Rational Growth by AppSumo

http://www.techcelerate.ventures
Trusted Advisor for Series A investment in the UK
An introduction to growing user signups via data and analytical thinking By Sandi MacPherson Via interviews with Andrew Chen
About Techcelerate Ventures

Tech Investment and Growth Advisory for Series A in the UK, operating in £150k to £5m investment market, working with #SaaS #FinTech #HealthTech #MarketPlaces and #PropTech companies.
user signup page product signup flow model
http://www.techcelerate.ventures
Trusted Advisor for Series A investment in the UK
An introduction to growing user signups via data and analytical thinking By Sandi MacPherson Via interviews with Andrew Chen
About Techcelerate Ventures

Tech Investment and Growth Advisory for Series A in the UK, operating in £150k to £5m investment market, working with #SaaS #FinTech #HealthTech #MarketPlaces and #PropTech companies.
user signup page product signup flow model
 
1 
 
Rational Growth 
An introduction to growing user signups via 
data and analytical thinking 
 
 
By Sandi MacPherson 
Via interviews with Andrew Chen 
 
Kindly sponsored by: 
 
 
2 
 
Rational Growth 
We live in world where it's easy to write code, but still hard to get the code into the 
hands of customers and users. 
 
Luckily, the same skills that make technology products possible  the analytical thinking 
that drives the engineering skills for product development  can be applied to 
"engineering" the growth of your users as well. The foundation of this thinking is to 
build a spreadsheet that models out how people discover and sign up to your product. 
By refining this model with real life data, you can to simulate different scenarios and to 
prioritize product changes. Finally, by deploying this code to real life and observing its 
effects, you can then further refine your model to make better changes in the future. 
 
This eBook will focus on thinking about your signup flow, which is often the highest 
point of leverage in your product. Products often lose 80-90% of their users within the 
first couple screens and the first couple minutes of their experience. Improving this is 
key to having a successful product. But the ideas explained here can be applied 
anywhere- whether you're trying to encourage more inviting, sharing, or more. 
 
This is an introduction to the topic  there is much more literature out there, but I 
hope this is a good starting point to learn to think analytically about growth.  
 
Written by Sandi MacPherson (@sandimac) 
Based on interviews with Andrew Chen (@andrewchen)
 
3 
From Visual to Spreadsheet 
"All models are flawed, but some are useful"  George Box (Statistician), 1979 
 
Before you can start this eBook, you need a product. And you need some users 
who are signing up to your product, even a small trickle will do. If you haven't done this 
yet, no optimization process will help you! So start there first. Even better is a product 
that has deeply engaging usage and a vibrant community around it, even if the userbase 
is small. An optimization process will turn good products with small audiences into 
good products with big audiences. But rarely will it turn a bad product into a good one. 
Once you have some data on signups and growth, the first step in thinking 
analytically about your signup process is to create your first model. The goal is to 
reduce the complexity of your product down to a simpler, abstract spreadsheet-based 
representation. This lets us examine each variable in more depth, and see how they 
interact with each other. This offers clues for what you can optimize. 
Usually this kind of model works by breaking down a signup process into a row-
by-row representation of what percentage of users finish each step. This lets you 
identify bottlenecks, and then brainstorm ideas for how to fill in these gaps. 
 
Roughly, here's your plan of attack: 
1. Map out the major steps within your signup process. 
2. Enter baseline data into a growth model. 
3. Come up with hypotheses for how to increase the %s. 
4. Examine their impact by altering the growth model to see the potential effects. 
5. Prioritize the potential hypotheses based your calculations. 
6. Execute the best idea. 
7. Repeat from step 2. 
 
