CUSTOMER ACTIVATION

Accelerate your business with these expert tips on "Customer Activation". Analyse and discover this TIP!

WHAT IS IT?

It measures our ability to convert a potential prospect into a potential customer, i.e. it measures the % of potential prospects who have taken the action we deem necessary to become a potential customer, be it registering, downloading an app or opening the door of the shop. 

WHY IS IT IMPORTANT?

It's an important metric because what it indicates is our ability to spark enough interest in a prospect to get them to consider following up with us (and potentially become a customer)... and it's very much related to the quality of the customer experience. It is absolutely critical because usually getting a prospect activated means that we have a better chance of converting them into a customer in the future (because they have left us their email or have shown genuine interest).

HOW IS IT CALCULATED?

The activation rate measures the conversion between the acquisition and activation status, it is calculated by dividing the users that we consider 'activated' (i.e. who have downloaded the app, who have viewed x products on the website, who have registered) by the 'acquired' users (see previous point).

To be more precise, the calculation formula would be:

Customer Activation = (Activated Users / Acquired Users) x 100%

Where acquired users are those who have shown interest in our company or product and activated users are those who have completed the desired action that we consider as activation, e.g. making a purchase, downloading an application, creating an account, etc. It is important to define what action we consider as activation and measure it on an ongoing basis in order to evaluate the effectiveness of our activation strategies and improve our users' experience to achieve greater success in converting potential customers into actual customers.

Customer activation in well-known companies

Here are some examples of well-known companies and their approach to customer activation:

1. Airbnb: One of Airbnb's main success factors has been its ability to activate new users and get them to make their first booking in a short period of time. Airbnb achieves this through a very simple and easy to follow onboarding process for new users, allowing them to feel comfortable and confident in making their first booking.
2. Uber: Uber focuses on activating its customers through a quick and easy registration process, which allows users to start using the app immediately. In addition, Uber offers attractive incentives for new users, such as discounts on their first ride, which increases the likelihood that they will make a booking.
3. Spotify: Spotify focuses on activating its users through a personalised and highly relevant experience. After users sign up, Spotify uses algorithms to analyse users' musical tastes and deliver highly personalised music recommendations. This increases the likelihood that users will start using the service and discover new songs and artists.
4. Dropbox: Dropbox focuses on activating its users through a frictionless and highly automated onboarding experience. After users sign up for Dropbox, the service guides them through an easy-to-follow setup process that allows them to start using the service immediately.
5. Amazon: Amazon focuses on activating its customers through a quick and easy shopping experience, as well as a highly personalised recommendation system that shows users relevant products they may be interested in. This increases the likelihood that users will make a purchase and become repeat Amazon customers.

Practical examples of customer activation

Here are some practical examples of customer activation:

1. If we have a mobile application, customer activation could be measured by the percentage of users who download the application and open it at least once in a given period of time.
2. In the case of an online shop, we could measure customer activation by the percentage of users who add products to the shopping cart.
3. In a service company, such as a consultancy, client activation could be measured by the percentage of potential clients who request a meeting to discuss their needs and objectives.
4. In the case of a restaurant, customer activation could be measured by the percentage of people who make a reservation online or who make an in-person visit after having seen the online advertisement.
5. If we have a software company, customer activation could be measured by the percentage of users who download a trial version of the software and use it for a certain period of time.

Case study for an entrepreneur to practice with customer activation calculation

Suppose we have a mobile application that offers personalised online training services.

To calculate the activation rate of our customers, we follow the following steps:

1. We identify our activation metric: in this case, we will consider a user to be activated when they complete their first training session.
2. Let's compile the data: during the month of January we acquired 1000 new users.
3. We calculated the activation rate: during the month of January, 300 users completed their first training session. Therefore, our client activation rate is 30% (300/1000).

With this information, we can analyse whether our activation rate is adequate and whether there is room for improvement to get more users to complete their first training session and become active customers. We can also compare our activation rate with other competitors in the market to see where we stand in the industry.