Product Operations: 4 Steps to Achieve Operational Growth!

I have collected several industry articles, and summarized them as follows from the perspective of strategic thinking - growth cognition - implementation team - personal execution; this may be a bit biased and exaggerated; I hope it can still inspire you.

1. Growth thinking throughout the user life cycle

Growth hacking has now evolved into a precise operating system/architecture, which is an operating system that achieves user and profit growth through repeated cycles of data mining and analysis - testing users - verifying results.

Sean systematically proposed how to use the concept of growth hacking to build a user growth operation system. In this system, Sean proposed the five most important aspects, namely customer acquisition, activation, retention, monetization and virtuous cycle, which is the endless AARRR model.

1. Customer acquisition

Sean provided two suggestions for low-cost customer acquisition: language-market matching, which tests the ability to capture users' attention. Channel-product matching refers to the channel through which the product should be placed so that it can reach the user's field of vision.

Channels can be divided into three categories: one is word-of-mouth channel, which is suitable for viral marketing; one is organic channel, which is suitable for search engine optimization and content marketing; and the other is paid channel, such as advertising and sponsorship.

At this stage, it is necessary to effectively locate users and make them notice the product at the right time and in the right context, surrounded by various competitors and external interferences. So, the main question to be answered in growth is: Will users notice this product?

Since users pay little attention to products, operations need to capture users' attention and emotions in fleeting opportunities. Therefore, the focus is on attracting users' attention and resonating with users through impactful design and copywriting.

For example, the first commercial produced by the fitness app Keep in 2016 was very impactful, and the brand slogan "Self-discipline gives me freedom" was able to arouse strong emotional resonance among users and left a deep impression.

2. Conversion

When users have noticed the product, we need to help them make a decision to try it: "Should I download the app? Should I sign up for an account?"

At this point, users are paying a little more attention to the product and are actively thinking and making decisions, but the window of opportunity is still short.

Operations need to further use good design and stories to arouse users' emotional resonance, describe the benefits of the product through clear copywriting, recommend personalized content and products to users, and use various psychological means such as scarcity, social evidence, urgency, etc. to enhance users' motivation to try.

3. Activation/Activity

Once users decide to try the product, they need to be guided to complete the necessary steps as quickly as possible, perform key actions, and experience the core value of the product. For example, draw a road map to your “aha moment.”

If the product you are responsible for is a shopping app, before new users experience the aha moment, they must complete the following steps: download the app - browse products - add to shopping cart - create an account - enter shipping information - click to buy.

In this series of actions, at which step do most users stop? Is it because you can’t find what you are looking for, is it too troublesome to create an account, or is the page setup unreasonable? You need to calculate the loss rate of users at each node to improve product performance and user experience accordingly.

At this time, users are at their peak period of attention to the product and begin to use more logic in the decision-making process to learn how to use new products. Operations can guide new users in various ways, simplify processes and remove barriers that hinder action, remind users who have not taken action in a timely manner, and help users set a goal and plan to become advanced users.

In this process of user growth, you can also reward users through gamification, such as common check-ins, points, rights, etc. You can also use triggers to wake up users, such as push messages. These all require repeated trials to find the most effective activation method.

After new users register for a trial period, the management software ProdPad uses a gamification approach to display a task list for new users. New users can extend the trial period by trying out various product features. In this process, new users will more clearly recognize the value of the product.

4. Retention

After users have experienced the core value of the product, we need to help them form usage habits, guide them to continue using more functions, and feel their own growth progress.

At this time, the questions that operations need to help users solve are "Does it solve my problem?" "How is it different from another product I know?" "Can I continue to discover new value?"

Fortunately, at this stage, users have at least experienced the value of the product once, and what operations need to do is to continue to retain users through various mechanisms: celebrating users' progress and milestones, timely reminders and communications, and introducing new features to users are all directions that can be tried.

At this stage, operations need to understand how habits are formed. Here is a classic case, which is Amazon's membership service. When it was first launched, many analysts said the plan was doomed to fail because delivery costs in the United States are very high, and Amazon would definitely lose money by offering members free delivery for a year for a $99 membership service.

But Amazon's real goal is to change people's habits, to make them accustomed to member discounts and free shipping when shopping, so that they will no longer buy things from other stores.

Finally, there are different ways to retain users in the initial, mid-term and long-term stages. Operations can be observed through grouping and continuously optimize operational methods and strategies to retain users. The rough approach is to send text messages uniformly after loss.

5. Monetization

After users experience the value of the product and stay, they finally come to the most challenging stage, which is how to gain real benefits from users.

For example, when asking users to purchase memberships/products, the question that operations need to help users answer is: "Do I have to make this decision now to pay for it? Are there other alternatives that would be of better value?" This decision is based on logic, and the user has to decide whether the value of the product he thinks is higher than the product's pricing.