 
 
 
4 
Your Signup Flow 
 
One of the foundational elements in crafting an accurate growth model is to think 
about your product as a step-by-step funnel from the standpoint of the user, rather than 
a content hierarchy. Rather than the homepage to start, think about what a new user 
experiences first  often some kind of profile page or detail page.  
What does your signup flow look like? What are the different actions that are 
required for a new user to signup to your website? What are your completion rates at 
each step? * Here's an example signup flow: 
 
 
 
 
 
 
Based on this flow, and the %s you could reduce this to a spreadsheet model with 
something like below, with a few distinct steps: 
  
 
                                       
*Each page in any signup design has at least one action for the user to complete (e.g. enter 
details, confirm account, etc.). The click-through rate (CTR) is the percentage of users that 
complete that action and continue to the next page.  
Page 
Action 
CTR 
Landing 
Signups 
30% 
Profile setup 
Ask for name, bio, etc. 
60% 
Tutorial 
View tutorial on homepage 
80% 
Total users signed up 
14.4% 
Landing 
Profile 
setup 
Tutorial 
60% 
30% 
Confirmed 
new user 
80% 
 
5 
Build Your Spreadsheet Model 
Creating a spreadsheet model is a great tool to simulate potential changes to 
your signup flow, allowing you to get an understanding of how those changes will affect 
the number of users you're able to sign up and for what cost.  
Modeling your signup flows like this isn't intended to give you the "answer" to 
what you should do. Instead, it's a forecasting tool, and a different way of thinking, that 
gives you some quantitative output in addition to the qualitative decision-making that 
you're already used to. 
Here are two example signup designs to demonstrate this thinking  both 
products are made up, but include some rough mockups so that you can understand 
the details: 
 
1. DailyDiary will show a website that has a long signup process, versus a 
website with a similar signup design with fewer pages and will estimate 
changes in both Customer Acquisition Cost (CAC) and converted users.  
2. TeamShare will compare a signup design that requires payment versus one 
that offers a free trial.  
 
  
 
 
 
 
 
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Baseline example 
Let's say you have a new diary website, called DailyDiary: 
 
 
 
 
 
 
 
1. On the landing page, the 
user is prompted for their 
full name, a password, and 
email. 
 
Often, landing pages are 
profile pages or detail 
pages, not the homepage. 
2. Next the user is 
brought to a page asking 
for more details, their 
notification schedule, 
terms to accept, and a 
CAPTCHA. 
 
3. The user is then 
asked to select what 
style of template 
they'd like to use. 
 
4. Next the user is 
brought to their 
homepage and a 
tooltip suggests that 
they write a new blog 
post. 
 
7 
 
 
 
 
After creating this visual flow, the next step is to quantify the drop-off at each step. 
To measure this, you can use a funnel-tracking feature from a product like Mixpanel or 
Google Analytics, or you can track this manually in your database. For the sake of this 
conversation, let's say you come up with the following: 
 
5. The 'new blog 
post' page is simple 
with few actions, and 
makes it very easy 
for the new user to 
create their first 
post. 
 
6. A follow-up confirmation 
email is sent to the user 
after setting up their 
account. 
 
8 
Page 
Action 
CTR 
Landing 
Signup 
25% 
Details 
More data and captcha 
50% 
Template 
Choose template 
75% 
Dashboard 
Follow tooltip 
60% 
Post 
Create post 
50% 
% of new users who post 
5.6% 
 
 
When multiplied together, each step's completion rates gives a total conversion 
rate of 5.6% who ultimately write a post, which you get from multiplying together the 
variables. 
 
Looking at the model above, you can tell exactly where people are dropping off. 
This is the first step in trying to understand how to go from 5.6% to something better. 
Question is, how would you make this better? 
 
 
 
9 
How to Brainstorm About Growth 
 
Creativity combined with rapid iteration are the keys to making progress on user 
growth. Remember that you can get to 10X growth by a combination of 2Xing a few 
different metrics, hitting one out of the park, or getting 10% increases across the 
board. They all multiply together to be 10X. If you can brainstorm a lot of ideas, going 
for quantity over quality, you'll have a lot of ideas to evaluate for impact versus cost. 
 
