feel about privacy or giving away your data or holding data from someone else, understand that, when you ask somebody for something like their name or their email address or for the right to contact them in some way, you are asking for something of value to them, and you need to offer them something of value in return. Maybe that’s access to your product, but a lot of people won’t hand over an email address or a Facebook login without understanding the value you’re giving them.
This is what I call the conversion step. Now, for those of you who work in ecommerce, I’m using this term a little differently than you may be used to. For most ecommerce products, the conversion metric is the sale. You talk about converting a visitor into a buyer, but I’m talking about it a little differently. A conversion in this case is something that happens when there’s any exchange of value—it could be a visitor creating an account or signing up for your mailing list. It’s that moment when they decide to join your product in some way.
Typical answers to this question could be:
• Have the user fill out a profile for better recommendations.
• Ask for an email address on a landing page in exchange for early access to a new version of the product.
• Get the user’s mobile number and permission to text them when their car arrives.
One important thing to note is that you should always include the reason the person would give you the information when defining this step of the User Lifecycle Funnel.
QUESTION 5: How will you make money from this user?
I won’t lie. This is my favorite step, but I’m always a little astounded by how many members of teams don’t know the answer to this in any detail. They might know the basics like “we sell advertising,” but they don’t know things like how to make the number go up or down or which types of advertising pay the best. Or, if they sell products and services, somebody on the team won’t know what things like gross margin are on products or what the balance is between selling hardware and selling customer support for that hardware. This is worse in startups where revenue isn’t a focus yet. Even if you’re not taking people’s money today, you still have to have a plan for how you will eventually make a profit. And no, the answer is not “volume.”
In other words, a lot of people on your team may not understand your actual business model, and that’s a problem if they’re making any decisions, because they’re going to make bad trade-offs. They’re going to make choices that lose you money because they don’t know that they’re losing you money. And that’s not OK.
Remember, when you’re answering this question, you need to be aware that different users might generate revenue differently, and some might not generate it at all. If you run a nonprofit or a government product, all of your revenue might come from donors or taxes, and your users would not have a revenue step. If you run an ad-supported business, the viewers might generate revenue by viewing ads, while advertisers would provide revenue by paying you for showing the ads. Yes, it’s the same money, but you should track it in both places.
Here are some typical answers to this question for specific companies:
• Viewing an ad: Buzzfeed readers
• Making a purchase: Amazon purchasers
• Paying for a seat license: Salesforce managers
• Moving from the free plan to the pro plan: Dropbox new users
QUESTION 6: What will happen within the first couple weeks to turn early users into long-term, retained users?
Finally, you need to know why people are going to come back time after time. After all, people might want to use your product. They might even be really motivated to use it. But if motivation were all it took, we’d all be going to the gym five nights a week, and I wouldn’t have forgotten my New Year’s resolutions by February.
Something will happen in the first week or two of using your product that should point to someone becoming a long-term user. Facebook had an interesting metric. It found that people who connected with seven friends in the first ten days of usage were very likely to be retained and still be users in a few months. When new users connected with friends quickly, they found value in the product sooner and created a network that would keep drawing them back week after week.
Finding that link was useful to Facebook, since it meant that it could focus on improving a metric—connecting with friends—that was useful for long-term retention but that could also be measured within the first couple of weeks.
You have something that will make people come back time after time and keep your product compelling. Much like with question number 3, there’s no typical thing here. It’s entirely dependent on your product and the value it offers its users.
STEP 2: Make the Funnel
Now that everybody has written down their answers, you’ll have a bunch of sticky notes and a room full of slightly confused team members. The next step is to put your funnel into order.
I told you to ask the questions in a particular order, but that may not be the right order for your particular product.
Take a look at these two different funnels shown in Figure 1.5. Do you see the difference?
FIGURE 1.5 The order of the steps may vary depending on the product or user.
They look very similar, but they represent entirely different types of products and users.
This first one might be a media company like BuzzFeed or YouTube or the New York Times.
In that funnel, the user could become aware of the product by seeing an article or video shared on social media—that’s awareness. The education step is very short—probably just the headline or maybe a comment made by a friend. The second they click on the link to view the entire article or video, they generate revenue by creating an ad view.
Maybe then they start to realize the value of the product and click on a few more articles or take a quiz, which shows engagement. They may come back and become a recurring user in exactly the same way for months. They may or may not ever decide to create an account or download the mobile app, which would be a conversion activity, or they might convert days or weeks later. In fact, conversion in this case is entirely optional.
The second product might be a Software as a Service (SaaS) tool for enterprises with a freemium plan. For example, imagine some sort of customer relationship management tool that lets you use the product for a little while before asking you to commit.
In this case, the user might become aware of the product because they heard about it at a tech conference, or a new employee talks about a system they used at their old company. You might need quite a bit of education on a system like this—maybe a webinar or a case study, since the customer needs to figure out if it’s likely to be the right thing to introduce to the entire company. Since there’s a free trial, the user can set up an account—that’s
