Using Friction to Your Advantage During Customer Onboarding 📈
Four tactics to help customers get over the hump and see value in our products
Hi friends! 👋
I hope you’re having a wonderful Sunday. We spent the morning at the Denver Zoo enjoying some beautiful weather here in Colorado.
This week’s newsletter includes one of my high-level takeaways from a workshop I participated in recently. It’s all about friction and how we can use it to our advantage to create successful outcomes.
Enjoy! And, please let me know if this sparks some thoughts on your side.
Have an amazing week, and we’ll see you next Sunday.
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Using Friction to Create More Successful Outcomes
Let’s imagine you’re the founder of a new budgeting app. Your product is grounded in a very noble ambition—help customers pay down debt, appropriately budget their money, and experience financial freedom.
Compared to other products in the market, you have the best marketing, the best technology, and a feature set that doesn’t exist anywhere else. You launch with great acclaim and receive over a hundred thousand signups over the first few days.
Everything seems like it’s going perfectly until you start looking at the numbers in detail. It turns out that over half your customers aren’t connecting their bank account (a necessary step) or budgeting a single dollar.
You might have a lot of signups, but you have a clear problem converting these signups to active customers.
Earlier this year, I participated in a workshop on this exact topic—Common Cents Labs presented by the Center for Advanced Hindsight at Duke. The central focus was how to use our understanding of behavioral sciences to effectively guide customers over the “hump” so to speak. How can we shape the environment to create the decisions, behaviors, and outcomes that we want?1
Intentions, Barriers, and Environments
Occasionally, customers sign up for our products and services just simply to try them out or because they’re curious. Usually though, they have a clear intention in mind. In the budgeting example, maybe the intention is to finally pay off the $10k in credit card. Pulling examples from my past, we can assume a customer signing up with Zapier wants to automate a task and/or make some process easier to manage. At WordPress.com, they likely want to build and launch a beautiful website.
Regardless of the product or service, your customers have a particular reason for signing up, and it pays to understand that reason on a deep level.
After signup though, customers inevitably encounter barriers that stand in the way of achieving that desired outcome. These barriers can be extremely logical and surface-level (e.g. a bug in your app is blocking the bank connection) or more psychological2 (e.g. you haven’t developed enough trust when asking for their bank login creds).
It’s safe to assume that there isn’t a straight line between a customer signing up for your product and fulfilling their original intention. Inevitably, we’ll see bumps (opportunities!) in the road that we can address.
By accounting for these friction points, we can create an environment that’s more conducive to success for our customers. We can get very tactical in defining:
The intention or goal customers have when they signup.
What success looks like in terms of actions and outcomes.
How we can close the gap between these two ^
Let’s take our fintech app for example and look at a few strategies to effectively shape the environment.
Four Strategies for Friction
Before looking at strategies, we have to define a desired outcome. For this example, let’s say that our goal is to increase the conversion of signups to “activated customers.” We’ll define “activated” to mean:
A customer that has linked two bank accounts and tracked transactions across 10+ categories in a single month.
Now, let’s look at some strategies within this context.
Reduce friction - Make it easier
This is the most obvious answer. If you want a customer to take a certain action, make that action as easily as possible.
In our financial app example, maybe we pre-fill their budget with 15 basic categories so new customers don’t have to start from scratch when they signup. This removes the “paralysis by analysis” and gets them into action mode sooner. They can customize the categories later on when they have more experience, but we’re starting with the ball rolling downhill towards our metric.
Add friction - Make it slightly harder now, easier later
A non-obvious strategy is to add more friction to the experience. We typically think about making things easier initially, not harder. However, if there are steps that we know lead to more successful outcomes for our customers, it might make sense to force them to take these steps during signup.
Let’s go back to the category example above. If we define success as budgeting across 10+ categories, setting up their initial budget categories is an action that has to take place at some point.
During signup, we could add an additional step that requires them to choose categories to add to their budget right away:
People have the most success when they effectively categorize their money! Here are 20 of the most popular categories. Choose 10 to add to your budget right away. Don’t worry—you can always customize these later!
Now, when they link their bank account, we can automatically start matching transactions to one of these ten categories and help the customer experience success sooner.
This creates a more challenging signup experience, but the customers that do make it over this hump are more likely to be successful moving forward. Might be worth the tradeoff!
Re-order the friction - Build some momentum early
Remember in our definition of success, we stated that “activated” customers need to have two or more bank accounts linked. One strategy is to force them to link accounts during signup; they can’t proceed otherwise. This might work! It also will likely alienate folks timid about giving bank account details to an app they just downloaded.
Instead of pressing harder at the beginning, we can ask them to link a bank account later on, essentially moving the biggest bump later once we’ve had a chance to build some trust.
Imagine a signup experience where you’re offered (but not forced!) to link a bank account. If you choose not to link right away, you’re encouraged to scan receipts for the first 24 hours, and we drip you tips on categorizing transactions and getting value out of your budget. Once you have five transactions categorized, then we drop you a nudge:
Awesome work categorizing your first five transactions! Make it even easier to categorize purchases moving forward by linking your bank account.
Rather than attempt the massive bank account hurdle at the start, we wait until we build some trust.
Equalize friction - Force customers to chose
Let’s say that we’ve overcome two of the hardest hurdles in activating our customer. They’ve linked a bank accounts and have 10 categories ready for action in their budget. The last step is to actively track some transactions when they come in.
Imagine we send our customer a push notification each day nudging them to open the app and review their activity from the previous day.
The action we want is for them to deliberately categorize each transaction. The easier choice is let everything sit in “Uncategorized” until there’s an overwhelming mountain of transactions, and they give up.
Our final strategy is to make the action we want and the easier choice equally as difficult/cumbersome/friction-full.
For example, we could auto-categorize transactions into buckets based on the data we have. Now, marking a transaction as “Uncategorized” and selecting the correct category require the same amount of effort.
Or, we make this an active choice. We don’t even create an uncategorized bucket because we know it doesn’t lead to great budgeting habits later on. When each new transaction comes in, we force you to choose a category. Again, we might drop some customers early on, but the customers that do make it through this filter would be more successful later on.
Over to You
I love this idea of using friction to your advantage. Often times, we’re solely focused on reducing friction, but Common Cents Labs really helped frame friction as a tool we could use to create more effective outcomes.
What resonates with you? How do you see friction playing out in your product cycle?
Obviously this assumes you have the best intentions in mind. These same tactics could encourage behavior that’s not in the customer’s best interest. That makes you a jerk.
I’m planning to write a full newsletter next week about these psychological/emotional barriers because I think they’re incredibly important!