The Role of User Activation in Atlassian’s Growth Strategy
User activation is a critical step in the user journey. Without it, trial users fail to become customers. But, even though activation is one of the most important metrics for a SaaS company, its far-reaching influence on a company’s long-term sustainability is often overlooked.
Shaun Clowes, currently the VP of Product at Metromile, focused heavily on activation during the six years he spent at Atlassian, building that company’s growth function from the ground up. He embarked on that mission during a time when growth was still a new concept in the B2B world. Mike Cannon-Brookes, one of Atlassian’s two CEOs saw how the strategy was working for B2C brands, tapped Shaun to put a growth team together, and gave him six months to see if he could create value and measurable ROI for the brand. Long story short, Shaun and his team delivered beyond expectations.
Understanding the Value of First Impressions
You could say that successful activation relies on positive first impressions. A great part of getting activation right has to do with removing any friction so that it’s incredibly easy for new users to not only start working with your product, but to derive value from it. Shaun and his growth team at Atlassian started by taking an in-depth look at all the available metrics as they searched for opportunities to prove the value of growth. They discovered fairly early on that even though their software products are quite complex (and typically had a 30-day trial period), most users spent only 30 minutes in a product before deciding whether or not it was the right solution. In other words, the window in which to prove a product’s value was much shorter than they had realized.
Having identified this fundamental difference between their expectations and the reality of how prospects were making buying decisions, the team made a plan to focus heavily on activation. After analyzing data and exploring different ways to understand how activation worked for their products, Shaun realized that they had a ‘zero-to-one’ problem. “Effectively, we learned that if someone was a daily active user (DAU) on any day during the first week—except day zero, which was the first day—that was a pivotal moment for us,” Shaun says. “We knew at that point whether or not we had shown enough value on the first day in order to make someone come back.” From there, the team measured which users came back in the second week, and worked to create a “second week wow,” the second key lever to drive activation.
On the surface, the formula is pretty simple: deliver value very quickly so that a user is willing to come back again and eventually form a habit, and then find ways to deepen engagement in order to create an even more connected relationship with this already happy customer.
It seems like a no brainer, but there are so many ways it can go wrong. “The reason a company fails to retain customers is a combination of a million different paper cuts,” Shaun says. “Finding and eradicating the million things that cause people to get lost and fail is harder than delivering big features designed to solve some of their deep pains. Uncovering the truth about what drives them away is a complex journey of discovery and learning fueled by constant experimentation.”
Applying that same level of intense deconstruction to the activation process is critical. There are plenty of examples of SaaS companies that did an impressive job of acquiring new users, but did not actually convert them into activated users who were experiencing the value of the product in a tangible way. Companies like BranchOut, LivingSocial, and Fab looked like they were on a course toward great success, but it turned out they were losing more users on the back end than they were activating on the front end. Ultimately, the math just didn’t work out.
Landing Your First Users and Finding The Right Metrics
As they were adapting the growth concept for B2B, Shaun and his team realized the important role of the first user within an organization. “The very first user is typically the hardest to get over the line,” he says. “They have to set up the software and get it into a position that proves value to other people within the company.” Bottom line: if you don’t activate that first user, there won’t likely be any additional users, and the account will be dead. But, while activating that first user is critical, you still have to activate secondary users. The activation flow for these two user types will likely be slightly different.
For either group, the first place to start is the zero-to-one problem, which is all about survival. “You have to be open and honest with yourself when you look at the very early periods when a customer is first interacting with your software,” Shaun explains. “You need to look at your metrics and data to determine if the user is surviving those very first interactions.” Shaun recommends getting as granular as you need to—asking if the user survives from day one to day two, from hour one to hour two, even from minute one to minute two—whatever it takes. You’ll probably be surprised by the drop-off rates from one point to the next.