 
A few tips on getting the most out of your ideas: 
 Think about each step of your flow and come up with as many ways as possible to 
make that step better, with a higher % conversion. 
 Try to shorten the flow. What could you take out and ask the user to do later? 
What's really required? Try to make it possible to sign in with just the mouse, and 
don't require anything on the keyboard. 
 Try to rearrange the flow so that the highest value proposition for the user comes 
firstnobody likes to start by giving their email address 
 Explore classic landing page techniquestry very long pages or very short pages. 
 Simplify each page, removing navigation and distractions so that there's just a 
single call to action for what the user can do. Don't encourage the user to explore 
the siteget them to sign up first and foremost. 
 
There are tons and tons of ideas out there, and many I get out of inspiration from 
looking at other products. Try out a lot of other well-designed products and see what 
you can experiment with too. 
 
 
 
10 
Baseline example 
 
For the sake of this discussion, let's take the classic method of trying to shorten 
the signup process and making it so that the user can do as little as possible to get 
started. To see how the model plays out, let's say you remove 2 pages from the flow to 
get the user to create a blog post. 
It might look something like this: 
 
 
 
1. This landing page 
asks the user for their 
details, and includes a 
CAPTCHA and terms of 
service. The page is a 
bit cluttered, so the 
CTR of this page might 
drop versus the 
previous simpler 
landing page.  
 
2. The new user is 
brought immediately 
to their new 
dashboard. A tooltip 
shows them how to 
create their first blog 
post. 
 
11 
 
 
In a typical situation, you should make mockups of a simplified signup flow like 
this as well as complete your spreadsheet model to try to figure out what would happen. 
When you do this, it's hard to figure out what are realistic expectations for how your 
numbers would change, but with experience, you'll get better and better at simulating 
changes.  
In this proposed set of changes, you've combined the first two pages of the 
original signup design into one page, and have removed the 'Choose Template' page. 
You could guess as to what this might result in by removing and combining a few 
variables in your signup flow, which might look something like this:
Page 
Action 
CTR 
Landing 
Enter details and CAPTCHA 
20% 
Dashboard 
Follow tooltip 
80% 
Post 
Create post 
50% 
% of new users who post 
8.00% 
3. The 'new blog post' 
page is the same as the 
previous version, and 
aims to get the new 
user to create their first 
post. Also similar to the 
previous example (but 
not shown here), a 
confirmation email is 
sent to the new user to 
confirm their account. 
 
12 
 
This spreadsheet is now the basis of your forecast of what might happen when 
these changes are made. The idea here would be to get from your original conversion 
rate of about 5.6% to something more like 8%, which is a relative increase of about 
+40%. Is this worth it? Are there other product changes that might make a bigger 
impact? This is the kind of thought process you can go through to figure out how to 
prioritize your growth projects. 
Of course, reality is what counts. The next step would be to start implementing 
these changes on our website, and track CTRs to see how our estimated data compares. 
As you get more data from your own iterations and within the context of your product 
and audience, you'll get more comfortable guesstimating in your models. 
You might wonder, what's the point of this if you can't get exact numbers right 
away? That's the point of modeling this out. No one will have your particular audience, 
product, and signup flow, so each set of numbers is entirely situational. The most 
important thing is that this can help you think systematically about your decisions. 
You can create conservative versus aggressive models and fill it in with any variables 
you do know, and use that to figure out if it's worth it. 
You'll never get a black and white answer for this, but it's better than randomly 
adding product features based on the emotions and needs of the team. While that's 
great for refining core product, when it comes to systematically growing a user base, a 
more scientific approach is warranted.
 
13 
Convert Now versus Free Trial 
 
Here's another scenario: How would CAC and conversion rate compare between 
one website that requires new users to signup (and pay) immediately, versus one that 
offers a free trial? You're probably thinking that the free trial conversion rate would be 
higher, but do you know by how much? 
You can use the same approach as before to estimate the before and after CAC 
and conversion rates. Let's start with your example, TeamShare, for team collaboration: 
 
  
 
 
 
1. The customer arrives at 
the landing page and is 
prompted to signup and 
purchase a plan. 
 
2. A plans and pricing 
page is displayed, and 
the new user selects a 
plan to continue. 
Bundles are offered to 
encourage larger up-
front purchases. 
 
