Nichole Mace, SVP of Product at Pendo, shared her perspectives during a recent webinar with Ramli John, best-selling author and founder of Delight Path.
The result? Everything product people need to know about AI and user onboarding from two great minds.
'Aha' moments are the tipping point between success and failure.
In the world of product experience, one moment reigns supreme: the "Aha!" moment. It's the point in a user’s journey when the core value of your product clicks into place. It’s that jolt of energy that propels users forward, convincing them that whatever comes next will be worth it.
Think about these moments:
- Spotify: When a user listens to a few songs and gets a personalized playlist that feels perfectly tailored to their taste.
- Duolingo: When a learner completes a few exercises and realizes they can now construct sentences in a new language.
- Venmo: The first time a user successfully splits a bill with friends and sees how effortless it is compared to fumbling with cash.
This isn't just a feeling; it's a critical tipping point between growth and churn. Those who experience "Aha!" moments are more likely to complete tasks, adopt the product more deeply, and drive long-term net revenue retention (NRR). In fact, companies that rigorously measure their "Aha!" moments see three times faster growth than their peers. Conversely, a staggering 74% of users will churn if they don't see that value almost immediately.
The Onboarding Dilemma: 'How' vs. 'Why'
Herein lies the classic product dilemma. Onboarding and the "Aha!" moment are both critical, but they can often be at odds.
- Onboarding is about teaching users how to use the product—setup, navigation, and functional orientation.
- The "Aha!" moment is when users realize why the product matters—the emotional realization of value.
In theory, onboarding should lead directly to "Aha!". But in practice, it's rarely a straight line. Product teams have historically faced a difficult choice. Do you force users through a comprehensive onboarding process, knowing you'll lose many at the top of the funnel? Or do you aim for a quick "Aha!" moment, risking that users will churn later when faced with a long or arduous setup?
Good news: AI is changing the equation. With AI, we can dramatically shorten time-to-value, not just by streamlining onboarding, but by rethinking it altogether.
A New Framework for Getting Users to "Aha!"
AI allows us to have the best of both worlds. The core problems of user activation remain the same, but our ability to solve them has fundamentally changed. This new approach can be broken down into four key phases: Understand, Personalize, Guide, and Eliminate.
1. Understand: know your users
It used to be that understanding your users meant collecting a ton of information at signup. Now, you can gain deep insights the moment they provide an email address. AI can analyze data that has long been at your fingertips but was difficult to make actionable—recorded sales calls from Gong or Momentum, the landing page or blog post they came from, and other behavioral data.
- Goal: Map behaviors and segment users.
- AI's Role: Use machine learning and AI insights to automatically cluster users into smart segments based on interest, job-to-be-done (JTBD), firmographics, and feedback.
- Impact: This saves an immense amount of time and removes the guesswork, setting the stage for truly personalized experiences.
2. Personalize: Tailor the journey in real-time
Once you understand who your users are, you can adapt their journey in real-time. This goes beyond basic segmentation. Years ago, creating just two distinct onboarding paths for different personas (like a "convenience seeker" vs. a "safety-minded" user) was a monumental effort. Today, 1:1 personalization is within reach. According to Segment, tailored onboarding boosts reported "Aha!" moments by a massive 50%.
- Goal: Tailor onboarding paths.
- AI's Role: Leverage LLMs and behavior prediction to adapt the user's journey, from providing targeted tips to translating content on the fly.
- Impact: Higher task completion and user activation.
3. Guide: Provide the next best action
Guidance is crucial for preventing user frustration. Instead of forcing users to leave your app for a help doc, you can embed AI-powered chatbots and agents directly into the product. These copilots can handle onboarding questions and guide users through workflows. Better yet, the prompts users feed these agents become a new source of data, creating a virtuous cycle where you continuously learn what your users care about.
- Goal: Drive users to the next best action.
- AI's Role: Use copilots, actionable prompt data, and recommendation models to provide in-product help.
- Impact: No context-switching, leading to a faster and smoother flow to "Aha!".
4. Eliminate: Remove friction from the process
Perhaps the most powerful function of AI in onboarding is its ability to eliminate steps entirely. At Pendo, we found that critical onboarding steps like tagging and segment creation could be eliminated with AI. By analyzing your onboarding funnel to find the biggest drop-off points, you can deploy AI to automate those steps, potentially turning a four-step process into just two.
- Goal: Remove steps to get to value.
- AI's Role: Use conversational UI to capture context and automate or skip painful setup tasks.
- Impact: A shorter, more efficient path to value drives better business outcomes.
5 Steps to AI-powered onboarding
Ready to implement this in your own product? Here’s a simple way to begin:
- Use AI to know your customer : Start by analyzing all your existing user data to understand who they are and what they care about.
- Map your key "Aha!" paths by segment : Identify the core events and user journeys that lead to retention.
- Identify drop-off points: Pinpoint where users are getting stuck or leaving the process.
- Pick one step in the flow to eliminate with AI: Choose a single, high-friction step and use AI to remove it.
- Measure, then expand : Track key metrics like "Time to Aha!" and onboarding completion rates to measure your impact, then expand your efforts confidently.
Once you have this cycle in motion, you can iterate and experiment. AI can provide insights into how users actually behave, which is often different from the path you designed. This is where the real fun begins, especially if you're tasked with growth.
Final Takeaways
As you begin this journey, keep these key principles in mind:
- AI is not just automation—it’s acceleration to outcomes. The goal is to get users to meaningful value faster.
- "Aha!" moments are best when personalized. A one-size-fits-all approach no longer works.
- Start small, measure impact, and expand confidently. You don't have to do everything at once. Pick a starting point, prove the value, and build from there.
