Two key factors in user operation growth and customer acquisition!

Customer acquisition is the basis for evaluating long-term sustainable operations. For marketers, this is also an area that needs to be focused on. In this article, the author summarizes two methods of acquiring customers based on work practice and shares them with you.

Growth brings profits, and profits mean more money.

Within the company, every iterative optimization emphasizes growth at all times, but did you know that growth itself has five processes (customer acquisition, activation, retention, revenue, and recommendation).

So every time you vow to set a demand target, what kind of growth can it actually bring?

Of course, 80% of people cannot answer this question because they treat all five steps as just one. There is so little benefit to doing this that when growth stagnates and business is hampered, you have no idea where to start to improve.

In the past year, I have been working on growth projects frequently, which involve many points worth pondering and thinking about. I will share them with you one by one. The purpose is to analyze what the complete product growth model is like with as little understanding cost and length as possible.

Unlike others, the examples I use are my own experiences, which are highly timely, and there are not so many other miscellaneous things to remember. One useful method is enough.

In today’s article, let’s take a look at the first step: what should we pay attention to first when acquiring customers?

01 Is there an audience for your service? Where is it?

Why are there some people who have not attended college and have low cultural level but can achieve success in their careers? But in reality, most of these cases are regarded as empirical examples of the "theory of the uselessness of studying", causing everyone to throw away the books in their hands.

1. Is studying really useless?
2. Did they achieve this because they were uneducated?
3. Or is it because they did something right that others didn't?

The three soul-searching questions, especially the last one, are enough to stump many people. After all, most people’s awareness of this issue is very low, so low that you don’t even realize that you have seriously ignored this issue.

In fact, if you observe carefully, you will find that these people happen to do certain things, they are good at them, and they have an audience. There is no need to explain why they are good at this. The so-called audience is a group of people who are always interested in the services you provide.

This is a complete service closed loop, with supply and demand parties, interest points, and sustainable development. Looking back, is studying really useless? Obviously not. The purpose of reading is to find your audience faster and more accurately and develop this closed loop.

Does audience matter? It’s really, really important.

You can’t imagine how terrible it is when a service has no audience. It's like a black hole of time, ruthlessly sucking away the time you've worked hard to iterate.

Does the audience need to be very precise? The more precise the better.

On the first day I started making products, I often told myself that the products I make must not be perfect, must have a focus, and the focus must be on the areas I am best at.

After all, something that is all-encompassing is equivalent to being good for nothing.

When I was working on "Jacob", my initial purpose was just to sort out some of my product development skills and experiences. After all, this part of knowledge has not yet been put online in any comprehensive university in China, because there is no formal subject to carry it.

Moreover, this part of knowledge about the product involves the intersection of multiple disciplines, and few people have summarized and settled it. The most complete and authoritative part may still remain in the minds of those early top-tier product managers, and most of them are passed down from master to apprentice.

Let me give you a number. If we calculate based on the number of product managers employed in China, there are 3 million of them, with an increase of approximately 100,000 each year.

As a product manager, it is essential to have your own product thinking, but there are more people who need to have product thinking than just product managers. This is a must for operations, promotion, technology, and even entrepreneurs and consultants in all walks of life.

Because product thinking is value-oriented. When it comes to business, it is centered on business value, and when it comes to service, it is centered on user value.

Product thinking is like a little assistant by your side, always reminding you what your goal is, not to deviate from the main channel, and not to make too many ineffective struggles and decisions. In the words of Socrates, it means to thoroughly know yourself.

The so-called self-discipline means setting clear goals.

If you have worked on both non-transactional products and transactional products, you will clearly feel that no other product emphasizes business value and goal orientation more than transactional products.

Because the road to commercial monetization for non-financial products is tortuous and circuitous, many times what you do to attract new users and promote activation is nothing more than to retain this wave of users first, and then find a suitable entry point later for concentrated monetization.