Or there are other forms of monetization, such as advertising space. Although the business models and monetization methods are different, there is a concept that needs to be paid attention to, that is, the pinch point, which refers to the place where potential profits are lost. For traffic-paying companies such as e-commerce and games, the period from when users select products to when they complete the purchase is a dangerous zone, and many people will give up on the purchase midway. Operations should evaluate these common pinch points and analyze why users abandon them.

Ultimately, you need to turn these five steps into a cycle and build a complete and systematic user system. This will allow existing users to survive and grow better within the product, and can also bring you new users through sharing, recommendation, invitation, and dissemination.

Extension Phase - Recommended

When a user is considering sharing a product on his social network, the question that operations need to help the user answer is: "Should I recommend this to others now? Who should I recommend it to? What is the motivation that motivates me to do so?"

It is worth noting that when users spontaneously recommend products to others, it is mainly based on emotional decisions. It is best to integrate sharing into product functions so that users do not have strong aversion or are in a period of excitement and pleasure when using the product. This will increase the chances of success in trying to guide users. For example, the gameplay of answering questions, sharing and resurrecting has been well borrowed by mini-program games. Encouraging user recommendations through subsidies involves more logical decision-making.

The above content tends to build a good internal operating system to drive better growth of the user ecosystem. This is the first and most basic link that operations need to master in the face of growth; we can call it systematic operational growth thinking; so how do we implement each link in operations? Don’t be in a hurry, let’s look at it from another side:

2. Growth has a window period, is replicable, and can be driven

First point: Growth has a window period

When the window period comes, it is the most valuable period for growth, and at this time we must decisively increase resources. Xiao Wenjie said that LeEco's window period was when the Internet finance policies were favorable and BAT had not yet entered this field, so it seized the early rigid demand, so it seized the opportunity for growth during the window period, which we call it the market window period. For example, the growth record of Lianshang Indonesian products that Xiao Xiaoshuaping shared recently was also due to the appearance of a market window.

There is also a time window period such as winter and summer vacations, the Spring Festival holiday, the 618 Double 11 promotion, product anniversaries, or the double billion support for other traffic products, etc.

In addition, regarding budget, operations must balance short-term value and long-term value. First, subsidies based on short-term scale must be calculated accurately; second, large-scale spending must be rigorously tested; and finally, spending must be done appropriately to establish competitive barriers based on long-term value.

Xiao Wenjie said that they used to subsidize users crazily, "the highest subsidy for an iPhone was 1,000 yuan. This 1,000 yuan not only increased transaction volume, but also brought in real users." He said that he "knows very well how to convert these users into valuable users in the future. If I hadn't thought this issue through clearly, I wouldn't dare to waste money like this." Perhaps Luckin Coffee has thought about or planned this very well, which is why it dares to give out coupons so crazily.

Second point: Establish a replicable growth model

When we build, operate and grow, both internally and externally, we first "prototype" on a small scale, conduct low-cost trial and error, and accurately calculate the input-output ratio; then we standardize the execution actions; and the last step is to replicate on a large scale to achieve exponential growth.

For example, in the case of NetEase H5 screen-sweeping that we often mention, there must be a set of standard processes for topic selection and production internally. Secondly, there must also be standardized processes for how certain platforms create accounts, how to attract content, and how to sell goods.

Third point: Rely on management to drive growth

Because the window period and money burning will always pass, market-driven growth will also encounter a ceiling. Only by relying on management to drive can we achieve long-term and stable growth. The management level can be improved from aspects such as products and operations.

When it comes to products, no product is complete without user feedback. Moreover, the product needs to be iterated and optimized based on user feedback. Establish a good product culture and product design mechanism internally."

In terms of operations, operations are about continuously enabling your products to achieve more growth targets, freeing up manpower, and automating some things that need to be done manually. The automation here includes the automation of system specifications, which is achieved by establishing a set of statistical indicators and using data statistical tools to calculate the completion status of these indicators.

Finally, it is necessary to manage growth expectations and accurately grasp the growth rhythm. Different periods should have different growth rhythms. Everyone writes a monthly plan, and everyone knows how to evaluate whether their work is helping the product grow positively and how to control the pace of following up on good things.

3. Implement growth thinking into the team

There are currently two options for the growth landing team:

One is to build a growth team. The team is composed of product, operation, data, development, design, testing and other personnel. It operates independently and is responsible for conducting growth testing for a product or multiple product business lines under the company. This model is generally adopted by large companies.

One is for the team leader to take the lead. Develop operations or product plans and connect technologies for testing and optimization; however, this is difficult and challenging. For example, I have optimized the copywriting for guiding new users to register. I have studied what kind of textual expressions and interest inducements can increase new registrations. I have run each solution online for a week to observe the data, and then tried another one and compared them.

If this idea is not conveyed well, the technical side will feel annoyed. Furthermore, you should try to use data awareness to evaluate first, compress the test plan, and find the two or three most likely ones for verification. Because the team's technology is developed according to the schedule, they don't have the time or energy to help you make changes.

