Derive the activation point

1. Where this step sits

Finding activation points is the first step of a nine-step retention checklist. The nine, in order:

1. Figure out activation points.
2. Onboard customers.
3. Incentivize customers to activate.
4. Link your community, and run events.
5. Correct or fire customers who behave badly.
6. Offer an annual payment option.
7. Hold a cancellation call, or show a cancellation video.
8. Survey your customers regularly.
9. Build a four-step customer journey.

The checklist reduces keeping customers to simple activities said to work across many businesses. Not every step will apply to yours. If you read one and think it will not work for you, you might be right, but many of them will.

Make finding activation points your top priority. They are said to have the greatest effect on how many customers leave: once you find what keeps people from leaving, you can do more of it and keep them.

2. What an activation point is

Activation points are leading indicators of whether a customer will stay. Write yours in this form:

Every customer who does X or gets Y stays longer than the customers who do not.

Exact numbers matter less than knowing these first:

• Customer engagement matters.
• Splitting customers into groups by how engaged they are makes your retention tools work better.

Once you know the point, you have a choice. You can hope customers get there on their own, or you can help them get there, for example with tools, education and other resources.

3. Find yours

Work through these in order.

• Start with the customers who left. Gather all the data you can about them.
• Of those, keep the ones who stayed 3 months or longer. Three months is a convention; there is nothing special about it, and you can use whatever length of time you want.
• Sort that list by who spent the most money, and take the top 20 percent.
• Learn everything you can about that group. Look at demographics, psychographics, income, business size, revenue and any other data you hold. If you don't know, survey them.
  • An example given: a public-relations agency studies its customers and finds that one kind of customer pays more, stays longer and gets better results. It serves only them. This is offered as a true story, of a company that grew tenfold over the next 24 months.
• Work out how they used what you sell and how you treated them. Use the common-factors method from SOP 133 — Run the five retention habits and expect the first-month rise, section 2: the factors they share become your candidates for an activation point. Narrow the candidates to 5 and work your way down the list. Some will matter and some won't. Find the ones that do.

4. Update your messaging and your onboarding

You have just studied the biggest spenders who stayed the longest. Now advertise to people like them. Change your paid ads, your organic content and your customer onboarding so that they select for that customer. Then you can put your effort into treating them that way.

• Messaging. In one example, a business had a competitor that sold just as many customers as it did and spent about the same to win each one. The competitor ran ads to everyone in the market. The business targeted only the people with the highest chance of staying longest, who therefore pay the most. The business's customers were worth far more than the competitor's, and it made far more profit. It got there by finding what its top 20 percent of customers had in common and using those factors to qualify prospects before they bought.
• Onboarding. In one business, churn was 8 percent and the goal was 4 percent. The question asked was: when do people first get value from what they bought? The closer it was studied, the clearer it became that the people who left had not made their investment back quickly, and the people who stayed longest had made it back in their first 30 days. So a fast-cash play was created, and every client was pushed to earn back their investment in their first 30 days. Running a fast-cash campaign is SOP 81 — Run a fast-cash campaign.
  • Churn went from 8 percent to 3 percent within 6 months.

Common activation points. They are different for every company; a few common ones:

• A business-to-business service company: the first time the customer gets leads.
• A software company: the first time the customer logs in and sees the dashboard.
• A physical product: the first time the customer uses the consumable product.

5. The action step, and when to look again

• Identify your best customers.
• Pin down your activation point.
• Change your messaging so it draws in customers like your best ones.
• Change your onboarding so it drives customers to the activation point.
• Retest every 6 to 12 months.

The first part, as questions: Who are the top 10 to 20 percent of your customers? That group is your avatar. What did the top 10 to 20 percent do? That is their activation point. Then update your messaging to attract the right customers, and your onboarding to drive them to the activation point.

6. Who comes before what

One of the highest-leverage moves in a business is simply to serve better customers. Improving a $100M business by 10 percent and a $1M business by 10 percent may be the same work, but the first is worth 100 times as much to its owner. Find those people. Price appropriately. Ignore the rest.

7. What this page does not decide for you

• How big the top group is. The steps in section 3 take the top 20 percent; the questions in section 5 ask for the top 10 to 20 percent.
• Which customers you start from. The steps in section 3 start from customers who have already left and keep those who stayed 3 months or longer; the questions in section 5 ask about the top of your customers without saying whether they have left. Not established on this page.
• How to tell which candidate matters. You work down a list of 5, and some will matter and some won't. How to test each one is not established on this page.
• What to do when none of the candidates matters. Not established on this page.
• Another route to the activation point, mapping the journey and interviewing your best customers, is SOP 157, section 6.

8. The checklist

Step	What you do
Define it	Every customer who does X or gets Y stays longer than those who do not
Priority	First of the nine steps; your top priority
Pool	Customers who left; of them, those who stayed 3 months or longer (a convention; any length works)
Rank	By money spent; take the top 20 percent (10 to 20 percent in the questions of section 5)
Study	Demographics, psychographics, income, business size, revenue, other data; survey if you don't know
Narrow	What they share, cut to 5 candidates; some will matter and some won't
Messaging	Advertise to people like your best customers; qualify prospects on the shared factors
Onboarding	Drive every new customer to the activation point
Examples	Leads (business-to-business service); first login and dashboard (software); first use of the consumable (physical product); they are different for every company
Look again	Retest every 6 to 12 months
Who before what	Serve better customers; price appropriately; ignore the rest

9. What this page does not cover

Onboarding is SOP 139 — Onboard customers to the activation point. Incentives are SOP 140 — Incentivize activation and time unlocks past churn points. Community linking is SOP 141 — Connect members to each other. Correcting or firing bad customers is SOP 142 — Correct or remove bad customers. The customer journey is SOP 143 — Build the four-milestone customer journey. Annual payment options are in section 5 of SOP 76 — Design cancellation terms and the waived-fee offer. The cancellation call is SOP 132 — Run the cancellation call. The survey is SOP 131 — Run the keep-one and remove-one survey. How the five retention habits were found, and what to expect in the first months, is SOP 133. Working out what a customer is worth over their lifetime is SOP 55 — Compute lifetime gross profit and the ratio that gates spending. The first activation point as an upsell moment, where the words mean a first good result, is SOP 222, section 2.