Of course, to know how to affect positive change, you need to look at more than just a survival metric. “You can’t move a survival metric by itself,” Shaun says. “You have to change other elements of the behavior or get users to engage more deeply with different features of your software in order to improve retention.” To accomplish this, Shaun’s team uses input and output metrics. Input metrics relate to things that you can affect directly and which measure value. Output metrics, on the other hand, are the results of the input—things like engagement or survival.
As an example, engagement in Spotify might be measured in terms of time spent listening to music. To influence the behavior that increases time spent listening, Spotify would need an actionable input metric such as time spent per session. One way to increase the time spent per session might be to add discovery features or social sharing features that would encourage or entice users to explore and/or share new music.
For Atlassian’s project and issue tracking product, Jira, there was an obvious correlation between users creating a project and creating an issue in the project, but—because the software couldn’t deliver any value without those actions—that observation wasn’t really helpful to the growth team. However, as Shaun’s team dug deeper, they discovered that if a user created three issues and invited someone else to Jira within the first week, that user’s chances of survival into the second week increased substantially. This provided a much more actionable insight.
Facilitating Instead of Forcing
While it’s important to uncover the right input and output metrics, Shaun stresses that you shouldn’t ever attempt to force people to take those actions. Users need to be engaging voluntarily. Your job is to be authentic about how you drive people to complete these behaviors, enabling and facilitating what they already want to accomplish within the software.
For example, the onboarding flow for Jira evolved through hundreds of iterations before arriving at the highly effective version the company uses today. Throughout all these changes, the team was constantly working to understand what it was that users were trying to achieve and how the software could support that effort. An early experiment called the 12-step program involved a mandatory wizard that walked new users through the key concepts of Jira. The concept made sense because Jira is a complex piece of software, so user success required a strong understanding of the basics. But forcing users to go through this process before showing any value was not an optimal experience.
While the 12-step program approach was successful, the team improved upon it with something they called choose-your-own-adventure. This version gave the user three options after logging in: help me create a project, let me browse existing project, or—for users who already knew what they were doing—get out of the way. “This seems like a trivial screen, maybe thirty lines of code,” Shaun says, “but it worked so effectively because it helped guide new users past the point of logging in to a place where they could take the actions that we knew would substantially improve their activation.”
The takeaway is that you should always be testing different aspects of your onboarding process in order to optimize the user experience. “I always look at things through the champion challenger framework,” Shaun says. “It’s not about winning or finding the one, final answer. It’s about seeing if you can do better.”
Getting Down in the Weeds
Shaun’s single best piece of advice is all about getting granular in your approach to activation. “The first step is to model out your early stage retention and think about it at a level of minute detail,” he says. “You don’t just want to look at it in terms of days, but also in terms of minutes. You want to assess every click and every form field. Each step in the process is probably a massive source of friction in ways that might surprise you.” Friction leads to confusion, which in turn leads to the user giving up, so it’s vitally important to eliminate friction wherever you can. You want to save your user from those million paper cuts that lead to drop off.
What’s interesting (and rewarding) is that even though the changes you make might be small and nuanced, it’s quite likely that you will uncover strong ROI. “It’s almost like free money,” Shaun says. “Because there’s not a lot of work involved in running five or ten experiments a month in activation.” And it’s important to run those experiments so you can get it right. You’ve spent a great deal of time, effort, and money on content marketing, advertising, and paid acquisition to acquire those users. You need to be able to deliver the value you promised so that those users will engage more deeply and stick around for the long term.
“The ROI will be pretty clear because you’ll not only get revenue, but you’ll also have happy users,” Shaun says. “And happy users refer other users, so a strong activation effort will not only improve retention, it will also have acquisition benefits. Word of mouth is always the best form of acquisition, and it’s the best way to drive authentic growth.” And a smart activation strategy will ensure that you get each user started off on the right foot.
Todd talked to us about what exactly “product led” means, how a product-led strategy extends way beyond acquisition, and how the less-is-more concept can make a big difference.