Product operation strategy: in-depth analysis of cold start!

Many well-known and popular products on the market (such as Zhihu, bilibili, WeChat, etc.) have mostly gone through a cold start-up phase. As time goes by and they reach a certain level, they are slowly opened to the public. Why do they do this?

What is a cold start strategy?

As a product operation strategy that requires deep cooperation between product managers and operation personnel to achieve, putting yourself in the shoes of a product manager can help you better appreciate the wonderful aspects behind this strategy.

The cold start strategy is a product operation strategy that can be used when the product is in the 0 to 1 stage (startup period). It is generally suitable for C-end products or B-end platform products developed using the MVP (Minimum Viable Product) concept. It is not suitable for custom-developed B-end products (with known needs, known users, and known scenarios).

The essence is to rationally verify through data analysis whether the product has met the prerequisites for continued promotion (valuable and marketable), forming a self-circulating mechanism and focusing all resources on achieving PMF indicators. At the same time, the cold start strategy has the value of accumulating word of mouth and triggering user self-propagation.

Generally speaking, products that use the cold start strategy have the following characteristics:

• Product side: restrict non-core users from using all or part of the functions;
• Operational side: focus on acquiring seed users; communicate closely with as many seed users as possible; do not conduct large-scale publicity and promotion.

For example, Zhihu’s early registration code invitation system restricted the registration of new users through invitation codes, and non-registered users could not use all of Zhihu’s functions. Another example is bilibili's registration and answering system, which sets 100 two-dimensional related questions as the threshold. Only by answering 60 questions correctly can one become a formal member. In addition to being able to use the video playback function, informal members are restricted from using advanced functions such as commenting and coin insertion.

At present, many products on the market do not have a lot of promotion resources in the early stages of development. Due to the lack of resources for promotion, they are forced to focus their resources on seed users.

Strictly speaking, such products do not use a cold start strategy, but happen to use the specific operation method of cold start in a certain period of time. Because it is very likely that once the resources are in place, the company will quickly invest a large amount of resources in promotion, but the product has not actually achieved PMF at this time. This will also cause a waste of resources and even introduce toxic traffic, leading to the death of the product.

The core indicator for measuring whether a product is PMF (Product Market Fit) in the early stages of its creation is “retention rate”

After the product is launched, many monitoring indicators will appear, such as the number of registered users, PV, UV, daily active users, and monthly active users. However, for start-up products, retention rate is the "North Star Indicator" for measuring the product, and it is of great reference significance for determining whether the product has achieved PMF.

The definition of retention rate is that users start using the website/app within a certain period of time (generally defined as registration). After a period of time, those who continue to use it are considered retained users. Nowadays, user attention has become extremely precious. Only Internet products that have obvious value to users can attract users to continue using them.

Attached retention rate calculation method and reference value:

• Retention rate = number of logged-in users / number of new users * 100% (generally the statistical period is days, and common period dimensions include the next day, 7 days, 14 days/15 days, and 30 days)
• Next-day retention rate: (number of new users on the first day, number of users still logged in on the second day) / total number of registered users on the first day
• 7-day retention rate: (number of new users on the first day, number of users still logged in on the 8th day) / total number of registered users on the first day
• 30-day retention rate: (number of new users on the first day, number of users still logged in on the 31st day) / total number of registered users on the first day

The average data reference values ​​of relatively healthy products in China: the average next-day retention rate is 40%, the average 7-day retention rate is 20%, and the average 30-day retention rate is 10%.

Why should cold start restrict the use of ordinary users?

1. Non-target users will interfere with indicators and affect the judgment of product value

A product has its target users when it is first designed. Although a certain degree of adjustment and improvement is inevitable during the product development process, the general direction generally does not change.

When a product is in the startup phase, the most important thing is to verify the product's PMF. However, after opening to the public, users may introduce unexpected uses for the product, causing it to deviate from its existing track, creating unpredictable risks to the product’s reputation in the early stages of its development.

Consider the following scenario:

After an enterprise IM software was launched, there were no restrictions on users' downloading and use. However, it was discovered by a fake order studio that it had communication and payment functions. In order to avoid being banned by WeChat, this IM software was used as the base for dispatching orders, and order-taking personnel recruited from other channels were introduced. This resulted in excellent retention data performance and high indicators in all aspects.

However, due to the illegality of the industry and its "pass the buck" nature, after operating to a certain extent, the order-brushing studio will disappear, and the outstanding debts of the order-brushing personnel will no longer be settled, which will instead affect the reputation of the IM software. Imagine if the product manager of this IM software makes judgments based on this abnormal retention indicator, he will misjudge the product value and think that the product has achieved PMF and can increase market investment, and subsequent investment will be wasted.

For example, if a company carries out a large-scale marketing campaign at the beginning, resulting in an influx of invalid traffic from a lot of non-target users, after users download and experience the product, they find that the product has no value to them and uninstall it and no longer use it. In this case, the retention of the product will be very poor, which may cause the company to believe that this product has little value and that further investment is not cost-effective, and choose to shut down the project.

1. Focus on core users, accumulate word-of-mouth from seed users, and accumulate "ammunition" for product self-growth

As market dividends are exhausted, traffic becomes more and more expensive, and product self-growth has become a realistic issue that every product has to consider. The key to product self-growth lies in word of mouth, and the key to word of mouth lies in exceeding expectations.

So how can we exceed user expectations?

At the product level, it is actually about collecting user feedback and quickly iterating features or experiences that meet user expectations. On the operational level, it is about getting closer to every user and creating a friendly atmosphere.

All this can only be achieved by focusing on serving users.

It is not difficult to imagine that when the product has 100 users, the operator can almost call out the real name of each user; when the number of users reaches 1,000, the operator can only remember the IDs of some active users; when the product reaches 10,000 people, the only reference is the user portrait.

Judging from the results, refined operations, serving one thousand seed users well, and allowing each user to gradually become a dissemination node to attract more users is definitely far better than introducing ten thousand ordinary users and being forced to carry out rough operations.

A truly excellent product must have the ability to grow on its own. The cold start is not only to cultivate users, but also to improve itself.

Just think about it, why did you download WeChat in the first place?

I believe that most people installed it because they were recommended by someone else. The power of word of mouth must be far better than ten thousand promotional slogans.

1. Avoid some poor experiences in the early stages of the product, which may cause a large number of users to churn out

It is difficult to guarantee that a product in its embryonic stage is perfect. There will definitely be some things that affect the user experience, perhaps unforeseen scenarios, untested bugs, or server failures. At this time, only seed users have a relatively good tolerance.

If too many users flock to this stage, the impact of the failure will increase exponentially, causing a devastating impact on the product's reputation. At this time, it is almost difficult to recall the lost users, which is a considerable loss for the company.

Imagine if the WeChat Pay server suddenly crashed and payments were impossible, how much impact would that have on users. But if it is in the early stages and you are an insider user of the WeChat payment function, I believe the problem will not be so serious. The seed users recruited through the cold start strategy actually also serve as part-time product testers to a certain extent, exposing more hidden dangers of the product.

Let’s review our achievements and reflections

1. The cold start strategy is a product operation strategy that can be used when the product is in the 0 to 1 stage (startup period). It is generally suitable for C-end products or B-end platform products developed using the MVP (Minimum Viable Product) concept. It is not suitable for custom-developed (known needs, known users, and known scenarios) B-end products.
2. The most important thing for a startup product is to achieve PMF (product-market fit).
3. The key to measuring whether a product has achieved PMF is whether the retention rate meets the standard.
4. When judging whether the retention rate meets the standard, it is necessary to exclude the interference of non-target users and make a judgment based on the corresponding industry average.
5. Cold start focuses product operation resources to provide seed users with services that exceed their expectations, thereby accumulating word of mouth.
6. The cold start process is also a process in which the product constantly encounters problems and fills them. Products that grow through the cold start period will be more robust.

Author:cc

Source:cc