why do users sign up with huge interest but drop off right during the onboarding setup?

Looking at our analytics last week, a massive chunk of new signups drop off right at step two of our interactive setup wizard even though it only takes sixty seconds to complete.

​we thought adding helpful tooltips and step-by-step guides would make onboarding seamless, but it seems like every extra click just increases overall user friction.

​how do you audit your first-time user experience to figure out what is actually causing drop-offs versus what is just passive friction?