Activation & onboarding review

Onboarding review: what activation should mean

To: Omar | From: Onboarding PM | Data: August cohort (4,000 sign-ups), day-60 retention

Summary

Activation is flat because we are measuring the wrong thing. Finishing the setup checklist barely predicts whether someone stays. Connecting a bank and categorising 10+ transactions in week one does predict it strongly. I recommend we redefine activation around that, rebuild onboarding to get people there faster, and replace next quarter's checklist goal.

What activation should mean

Activated = connected a bank AND categorised 10+ transactions in the first week.

This is the moment Tidepool delivers its core promise: seeing where your money goes. Only 27% of August sign-ups reached it, so our real activation rate is less than half the 61% we report.

The evidence

Day-60 retention by first-week behaviour (baseline: 28% of all sign-ups retained):

Five things stand out:

1. The checklist is a weak signal. Completers retain at 30% versus 24% for non-completers, close to the 28% baseline. 1,696 people completed it and still churned.
2. Bank plus categorisation is the strongest signal. Users who did both retain at 78%. They make up 27% of sign-ups but 75% of everyone retained at day 60.
3. Each half is weak on its own. About 920 people connected a bank without categorising, and they retained at 13%. About 300 categorised without a bank, and they retained at 16%. The value comes from real transactions that the user has made sense of.
4. The biggest leaks are at the steps that matter. Half of sign-ups never connect a bank. Of those who do, 46% never reach 10 categorised transactions.
5. Budget creation isn't a good activation metric. Its retention lift is small and only 31% do it. That is worth investigating separately for a budgeting app.

Caveats: this is one cohort and the data is correlational. Motivated users may simply do more of everything. The gaps are large enough to act on, but we should confirm cause with experiments rather than assume it.

What to change in onboarding

1. Put bank connection first. Today it comes after a four-item checklist that we lose 39% of users on. Naming the account and picking a theme add no value at signup and can move to settings. Ask for notifications later, once there is something worth notifying about, such as a first spending summary. The savings goal becomes optional after categorisation.
2. Make connecting a bank feel safe and fast. Address security concerns at the moment of asking, with plain-language reassurance about read-only access. Offer the most popular banks up front. Instrument the drop-off between starting and finishing the connection, which we can't currently see.
3. Guide the first 10 categorisations straight after connecting. Show recent transactions with suggested categories so each one is a one-tap confirm. End with an immediate payoff: "Here's where your money went this month."
4. Recover people who stall. Send a reminder to anyone who connected but hasn't categorised within 48 hours. That group is about 920 people a month retaining at 13%.

Each change should ship as an A/B test with day-60 retention as the outcome. That is how we confirm the relationship is causal.

The design team's proposal

A celebration screen and a progress bar are reasonable patterns, but aimed at the checklist they would polish a step that doesn't drive retention. I'd ask design to point the same ideas at the new milestone:

• A progress bar for "connect bank, then categorise 10 transactions."
• A celebration on the 10th categorisation, paired with the first spending insight.

That is a small redirect of their work, not a rejection of it.

Next quarter's goal

I recommend we retire the 61% → 75% checklist goal. Even if we hit it, and every extra completer gained the full 6-point retention gap (which is generous), that would mean roughly 30–35 more retained users per 4,000 sign-ups.

Compare moving just 10% of sign-ups (400 people) into the bank-plus-categorised group. If even a fraction of that 68-point retention gap is causal, the payoff is several times larger.

Proposed goal: raise week-one bank connection plus 10+ categorised transactions from 27% to 35%, with day-60 retention as the guardrail metric. We should set the final target once the first experiment shows how much the metric moves.

Next steps

• This week: confirm the new activation definition with you and analytics, and backfill it for June and July to check it holds across cohorts.
• Weeks 2–4: run an A/B test of bank-first onboarding with the checklist deferred, and add instrumentation to the bank connection flow.
• Weeks 4–8: test the guided categorisation flow and the redirected progress bar and celebration screen.

To: Omar, Head of Product From: PM, Onboarding Date: September 2024 Subject: Onboarding Review & Activation Strategy

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1. What Activation Should Mean for Us

Currently, our definition of activation—completing a checklist of cosmetic preferences (name, theme, savings goal, notifications)—is flawed. It measures vanity completion rather than value realization.

As a personal finance app, Tidepool delivers core value when users connect their financial reality and engage with it. Looking at our August cohort (4,000 sign-ups), the data tells a clear story about Day 60 retention:

• Checklist completers retain at 30.4% (742/2,438).
• Bank connectors retain at 48.2% (964/2,000).
• Users who categorise 10+ transactions retain at 64.5% (891/1,380).
• Users who do BOTH (Connect + Categorise) retain at 78.0% (842/1,080).

Recommendation: We must redefine "Activation" from “completed the setup checklist” to “Connected a bank AND categorised at least 10 transactions within their first week.” This anchors our success metric to actual product utility, shifting our focus from cosmetic setup to establishing long-term financial habits.

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2. The Evidence: Where We Are Losing Users

Our current funnel drops off steeply: 1. Sign up: 4,000 (100%) 2. Setup checklist: 2,440 (61%) 3. Connect a bank: 2,000 (50%) 4. Categorise 10 transactions: 1,360 (34%)

The biggest leak is bank connection (dropping 11 percentage points right after the checklist) and transaction categorisation (dropping another 16 points).

Interestingly, the checklist itself acts as a barrier. Users are spending cognitive load on naming accounts and picking themes before experiencing the core product. Meanwhile, power features like "Created a budget" (33% retention) and opening the app 4+ days are strong secondary indicators, but bank linking and categorisation are the undisputed gateways to retention.

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3. What to Change in Onboarding

To drive our new definition of activation, we need to restructure the first-time user experience (FTUX):

• Kill the upfront setup checklist: Strip out non-essential steps (naming accounts, picking themes, notifications) from the critical path. Move them to profile settings or prompt for them after value has been proven.
• Accelerate time-to-bank: Move bank connection immediately following sign-up. Users downloaded Tidepool to see their money; let them see it instantly via Plaid/Aggregator integration.
• Gamify the "aha" moment: Guide users smoothly from bank connection directly into categorising their first 10 transactions. Use smart auto-categorisation with a clear, frictionless bulk-approval or swipe UI to make reaching the 10-transaction milestone effortless.

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4. Verdict on the Design Proposal and Next Quarter's Goal

The Design Team’s Proposal (Celebration screen + Progress bar): * Verdict: Reject in its current form. Adding a progress bar and celebration screen for the existing checklist optimizes the wrong metric. It puts lipstick on a superficial activation loop. * Pivot: If we redesign onboarding to focus on connecting a bank and categorising transactions, then we can use a celebration screen and progress bar—not to celebrate picking a theme, but to celebrate linking an account and hitting that crucial 10-transaction milestone.

Next Quarter's Goal (Raise checklist completion from 61% to 75%): * Verdict: Abandon this goal. Optimizing checklist completion is a local maximum that misaligns product and user success. Chasing 75% checklist completion will likely result in higher drop-offs further down the funnel and flat-to-declining Day 60 retention. * New Goal: We should replace this with a target to raise our true activation rate (Bank Connected + 10 Transactions Categorised) from the current baseline (~34%) to 50% next quarter. This directly correlates with our actual business health and user retention.

To: Omar | Re: Onboarding review

Recommendation

Activation should mean connecting a bank and categorising 10+ transactions in the first week. Our current definition, completing the setup checklist, barely predicts retention, so the 61% is flat for a reason: we're measuring the wrong thing. I'd fix the path to the real activation event, use the design team's ideas only on that path, and replace next quarter's goal.

Evidence (4,000 August sign-ups, day-60 retention)

Three things stand out:

• The checklist is a weak signal. Checklist completers retain at 30%, against 28% for everyone. The checklist is theme, notifications, account name and goal, so it's mostly cosmetic setup.
• The combination matters, not either step alone. Backing out the overlaps from the CSV:
• Bank only (no categorising): about 920 users, 13% retained.
• Categorised only (no bank): about 300 users, 16% retained.
• Neither: about 1,700 users, 6% retained.
• Both: 78% retained.

Users who connect but never see their spending sorted do worse than average. The value moment is seeing where the money goes, which needs both steps. - Budgets and app opens aren't the answer. Budget creators retain at 33%, close to baseline. Opening the app 4+ days (40%) is engagement, not a lever we can pull in onboarding.

Caveat: this is observational. Motivated users probably do everything, so these numbers show who retains, not what causes it. The recommendations below are therefore tests, not guarantees.

What to change

The funnel is 100% → 50% connect → 27% connect and categorise. There are two leaks:

1. Half of users never connect a bank, and they retain at 8%. Put bank connection first, straight after sign-up. Move theme, notifications and account name out of the critical path (defer or drop them). Look at where the connect flow fails and whether trust copy (read-only access, security) is needed. I can't tell from this data whether the checklist is causing bank drop-off, so I'd A/B test bank-first against the current order.
2. 46% of those who connect (920 of 2,000) never reach 10 categorised transactions. This is the biggest fixable gap, since 78% of those who finish retain. Auto-categorise on connect, pre-fill best guesses, and walk users through their first 10 with one-tap confirmations rather than leaving them to find the feature.

I'd also instrument the funnel by step and by time, so we can see where in the first week people stall.

The design team's proposal

A celebration screen and a progress bar for the checklist would probably raise checklist completion, but that metric barely relates to retention, so we'd likely see a "win" with no change in retained users. I wouldn't ship them as proposed. Both ideas are cheap and sound, though, so I'd redirect them:

• Make the progress bar track the real path (connect bank → categorise 10).
• Put the celebration at the moment of value, such as the 10th categorised transaction, ideally with a first insight ("here's where your money went").

This is a good way to involve design in the work above rather than rejecting their proposal.

Next quarter's goal

Drop "checklist completion 61% → 75%". Pushing it up could even pull effort toward low-value steps.

Replace it with: percentage of sign-ups who connect a bank and categorise 10+ transactions within 7 days. Baseline is 27%. I'd propose a target around 35%, but that is a judgment call until we've sized the effect of the first experiments, so let's set it after a few weeks of data. Guardrail: day-60 retention among those users should hold near its current 78% (if we widen the funnel with less-motivated users, it may dip, and we should watch that). Track the real outcome, overall day-60 retention (28% today), alongside it.

Next steps

• Run the bank-first vs current-order A/B.
• Prototype auto-categorisation and a guided first-10 flow.
• Work with design on the redirected progress bar and celebration.
• Agree the new activation definition and dashboard before the quarter starts.

I'm happy to walk through the numbers if useful.