The Hidden Economics of Onboarding Friction
Every tap, scroll, and permission prompt in customer onboarding carries an invisible price tag for companies. Small actions or prompts that cause customers to second guess their product choice can cost companies thousands over a consumer’s life.
Meta asks for your contacts right off the bat, something that might cause people to close the app before even setting everything up. Some people (like my mom) wonder “why do they have to know this about me?” Instagram depends on a giant and data-filled social graph. Without friends, the feed is dry, and users might turn away from using the app. Without constant use, advertising revenue evaporates. Even though the short term loss could be between 10-15%, this is a trade for much higher lifetime engagement. After all, the more friends you have on Instagram, the more likely you are to keep using it!
Notion
Notion takes a completely different stance. It delays almost all data collection and pushes users directly into creation mode. People rarely drop off during onboarding (maybe 3-5%), but may leave later if they don’t find a meaningful use case (15%). Notion is extremely flexible and customizable, so they want to learn from you first about how you plan on using it. But for people with low patience, it might be easier to keep using google docs.
Venmo
Venmo frontloads pretty much all of its onboarding. Since banking and money transfers must be secure, they have to verify your bank account and identity first. This step can take a while and some people get wrongly turned away, potentially causing 30% to leave before they’ve even been able to log in. But Venmo is ok with this cost because this step keeps many fraudulent users off the app and makes the transfers seamless once the verification steps are taken.
