managed to convince your customer of the value your product brings. The end goal should be to capture the customer’s attention and wallet-share for the long term and increase the customer’s lifetime value.

An activated customer can bring great value to your business. They could become loyal customers, bring in more customers with them over time, and also bring in higher revenues.

Activation Stage Differs based on Product / Service

This stage is when the customer makes that very important first purchase, buys that first subscription, or avails of that first service. So, activation could mean different things depending on the product or service you provide.

For instance, a ride-hailing company or online travel booking company would consider booking that first cab or hotel room as activation, while for OTT platforms and media companies, it would be buying a subscription. For audiobook/music/video streaming platforms, it could be downloading that first book or song or watching that first movie post subscription, as that is when the customer derives value from the product. For E-commerce or B2C companies, it is the purchase of that first item that signifies activation.

The activation stage is very critical because this first experience of the customer can dictate whether or not they will want to be your repeat customers.

Imagine if the product is delivered on time or well-before time, wrapped beautifully in a sustainable manner using recycled products with a personalized message that gives a brief about the product’s beginnings. Wouldn’t that be a wonderful first experience that the customer is unlikely to forget anytime soon?

Seamless Onboarding Leads to Successful Activation

In the article on Customer Onboarding, we talked about the importance of onboarding customers in a frictionless and efficient way so that they are easily converted into regular, paying customers.

A seamless onboarding experience followed by a successful activation process should be seen as the foundation for a long-term relationship between the customer and the product or brand.

As an example, let’s look at Fitbit, the health and fitness tracker app.

FitBit Customer Activation Stages

Fitbit follows a freemium model approach. During the onboarding stage, the app provides with a few free features such as access to short exercise videos.

But on activating the ‘Premium’ membership, the app opens up an entire suite of workout videos, meditation practice videos, meal logs, water-intake logs, and healthy recipes to try and even helps create a ‘Wellness Report’ that tracks health trends over a 30-day period. This report, the app claims, is credible and reliable enough for you to have a conversation with your doctor about it.

The app acts as a one-stop shop for all things health. Tangible measures such as steps taken, heart rate, calories consumed, water intake, etc all give the customer a real-time understanding of their habits. It helps them make healthier decisions. This is a big draw for customers – the reliability and ease of access to such information.

Moreover, the app interface and the content are smooth and easy to follow. The app offers challenges and adventures which adds a competitive element to the overall experience.

Given the price point at which it is retailed, a customer might gladly pay for the premium service as it is priced much below the price of the Fitbit tracker devices.

Tracking the ‘Aha’ Moment: Customer Activation Metrics

  • Activation Rate: (No. of active customers / No. of visitors)*100

This is the rate at which your curious visitors become active customers of the product/service. This is a critical indicator of how good your onboarding process has been. A lower activation rate might be an indication that the onboarding experience of your customers could be better. Making changes to the existing onboarding process by identifying the pain points of customers could help in boosting this number.

But if you are experiencing a good or increasing activation rate, then that means that you are on the right track. This is a good indicator that you have been able to provide a good onboarding experience to your customers. It means that you have been successful in convincing potential customers of your product’s value proposition and bringing them to the point where they are willing to take the right action, whatever it is, that signifies activation.

The activation rate, however, will not be able to tell you the reason behind such conversion or non-conversion. To know more about why the activation rate is low, you will have to dig deeper into the data and figure out where the problem is.

  • Sign-up to Subscription Rate: (No. of subscribers / No. of sign-ups)*100

This rate is an indicator of how many customers agree to pay for a subscription after the initial onboarding sign-up process. A higher rate here means that the customers were able to derive value from your product during the trial period.

For instance, music apps such as Spotify, YT Music play ads in between the playlist or at the start of it during the trial period but allow you to enjoy the full range of their music library. This access to their vast music library, even though with interruptions in the form of ads, convinces customers to move from sign-ups to subscriptions.

This rate, again, is only a representation of the quality of the onboarding experience. To know how to get customers to subscribers, you will have to understand the data and get to the root of the problem.

  • Rate of Sign-ups: No. of sign-ups/ No. of visitors)*100

This indicates how many people have liked the app or website and are now interested in receiving content or product updates from you. These are people who visited your app or website, were impressed with it and wanted to sign-up to not miss any updates or announcements.

This means that you are able to showcase the value of your product well. For instance, a well-designed website or app that provides a sneak peek into the type of content available, could help media publications convert visitors into signing up for their newsletters, daily updates, etc. Good content gets valued and is reflected in a high rate of sign ups.

Revisit Metrics Regularly

There might be other metrics that businesses may be employing to track the level of activation and the reasons behind it. Irrespective of the metric used, the key is to keep revisiting the metric to check its progress.

The advantages of regular check-ins with these metrics include the following:

  • It helps you keep track of what is working for the customers and what isn’t.
  • You can make timely interventions and changes to products, features, or in-app experiences so that you don’t lose customers.
  • It keeps you ahead of the competition as you are able to identify customer pain points and resolve them in a timely manner.
  • It gives you deeper insights into changing customer behavior and market trends.

In the next article, we will learn about the next stages of customer lifecycle marketing – Repetition and Habituation.

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