 
14 
 
 
 
 
Before changing the signup design to one that offers a free trial, you'll use a 
signup model to simulate the changes and estimate the resulting changes. Having a 
model of your signup metrics (based on actual or estimated data) before making the 
changes versus making changes without first consulting one helps you forecast the 
potential impact and prioritization of this change. 
 
Page 
Action 
CTR 
Landing 
Get more info 
50% 
Plan/pricing 
Choose plan 
20% 
Signup 
User/payment details 
3% 
Total paying users signed up 
0.30% 
 
3. The customer is then 
prompted for their contact 
and payment information. 
An optional promotional 
code allows for sales reps to 
encourage customers to 
signup to receive deals. 
 
4. The dashboard is 
presented and the 
customer can begin to 
use the full version of 
the website. 
 
 
15 
 
You've estimated a current total conversion rate of paying users at 0.3% of those 
that visit the landing page, which equates to a CAC of $200.00 (based on a CPC of 
$6.00). 
 
Let's adjust your model to simulate a signup design with a free trial. You're going 
to estimate increases in CTR on both the Plan/Pricing and the Signup pages versus the 
original required payment signup design CTRs. 
 
Page 
Action 
CTR 
Landing 
Get more info 
50% 
Plan/Pricing 
Choose plan 
30% 
Signup and usage 
Lots of user activity 
60% 
Freemium 
Payment details 
15% 
Total free trial users signed up 
1.35% 
 
 
Assuming that a large % of users become engaged, you might ultimately find that 
a large % of users who sign up ultimately end up converting to a premium offering. 
 
Your model of the free trial signup design gives you a much better conversion rate 
of 1.35%, resulting in a CAC of $44  drastically lower than the original $200.00. 
However, keep in mind that this kind of model only suits specific kinds of products that 
have high-retention and where users have a path to a freemium wall. 
 
However, this data is integral to your decision making process when considering 
whether or not to offer a free trial, and the costs associated with doing so. 
For completeness, let's see what this new signup design might look like: 
 
 
1. The customer arrives at the 
landing page and is prompted to 
sign up for a free trial or to 
review the details of the paid 
plans. 
 
 
16 
 
 
 
 
 
 
 
2. A plans and pricing page is 
displayed and a free trial of a 
plan is selected. The new user 
is expected to begin a free 
trial, so that option is the 
most prevalent. 
3. The new user is then 
prompted for their personal 
and work details. 
 
4. The new user is brought 
to their dashboard. A notice 
on the top of the page with a 
countdown clock shows how 
much time remains in their 
trial. 
 
17 
 
 
 
  
 
 
It's important to note that after you create this model, and these mockups, the 
next thing you have to do is to evaluate the ROI of the experiment versus the other ideas 
you have. Then if it makes sense, implement the experiment (most likely in some kind 
of A/B test), check the resulting numbers against your forecast, then keep going. 
To reiterate, this is all basic stuff, but is really a different way of thinking about 
and assessing the impact of your features. It's a more rational and more scientific way 
to measure the impact of signup and conversion rates, so that you can spend your time 
working on projects that have high impact with low cost. Combine this with a high 
iteration speed where your team can push out many of these experiments every week, 
and you're well on your way to 10Xing your growth rate. 
Oftentimes, you'll find that only 2-3 A/B tests out of every 10 will perform better 
than your baseline case. Given that, you'd have to run at least a half dozen per week to 
see a positive result on a regular basis. If you only run 1 or 2 A/B tests, it's easy to get 
discouraged early.  
5. A confirmation email is sent to 
remind the user about the length 
of their trial and how to contact a 
representative if they're 
interested in a paid plan. Trigger 
emails will also be sent closer to 
the end of the trial date to 
encourage them to purchase a 
plan  an important step in 
converting trial users into paying 
customers. 
 