Second, quantify the monthly and quarterly goals of the product so that everyone on the team can actually see the measurable indicators, including revenue; that is, clearly define the OKR indicators or North Star indicators.

Because during the growth process, we need to take into account every aspect of the user life cycle. Among them, each link needs to focus on different core indicators. Therefore, in the process of operation and decision-making, the team must first think clearly about what they want to achieve and what they want to grow in this link.

When defining growth indicators, comprehensive assessment indicators must be taken into account. Because if you only evaluate a single indicator, it may lead to unhealthy growth. For example, if you only examine the number of new users, while the number of users increases, it may bring in a bunch of zombie users. If you only look at active users, it may only be the number of new users, but the activity of old users is declining.

Third, each individual on the team must be responsible for his or her own quantitative standards, and the performance of each team member must be linked to the team's indicators. This will make the company's growth indicators clear from top to bottom, and everyone will be motivated to achieve their personal goals and ultimately achieve the company's growth goals.

For example, when a team is having a meeting, the boss can first write on the whiteboard wall why the team wants to tackle this task, what resources are available, and what the overall goal is; then the people below can come up and sort out what methods they can try for their part, and what indicators they can achieve; finally, take photos for archiving, and return to their workstations to start work; in the meantime, follow up on matters and summarize meetings, and reasonably instill in everyone that individual work is not independent, it will affect the overall situation, and the team must not only be united in spirit, but also help each other.

4. Execute the growth method to individuals

First, draw up a growth plan with clear goals and key points. In the actual process, use this plan as a blueprint to ask questions, propose hypotheses, conduct tests, draw conclusions, and constantly adjust and revise. This growth plan includes the following:

Direction indicator: North Star indicator - Roadmap: Growth model - Dashboard: Key indicator dashboard (quantitative data) - Reference book: User psychological decision map (qualitative data)

After you’ve defined your North Star Metric, the next step is to build your growth model. The essence of a growth model is to distill the content into a mathematical formula that includes the main variables that affect user or profit growth, and explains how these variables interact with each other and ultimately affect growth.

• Output variable: Generally speaking, this is your North Star metric.
• Input variables: These are the main variables that can affect the North Star indicator.
• Equation: is the relationship between these variables.

After the growth model is sorted out, the next step is to monitor the key behavior funnel data. Here you can take a hierarchical and step-by-step approach, first defining the few most important events for tracking. Then do the next most important thing. The advantage of this is that you can proceed step by step and get the most important data quickly.

For example, if you have an e-commerce website, what are the three most important behaviors of users on the website?

1. Product page views;
2. Add product to cart;
3. Product purchased successfully.

For example, if you have a chat application, what are the three most important behaviors of users in the application?

1. User registration;
2. User adds friends;
3. User sends a message.

For example, if you have a SaaS software, what are the three most important behaviors of users?

1. Trial registration completed;
2. Key function usage;
3. Upgrade payment completed.

As mentioned above, only three actions are enough to track the key actions of users. After that, you can slowly add more steps for a few key funnels:

1. Product page views;
2. Click on the product thumbnail;
3. User registration;
4. Add the product to the shopping cart;
5. The user clicks to buy;
6. The user successfully purchased.

Building a key behavior funnel allows you to quickly understand the conversion efficiency of each key step in the user journey. Once you understand these key steps, you may gradually need to monitor more data indicators in the future. The following metrics need to be displayed:

• North Star Indicator: Value and Trend.
• Key indicators of the growth model: number of top visitors, new user activation rate, old user retention rate, profitability, etc.
• Key segmentation indicators: such as indicators related to key behaviors, funnel decomposition of some important processes, etc.
• Important user groups: by channel, by new and old users, by product platform, etc.

From a growth perspective, the North Star Metric is a number that a company/team/individual is pushing forward, but from a user’s perspective, it represents “value being delivered to the user.” It quantifies the key indicators that affect each step of growth and also represents the decision-making process of each user. Through the total conversion rate, we also need to realize that each user has different motivations, backgrounds, states, and thinking patterns, so the decision-making process is also different.

Therefore, when analyzing “cold” data, we must remember that the other side of the data is the aggregated results of the behaviors of countless users. Data is dead, but user behavior and psychology are alive. Only by deeply understanding user psychology can we effectively drive growth. To effectively grow your business, you must understand the psychology of your users at different stages of decision-making.

Related reading:

1. Product operation: 2 major ways to get started to accurately control private domain traffic!

2. Product operation: How can products improve user stickiness?

3. Practical Tips + Case Studies | How to improve user stickiness through habits?

4. How to conduct user behavior analysis and improve user stickiness?

5. How to establish a user incentive system to enhance user stickiness?

6. How can products improve user stickiness? Here are 3 tips

Author: Mao Li

Source: Operational Growth