User operation: Can you survive without growth?

Introduction: " Refined user data is not obtained from new users , but from existing users. We try our best to activate their consumption behaviors to refine the data particles . "

The Internet winter that began at the end of 2018 has not yet gone away, but operators' collective "growth anxiety" has reached its peak. I don’t know when it started, but Internet companies in particular are no longer satisfied with brand exposure and revenue performance, but rather growth, growth, and more growth. From the CMO to the grassroots marketers, everyone is working together and is responsible not only for traffic but also for growth. In the cold winter environment, starting from around 2017, many people regarded the "Growth Hacker Theory" as the Bible. Sinking, fission, community operation, and low-cost growth have become the most discussed topics in the past year or so. Even college graduates who have just graduated can talk seriously about the operating model of social e-commerce when applying for jobs.

The growth hacker theory was proposed by Sean Ellis in 2010. The core theory is to achieve explosive growth in the number of users through detailed mining of user behavior data and rapid and targeted product iteration, which is as magical as being "manipulated by hackers." The logic of "refinement of user behavior data" was also solemnly mentioned by Gao Xiaosong in the program "Xiao Shuo". Considering Gao Xiaosong's background in Alibaba's big entertainment, the authority of the growth hacker theory was invisibly endorsed once again by the authority.

However, is the growth black hole theory really fully suitable for the current development status of China's Internet industry? Is something that everyone is doing and believes in necessarily right? Should we carefully reason and tailor our approach to the situation, or should we be swayed by public opinion and adopt a plagiaristic approach? Let us start with the growth hacking theory itself and I believe we will have new thoughts.

1. Let’s start with the four differences between Chinese and American Internet companies

After 2017, the core of marketing began to shift rapidly to focus on user experience, and more and more companies realized that product teams are not just marketing departments. Corporate marketing began to focus on effective user management to promote user growth, which became the basis for hacker marketing to become popular a year later.

However, there are four clear differences between Chinese and American Internet companies: Do they have a deep understanding of the huge value of data? Do you master data-driven systems and methods? Is data used to guide the operations of each business unit? Are you good at using data analysis tools to replace manpower?

It cannot be said that Chinese companies do not understand these differences, but rather that the only ones who truly know the answers to these four questions are the companies themselves and God. What’s more, some differences are well known but we are powerless to do anything about them, such as the root cause of the current Chinese Internet winter – the capital winter.

There are also some specific problems, which are also derived from the above four problems. If we deal with the Internet industry with Chinese characteristics according to the response method of the growth black hole theory, the solution will not meet the actual situation.

1. Good products are the foundation of growth, but sometimes you can only choose "okay" products.

We all clearly realize that creating a good product that is irreplaceable by users is the foundation of all growth, including business growth, data growth, and user growth. Therefore, many companies will invest a lot of resources to create new products that are full of gimmicks, but users do not like them. Or what should we do if some users like it and others resist it? For example, on a certain product, those who like it and those who satirize it are all customers who have actually purchased things on it, and the public opinion about the precisely targeted lower-tier market population is also half positive and half negative. Is such a product a "good" product?

Moreover, it is extremely difficult to develop an irreplaceable product. For Chinese startups that are extremely dependent on the capital market, the failure of the first product means the failure of the business. So the reality is that it does not need to be “good” or “irreplaceable”, as long as the quality and functionality are “okay” and the product has a few highlights, settling for second best is also an option.

This is the problem of recognizing the value of products. If you cannot recognize the profound value of products, you naturally will not understand the profound value of data. Second-best products only bring "data" that is not data.

2. Focus on acquiring new users and forget about activating and retaining valid users.

Today's companies all emphasize user experience, but from the company's internal structure it can be seen that the product manager and the marketing manager are two different people, and the two departments often have conflicts over who comes first, and product development and marketing are basically separated. The growth hacking theory questions the silo-style functional division structure of traditional companies and emphasizes the establishment of a user growth team.

Some domestic companies, in the spirit of "take-it-as-it-is", changed the name of their marketing team or operation team to an operation team, and left the task of growth to them. This is the origin of marketers’ “growth anxiety” in the past two years. Marketing is focused on closing deals, and growth is primarily reflected in data. Data should guide marketers to effectively close deals. Marketing itself does not drive or control data, and data should not be the result that marketing should achieve. This is a logic that puts the cart before the horse.

Previously, the former general manager of a ride-sharing service believed that if 10% of the 150 million car owners in the country were converted, there would be more than 10 million car owners. How to attract these car owners to join?

Her solution is to incorporate "social attributes" into ride-sharing. She also frankly admitted that "ride-sharing makes private cars a semi-public, semi-private social space, which is a very futuristic and sexy scene." "Everyone knows what happened next. I don't know if there is any data to show that users need to turn ride-sharing into a social scene? I only know that the general manager needs to convert 10% of the 150 million.

Those unactivated users are never valued, their real needs are not cared about, and their stay or departure is not cared about. This is not the explanation of the growth black hole theory. Added by a user!

3. Growth strategy is key, but sometimes the strategy is wrong.

You know, even if a product is truly outstanding and has a group of early users who truly love it, it will inevitably fail without a strategy to fully drive user growth. What is even more worrying is that if the growth strategy is the personal fantasy of the company's decision makers from the very beginning, then failure is doomed from the start.

Growth hacking theory is not just about choosing the best method from a series of strategies to implement, but a continuous experimentation process to ensure that these methods can be effectively implemented.

When it comes to the sharing economy trend, there is no doubt that it started with bicycles, followed by shared power banks, shared umbrellas, and even shared sneakers.

The founders of these projects believe that the core of the sharing economy is to make it easy for users to obtain products in this category, and the best way to do this is to make shared products ubiquitous. But they forgot the most basic business rule: goods can only be circulated and profitable when the quantity is slightly lower than consumer demand. Our ancestors called this principle "scarcity makes things valuable."

So what has the sharing economy become in just two or three years? There was even a famous investor who publicly challenged the project founder on Weibo: "If the project succeeds, I will live broadcast eating shit." Growth hacking is a theory. Theory is always instructive, but it may also lead to wrong decisions due to differences in understanding.

2. Does it mean that we cannot survive without growth?

Why are more and more startups starting to look for niche areas and focus on creating small, beautiful and personalized products? Because they understand that people are willing to pay a high premium for their own values, as the old saying goes, "Money cannot buy what you desire." More and more Chinese sellers on Amazon are starting to run “boutique stores” instead of being obsessed with creating “explosive products” as before.

The reason is very simple: profit is the foundation, data growth is just a means, and if the total volume cannot be achieved, then increase the unit price. Therefore, no growth does not mean no profit or no survival.

The key is to look at your own profit model, whether it relies on scale profits or on skyrocketing unit prices. Many decision makers in companies are confused, probably because they are too involved to understand the situation. In short, the theory of growth hacking is not a model, but a methodology that needs to be understood, deepened, and improved before it can be used on oneself.

So will scale definitely bring huge benefits? Scaling is the growth of one's own size, which will definitely bring higher profits, but it will also increase resource consumption. Where are these resources? In fact, it is market demand. The strength of market demand is determined by the scarcity of products and services. This brings us back to the question of creating a “good” product.

If you cannot create an irreplaceable and extremely scarce product, and have to settle for an "okay" product, how can you talk about market demand, resource consumption, and scaled profits?

The saints of growth hacker theory always cite Facebook as an example, which took only four years to grow from 100 million users to 1 billion users. However, they fail to see that the social attributes and free attributes of Facebook itself are growth drivers. At the same time, the growth of campus networks in China was also a trend. This was the need and inevitable result of the development of the times, rather than the result of practice guided by theory.

Substituting known results into the formula for verification will result in huge factual deviations.

The products and services provided by most companies are not scarce. Instead, they themselves lack a common resource - capital. Unfortunately, the trick of exchanging growth data for funds does not work. There is no necessary connection between the two, and investors are not fools. This is the root cause of "growth anxiety disorder". Just like a person who sells blood to survive, pressure is a way of surviving by moving towards death.

3. Is the Growth Hacker Theory Wrong?

Once a theory is summarized, it is rarely wrong. The errors lie in the understanding and operation levels. Just like many marketers denounce the absurdity of positioning theory, the reason is that they do not have enough funds to accurately target customer groups. So, is it a theoretical error, or is it a constraint caused by poverty?

When people start taking action to achieve a goal, costs will naturally arise, and they will definitely take precedence over benefits. How many people really believe in pie in the sky? What’s funny is that there are quite a lot of people who believe in “zero-cost customer acquisition”.

The cost of growth hacking theory lies in product development, user demand research, and the fine-grained grinding of data particles, but this part of the cost is passed on in the end.

Take video websites as an example. From the perspective of product development, they need to obtain more high-quality video content, either by purchasing or making their own. Don’t Youku and iQiyi have enough self-made variety shows? These are all costs.

In terms of user demand, if users don’t like watching ads, then there will be no advertising revenue and it will also be a cost. Video websites have introduced a membership payment system that allows users to watch the latest dramas and skip commercials, passing these costs on to members, thus perfectly solving the cost issue. The increasing number of paying members reflects the scarcity of the service. This scarcity is a "dichotomy": either you don't recharge and continue to endure it, or you recharge and have a great experience.

What is scarcity? That is, the options to choose from are getting fewer and fewer, but not zero. One is called monopoly, two are called oligopoly, and three or more are called competition.

Therefore, "zero-cost customer acquisition" is just a YY idea and is not the growth black hole theory at all. Reducing the cost of customer acquisition is the essence.

Discover specific ways to reduce customer acquisition costs, provided by refined user data, and then have marketing verify whether it is feasible and whether it can be replicated and expanded ? Refined user data is not obtained from new users , but from existing users. We try our best to activate their consumption behaviors to refine the data particles .

The growth black hole is not about growth at all, but about activation. It’s just that some marketers interpret the word “growth” as “new customers”. To activate old users, we rely on marketing strategies and methods.

To summarize:

1. The existing market is more important than the incremental market.

2. You can make profits without growth.

3. The disappearance of the demographic dividend is a fact, and it needs to be replaced by technological dividends, strategic dividends, etc.

4. Create scarcity of products. If that is not possible, then compete with service attitude. There is no upper or lower limit to attitude.

5. The significance of data is to guide actions, not the goals and results of actions.

Finally, like the line in the movie "Forrest Gump": "To move forward, you must first forget the past. This is the purpose of running." Forget the wrong thinking caused by anxiety, and do marketing when you should do marketing, and do branding when you should build a brand.

Related reading:

1. User operation: new funnel model for conversion analysis!

2. User operation: How to use B-side operation thinking to increase user growth?

3. Product operation: How to use data analysis to drive product user growth?

4. APP user growth: One model solves 90% of growth problems!

5.How to increase users? