The most comprehensive core strategy for user operations!

"Operation is to keep users," this statement is correct, but there is a more important second half: and keep them paying. When a product enters the mature stage and has enough "passer-by-pass" users, making more money from existing users becomes a more core KPI rather than attracting new users. At this time, how to manage user relationships in a refined manner becomes one of the key tasks of operators.

1. Build a model for user lifetime value

Users can be classified differently in different dimensions: from the perspective of user activity, they can be divided into zombie users, low-frequency users, active users and deep users; from the perspective of the value of users to the platform, they can be divided into seed users, ordinary users and core users. Different operation strategies should be adopted for different users, and analyzing and managing users from the perspective of user life cycle is one of the common methods of data-based operation.

The mission of operations is to enable users to continuously generate commercial value during their life cycle. The so-called user life cycle value CLV, that is, Customer Lifetime Value, or LTV (Life Time Value). The so-called commercial value is not simply money-making models such as e-commerce advertising and games. Intangible and difficult-to-quantify resources such as information and data are also commercial assets.

The user's conversion to your product is only the beginning of the story. The goal of operations is to do everything possible to extend the user life cycle and to do everything possible to tap into commercial value during the life cycle. However, no matter how good your operations are, you cannot truly prevent user loss. You can extend it, but you cannot stop it.

We all know that business value = user lifetime value - customer acquisition cost - operating cost. Operation is the implementation and executor of Internet business realization. Different products and business models will result in very different CLVs for users. For example, the CLV of e-commerce is determined by a series of purchase data indicators, the CLV of new media and portals is determined by advertising and exposure indicators, and the CLV of games is determined by the payment data of wealthy players. In short, we need to comprehensively consider various indicators and data to establish a reasonable CLV model.

2. Please users, but don’t be blind

The psychological state, needs, and interests of users at different stages are different, so we should design different marketing activities for users at different stages of their life cycle.

1. Targeting potential users: The key lies in word-of-mouth marketing. Introductions and recommendations from friends are often more trustworthy and help to dispel the vigilance of potential users. Companies should carry out more activities such as evaluation, gift-giving for sharing, and gift-giving for recommending members.

2. Targeting new users: At this stage, users are in the growth stage, and the focus of marketing should be on improving loyalty. Incentives should be given for every consumption of users at this stage to guide them to make secondary consumption. For example: A restaurant will give you a coupon when you check out: Next time you visit the store, you will get a free drink of a certain kind. In addition, the accumulated consumption amount can upgrade the membership level to enjoy more privileges, which is also a good way to cultivate new users and increase consumption frequency.

3. Targeting old users: They are the main purchasing power of the company's products/services. Users at this stage do not need to spend too much cost to maintain, but their enthusiasm needs to be improved. Companies should pay special attention to the activity of mature users. Once user activity decreases, it may mean that you will lose him. Their activity level can be effectively increased through interactive activities, periodic activity reminders (holiday/birthday greetings), and issuing discount coupons.

4. For lost users: Users who have not made any purchases for a period of time can be considered to have been lost. There are many reasons for user churn: getting tired of a company's products/services, choosing other alternative products, or the products/services are no longer suitable for them. At this time, excessive product promotion may increase user boredom. For lost users, product iteration and updates, humanistic care, and nostalgic sentiments may be effective ways to reawaken them.

Through the concept of user life cycle, we should know that we should carry out targeted marketing according to the different stages of users. During the user growth stage, we should focus on cultivating users and increasing the value of their contribution; mature users are the main purchasing power of products/services and this stage should be extended as much as possible; user loss is sometimes inevitable, and we should not forget the power of humanistic care when trying to win them back. In terms of user life cycle management, Zhuge Jun can help companies achieve marketing goals more efficiently.

3. How to find your user life cycle

The user life cycle varies depending on the characteristics of the product/service. For example, the user life cycle of wedding/travel products must be different from that of e-commerce. If you want to find your user life cycle, you can actually deduce it from the retention rate that we pay attention to every day. In our understanding, the retention rate can only analyze the stickiness and activity of users, and it is not commercially explainable. However, if it is converted as follows, the user life cycle can be obtained:

User life cycle = cycle / (1-newly added retention rate within the cycle)

For example, if the monthly retention rate of new users of a product is 70%, then: average user life cycle = 1 month/(1-70%) = 3.3 months. The goal of the operation is to extend the user life cycle from 3.3 months to 4 months, 5 months or even longer. And generate commercial value during this period. For most products, this formula is applicable. In addition, for low-frequency products, such as tourism products, the average annual number of trips per person is about 3 times, so we can expand the time dimension of the cycle.

In order to maximize the commercial value, we need further precise analysis and operation, because the user life cycle is closely related to churn. Once the user churns, the user life cycle ends, and it will be impossible to tap the user value. Therefore, we should clarify two issues: 1. Every user's life cycle can generate commercial value, but some users are destined to be more valuable. Find this group of more valuable users and study their behavior, so that more users can "imitate" the behavior of high-value users and ultimately bring more value; 2. Nip the possibility of user churn in the bud and extend the user life cycle.

Operations have a starting point and an end point, and the key word is variable tuning: discover the key issues that affect the performance of the ultimate business goals through data analysis, and then look for key variables (correlated variables or causal variables). Ideally, all variables that affect key business indicators are adjusted to the appropriate gear, and finally combined to achieve automatic and efficient operation of the business.

author: Zhuge Jun

Source: Zhuge io Data Coach