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Onboarding: The First, Best Chance to Make a Repeat Customer

(Apologies in advance for cribbing the Steve Blank blog structure, but well…it’s a good structure)

I’ve been thinking lately about onboarding.  While definitions vary, I like this one from Tristan Kromer: “onboarding is the process of acquiring and assimilating new people / users into a system [or] culture.”  To reframe that in a business context: onboarding is the process of turning a first-time user into a repeat customer during the user’s first interaction with your product.  It’s what occurs in the time between when a user registers for your product and when a user passes judgment on it.  A successful onboarding session will convince a first-time user to become a repeat customer by:

  • Explaining how to use the product,
  • Demonstrating the product’s value, and
  • Fostering enjoyment.

For many products, the process is simple enough to map.  Consider a simple example: an electric shaver.  An instruction booklet explains how to set up and use the shaver.  The first use then demonstrates how well the shaver functions.  If all goes well, the customer understands how to use the shaver, enjoyed using the shaver, and has thus been convinced to continue using the shaver.  A successful onboarding.

The Unique Challenge of Social

Social web products offer a unique challenge to onboarding.  Because they draw value from network effects, bringing a new user into the fold is often difficult, especially where that user’s networks aren’t members of the service (note: this is why smart social companies tend to target networks rather than users in the early days—for social, capturing users is a byproduct of capturing networks).  I’ve often felt that the social products I sign up to as an early adopter offer are completely different from the ones I experience once I’ve established a network.  So how do you explain and demonstrate a handicapped product?

Explaining

I think builders of social web products often forget about the incredibly intimidating feedback mechanism built into their networks.  If I don’t use an electric shaver properly, I get a bad shave.  If I don’t use a social network properly, I get publicly embarrassed.  This leads me to two assertions:

  • The threat of public embarrassment generally leads people to act tentatively
  • Tentative users are less valuable than active users

If you believe these assertions, then it will make sense when I say that, during onboarding, social companies can’t stop at explaining their functionality, they must also explain their culture, because the culture is an essential part of the product.  Consider Hashable.  Mike Yavonditte (Hashable’s CEO) has spent an inordinate amount of time on Twitter educating users about his product.  Sure, he talks about features (e.g., which hashtags will get read automatically), but he also talks about appropriate uses and what constitutes a faux pas (e.g., don’t intro people you don’t know).  It’s great to see Mike work his ass off to build a culture among users, but whenever I read his tweets, I can’t help but think that these culture lessons should be explained during onboarding. (Side note: companies beyond the earliest stages generally do explain cultural norms during new employee onboarding to speed up the newbie’s path to productivity; I’m not sure why the same logic shouldn’t apply to users).  Indeed, onboarding is a social product’s best opportunity to begin inculcating new users into the norms and expectations of the product’s culture, thereby smoothing the user’s transition from from hesitant lurker to active user.

Demonstrating

Because the value available from a social product depends on the size and makeup of a user’s network, social products find it difficult to demonstrate value to new users.  On Twitter, for example, a user following 10 random, unconnected people is experiencing a substantially worse product than a user following 150 members of a loosely organized expert community.  Onboarding is a chance to guide new users to the point where they can see for themselves the potential in a social product.  Too often, the social product onboarding helps you connect with disparate people or topics, when it would do better to help you connect with one or two integrated networks.  

To use Twitter as an example again, rather than having new users follow a few top tweeters in a few broad topics that interest them (the status quo), a better process would help them find a deep network of tweeters to follow in an area of interest to them.  In this way, new users would immediately see the value of an integrated tweetstream that’s amenable to deep exploration.  For instance, what if upon registering, Twitter asked a new user to connect her Facebook account.  Twitter now knows that this user’s first interest is the Detroit Red Wings.  Using Sulia (disclosure: Sulia is an IA Ventures portfolio company) or Twitter’s own Lists feature, Twitter could then serve the user an example tweetstream full of tweets about the Red Wings (http://www.sulia.com/channel/detroit-red-wings/) and Hockey (http://www.sulia.com/channel/hockey/).  Under this scheme, new users would be exposed to a large chunk of Twitter’s power (high-fidelity expert analysis of myriad topics) during their first session.  Twitter would thus make a case for itself as the go-to site for consuming information about something the user cares about deeply during that user’s very first interaction with the product.  Companies should always be looking for ways to increase user engagement (engagement lowers churn, which translates into increased customer lifetime value), and onboarding is the first, best opportunity to do it.

Ancillary games

Some social products accept that there will be a time lag between signup and network creation/value extraction.  To compensate, they create ancillary games which offer users a sense of achievement while they set up their network.  A great example of this practice is LinkedIn, which encourages users to complete their profiles to reach “100% completion.”  It’s a good concept, but companies should remember that profile completion games are only a complement to helping users build useful networks.

Takeaways

  • Onboarding is the process of turning a first-time user into a repeat customer
  • A successful onboarding process will explain a product and demonstrate its value in an enjoyable way
  • During onboarding, social products should teach users about both their product and their culture
  • Profile completion games are not a substitute for helping users create useful networks during onboarding
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Reason #1004 why Reed Hastings is my favorite public-company CEO

Henry Blodget (Business Insider): Lastly, I have a couple questions about Netflix’s culture. I was fascinated by the presentation you did about that a couple of years ago. For example, the fact that you have no set vacation policy company-wide—that folks can take as much vacation as they want. When I broached that idea here asking if it was a good idea and if we should do that, people freaked out because they said “No, what’ll happen is everyone will work around the clock and I will feel like I can never take a vacation.” Why do you have the no vacation policy?

Reed Hastings (Netflix CEO): I would say we don’t have a “no vacation” policy, that’s a little ambiguous. Instead, we have no policy on vacation. Perhaps because I take lots of great vacations it sets a good example. If you [Henry] were more visibly on vacation and then when you asked the question about it, everyone would probably relax. To the degree that you hardly ever are seen to take vacation, that might scare people.

BI: So it’s my fault?

RH: I think so. 

BI: And the other thing you said that jumped out was “We’re not a family, we’re a professional sports team. Therefore, we’re going to try to have the best players at every position, and that means that folks who are B-players are going to be working elsewhere.” And when I raised that as a possibility here, people said “It’s ridiculous. There are lots of players who are B’s who want to be A’s. It’s just much too harsh.” What’s your reaction to that?

RH: You’re over-simplifying with A’s and B’s. There’s a lot of graduations in terms of how someone performs. We’ve often had someone who was performing OK at one job so we move them to another job and they do fantastic. So it’s not even that much a reflection on the person. But in general, a sports-oriented model is “If you want to win the championships, you have to have great players who can work together.” You need both of those, and so that’s what we focus on: getting great people who can work together. 


Read more: http://www.businessinsider.com/netflix-ceo-reed-hastings-interview-2011-4?op=1#ixzz1JDisM3jF

Quote IconI regard romantic comedies as a subgenre of sci-fi, in which the world operates according to different rules than my regular human world. For me, there is no difference between Ripley from “Alien” and any Katherine Heigl character. They are equally implausible.

Flick Chicks’, by Mindy Kaling in The New Yorker (via alexjcampbell)