 
18 
Other random notes on things to try 
Here are some other popular techniques that you can try to improve your 
completion rates and lower your customer acquisition costs: 
 
1. While a shorter signup flow can be a big help in raising conversion numbers, it's 
not a cure-all solution. Some 
�pages can become too cramped and are new users 
may find the discouraging. As you saw in the blogging example, 2 pages at 30% 
each will yield a 9% conversion rate at the end  so if you can combine those 2 
pages into one with a conversion rate greater than 9%  do it!  
2. Any 'high value' pages should be upfront as more people are present at the 
beginning of your signup flow than the end (e.g. an 'invite friends' page). If you 
have multiple goals in your signup flow  prioritize, and move the important ones 
nearest to the beginning. The same concept applies for high conversion rate 
pages. If you can get more people through the beginning steps, there'll be a 
higher chance that more of your signup goals will be completed.  
3. Try different registration types (e.g. sign up with Facebook or Twitter). The 
success of these will depend on your audience, and could yield positive or 
negative results.  
4. 'Lazy registration' is a technique used by some websites (e.g. 
http://www.geni.com, http://www.doodle.com) where the user experiences the 
product during the signup process. Signing up for the site is an expected part of 
using the website itself. This type of signup is very easy for the new user to 
complete, but can only work with certain types of websites.  
5. With ecommerce sites, the costs associated with acquiring a customer are not 
necessarily your only concern, and you are more concerned about your overall 
ROI. This means you must consider up-sell and cross-sell techniques to push the 
customer to purchase more items.  
6. Bundling is a common tactic with SaaS products. You can increase the amount 
that your customers spend at one time by offering them a discount when they 
 
19 
spend more at one time. If you set the price high enough, you'll potentially be 
able to cover your CAC with one purchase, versus trying to bring the customer 
back to your website multiple times to pay for separate chunks.  
7. Many SaaS products have begun offering a free trial, which allows you to obtain 
the user's contact information to follow up with them if they don't initially make 
the purchase.  
8. For any type of website, the payment step is often high churn. This is a good 
page to experiment with to try to optimize for the highest possible CTR.  
9. It is always important to optimize your ads. There's no point in paying for clicks 
that will never convert into users. Great ads are key  even a perfectly designed 
signup flow can't convert people who are uninterested. 
10. There are many online resources about optimizing landing pages. Read up on 
best practices (see our Resources section later for suggestions), and A/B test 
them until you come up with a winner. 
 
Remember that overall, none of these specific techniques are guaranteed to 
improve your signup flow. However, with a growth spreadsheet, you can now start to 
model changes to your signup flow and simulate what might happen, helping you to 
make data-driven decisions. 
 
 
 
20 
Conclusions and next steps 
This eBook primarily focused on the key step of signing users up, but of course 
that's merely one step out of many. The more important lesson is the process of 
mapping your product's UX into a spreadsheet, simulating and prioritizing product 
changes, and then running the experiment to validate your hypotheses. 
You can take this rational approach to many other pivotal moments in the lifetime 
of your product as well, including: 
 
1. Activating users 
2. Increasing usage and activity 
3. Retaining and re-engaging users 
4. Getting users to invite their friends 
5. Converting users from free to paid 
6.  and much, much more 
 
Each one of these moments is just as important as a signup, and each one can be 
broken down into a step-by-step funnel and optimized. The same techniques as you can 
use for optimizing signups can also be used in these other activities  just build your 
model, put in baseline data, try out a bunch of experiments, then measure again to see 
if you've improved things. 
On a final note, it's important not to go overboard on optimization. New products 
are about providing deeply engaging experiences, and optimizations can help you bring 
that to more people and make sure a larger percentage of new users have positive 
experiences. Optimization won't help you fix something that's broken, or get you out of 
a market that's too small. Consider this just another tool in your tool belt, to be used 
once a product is working well and just needs more growth.