Many products don’t make it to the day when they become hits, and by the day their traffic skyrocket, they are already completely forgotten. These are all external and internal troubles caused by insufficient cash flow. The responsibility actually lies with the product managers' low perception of the commercial conversion of the products.

So starting this year, you can find that there are many more articles on finance and insurance in "Jacob", and there will be many more in the future. There are no recommendations or introductions to specific products, but they are all sharing of skills and experience on these knowledge points.

There is only one purpose: to always cultivate one's sensitivity and pursuit of profits and risks.

This is a very meaningful thing. Based on the above capabilities, I found that the audience of "Jacob" has become wider, but for me, I only need to do one thing well forever:

We continue to explore things that are worth investing time and effort in, and these things have three very significant characteristics:

1. There is a clear goal, and it is approaching step by step;
2. Have good returns;
3. There are controllable risks.

My audience can be divided into the following three types, omitting some detailed descriptions, the main characteristics are as follows:

1. Those in the Internet circle who have a need for product thinking (first-tier cities, mostly male, 20-35 years old);
2. Those in the Internet circle who have financial management and insurance needs (mostly those with families in first-tier cities, aged 30-45);
3. Those in traditional industries who have a need for Internet product planning (first- and second-tier cities, mostly male, 35-50 years old).

This is the evolution and boundary division of my audience in the past year. I share my own process of being "Jacob" to illustrate that your audience is not a standard answer that can be arrived at after two or three days of hard thinking, but a range that changes with the constant business.

Trial and error is the first step you must take. Don’t be afraid of trouble. Dyson also tried more than 5,000 times before expanding its target audience from Japanese family-oriented men to Chinese women who pay attention to appearance.

02 Do you have any idea about customer acquisition cost?

Giving concessions to acquire customers is the most common thing in the entire growth process. The CAC indicator is used to refer to the user acquisition cost. When it is cheap, CAC may be a few cents or a dollar, but when it is expensive, it can reach one or two thousand yuan. For example, the customer acquisition cost in some P2P industries is usually between 1,500 and 2,000 yuan.

The customers referred to here are effective customers, customers who can generate value, not just any random registered users.

Why is the customer acquisition cost so high? There will still be a steady stream of people doing it, are they stupid?

This requires the introduction of another concept: LTV (total lifetime value). This concept is an estimate, which is an estimate of how much value a normal user will generate throughout the entire service journey.

Because fixed-income investment products, like P2P, earn the interest rate difference between the asset side and the capital side. The investment frequency of a user is fixed, and the investment amount will also tend to be fixed in the later stage. Generally speaking, the user LTV of this product will be between 150,000 and 200,000, and even between 300,000 and 500,000.

Considering the 20% profit ratio, the customer acquisition cost of just a few hundred or a thousand is simply a huge profit.

Usually, we will set a value. I personally regard this value as the life and death line of the product. It can be expressed as: LTV/CAC. If the ratio between the two is less than 1, this "game" will be very dangerous and may collapse at any time, unless there is strong capital intervention.

If their ratio is greater than 1, it proves that the business operation chain is still healthy at this time. This is why I always emphasize that you should not blindly promote a product model that has not been proven to grow.

Because when the LTV is not clear, blind promotion will only increase the CAC. In the end, if you find that there is a problem with your growth model, the LTV is very small or cannot cover the CAC at all, it will be embarrassing. It is difficult to choose whether to continue or cut losses.

Audience and customer acquisition costs are highly correlated. It does not mean that users with high customer acquisition costs are more effective. There are many channels with low customer acquisition costs and high user quality.

Continue to refine the scope of the audience, acquire customers at low cost, and achieve high-quality conversions.

The above are the two key factors regarding the first step of the growth model, "customer acquisition": audience and customer acquisition cost. Simple things are often the most powerful. Polish them well and hope will be just around the corner.

Next time we will talk about some practical application examples on customer acquisition.

Author: Jacob

Source: Jacoblab (ID: jacoblab)