Activation & onboarding review

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

---

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.

---

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.

---

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.

---

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 From: PM, Onboarding Re: Onboarding review

Summary

Our activation metric is measuring the wrong thing. Completing the setup checklist is 61% of sign-ups, but it barely separates users who stay from those who leave: 30% of completers are retained at day 60, against 24% of non-completers. The behaviours that matter are connecting a bank account and categorising transactions. Users who do both are retained at 78%. Users who do neither are retained at 6%. I recommend redefining activation, putting bank connection at the centre of onboarding, and reshaping the design proposal around it.

What activation should mean

Activation = connected a bank account and categorised 10+ transactions in the first 7 days.

Baseline: 27% of August sign-ups (1,080 of 4,000). This definition reflects the core value (seeing where money goes), is the only combination with a large retention gap, and is measurable from event data.

Evidence

Four things stand out:

• Bank connection and categorising are complementary. Each alone yields 13–16% retention; together they yield 78%. The value appears only when both happen.
• The biggest fixable leak is after bank connection. 46% of users who connect a bank never categorise 10 transactions.
• Budget creation is weak in week one. Its retention (33%) is barely above the 28% baseline, so it shouldn't define activation yet.
• App-open frequency is an outcome, not a cause. It's a useful engagement metric, but users who are already activated open the app more.

These are correlations. Users who do more are probably more motivated to begin with, so the 78% overstates the causal effect. We need experiments to confirm the lift, but the gap is large enough to act on now.

What to change in onboarding

1. Make bank connection the first real step. Only half of sign-ups connect, and the cosmetic steps (name, theme) come first. Move bank linking up, explain the payoff ("see where last month went"), and reduce friction: clear read-only reassurance, and recovery paths for failed connections.
2. Help users categorise 10 transactions quickly. Pre-suggest categories, allow one-tap confirmation, and show progress ("3 of 10: your spending is taking shape"). Target the 46% who stop short.
3. Demote checklist items that don't carry the value. Theme, name, and notifications should be optional. The savings goal is untested in our data, so test it before cutting it.
4. Move budget creation later. Prompt it after the user has categorised 10 transactions, and measure whether that lifts budget creation and retention in weeks 2–4.

The design team's proposal

The celebration screen and progress bar are good craft aimed at the wrong target. A progress bar on the current checklist will push users through theme and notifications faster. That raises the 61% number without touching the steps that predict retention, and may do nothing for bank connection.

The celebration is valuable, but only at a milestone that matters. I'd ask the design team to rebuild the progress bar around the two activation steps (bank connected, 10 transactions categorised), with the celebration triggered when both are done. We test it against the current flow and ship only if activation moves.

Next quarter's goal

Replace "checklist completion 61% → 75%" with "activation (bank connected and 10+ categorised in week one) 27% → 35%."

Sizing: in a 4,000-user cohort, 27% → 35% is about 320 more activated users. At 78% retention, that's roughly 250 more retained at day 60. A checklist point, by contrast, is worth about 10 retained users at current completer retention. Marginal users will retain worse than average, so treat 250 as an upper bound.

35% is ambitious but reachable: it requires bank connection to rise from 50% to about 60%, and categorising conversion from 54% to about 58%. The checklist stays as a leading indicator, not the goal.

Next steps

1. Adopt the new activation definition this week and add it to the onboarding dashboard.
2. Run an A/B test of bank-first onboarding against the current flow.
3. Ask design to rebuild the progress bar and celebration around the activation steps, and test before shipping.
4. Confirm the retention lift with a holdout or experiment, since current figures are correlational.

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.