User growth methodology of bringing new users to old users

The growth model of old customers bringing in new customers has become a common growth model for Internet products.

During the just-passed Double 11, Taobao designed a model of old users bringing in new users in the building-building PK: if you invite new users to help build a building, you can directly increase the level of your team by 50. NetEase Yanxuan’s regular group buying also includes a model of inviting new members: by inviting new users to join the group, they can purchase products at super low prices.

In the era of Internet inventory, how to maximize the value of existing users, reduce customer acquisition costs, and improve growth efficiency, the growth model of inviting friends to bring in new ones is increasingly being used in various scenarios of various APPs.

In more than two years of growth work in the model of old customers bringing in new customers, I have investigated the models of many APPs and explored some methodologies from practice. I have made some summaries in my free time, and I hope it will be of some help to you.

What is the growth model of old leading new?

Members Get Members (MGM) refers to old users inviting friends to register and download the APP. After the friends complete the relevant tasks, the old users can receive the relevant invitation gifts, and the friends can also receive invitation gifts.

Here, we generally refer to old users as M1 and friends as M2. The tasks that new user friends need to complete are different in different products and scenarios, such as completing registration, real-name authentication, placing transaction orders, handling business, etc.

After a friend completes a task, the invitation gift received by an old user and the invitation gift received by a new user will be different, and some users may not even have any relevant offers.

Two different growth formulas

After understanding the model of old employees bringing in new employees, let’s sort out the growth methodology behind this model.

1. User-oriented growth methodology

The first perspective is from the process perspective. The main growth formula is as follows:

Customer acquisition (M2) = invitation page UV x M1 invitation rate x M2 invitation completion rate

This formula is a common methodology in Internet operations. It is based on the process of user participation and focuses on funnel conversions at each key node.

In MGM, the key nodes are mainly M1 sending invitations and M2 being invited to complete tasks.

In promoting M1 invitations, on the one hand, offer incentives can be used to boost the M1 invitation rate. For example, you can get 40 yuan for inviting one person, and after a successful invitation, you can also participate in a lottery for a grand prize; on the other hand, through scenario-based embedding, the sharing invitation rate of M1 can be improved.

When a user uses the APP and has a good experience with the product, he can tell his friend to invite friends and get a discount on the product. When a user participates in a rush sale and fails to purchase the product, he can tell his friend to invite friends and get the product for free.

In order to encourage M2 to complete tasks upon invitation, on the one hand, it is necessary to improve the experience of new users participating in the whole process, especially how to guide users to complete designated tasks after they download the APP; on the other hand, it is necessary to optimize the notification system for M1 to encourage M2 to complete tasks, such as allowing M1 to remind M2 to complete tasks, reminding M1 through SMS/push and other channels, etc.

After ensuring a certain conversion rate, increase the traffic of the activity. This is the logic of all activities: first improve the conversion rate, then increase page traffic.

2. Growth methodology for M1

The second perspective is to start from the inviter. The main growth formula is as follows:

Customer acquisition (M2) = Number of inviters (M1) x Average number of invitees per household

The core of guiding the old and the new is M1.

Only by stimulating M1 to the maximum extent can there be a steady supply of M2; only by stimulating the target M1 to the maximum extent can the target M2 be acquired efficiently.

Increasing quantity first and then improving quality is the general practical approach in business operations.

The first step is to increase the scale of M1 to increase the scale of M2; and then to select high-quality M1 to improve the quality of new M2 households. The eternal truth that birds of a feather flock together is particularly evident in the model of the old leading the new.

In actual practice, M1 needs to be classified.

First, M1 can be divided according to the number of invitees. For example, M1 with no more than 5 invitees per unit time is defined as bottom M1, M1 with more than 20 invitees is defined as head M1, and the middle one is defined as waist M1.

Different M1s will have different business strategies.

Most M1s are bottom M1s with limited invitation capabilities, but M2s are of higher quality and easy to spread. Therefore, it is necessary to design a corresponding invitation gift for the bottom M1, and at the same time, to encourage the participation of M2 in the process to improve the conversion rate of fission.

The top M1 has a strong invitation capability, but the quality of the M2 it brings is not necessarily high, and it has a strong profit-seeking attribute. It is necessary to encourage their participation by designing invitation gifts that are easy to cash in and have high circulation value.

In many scenarios, the above two methodologies often need to be combined with each other to develop strategies for attracting new customers.

At the same time, the focus will be different at different stages of attracting new users of the APP, and it is also necessary to adapt to local conditions.

Author: Tong Qi

Source public account: I am Tong Qi (ID: greatlife007)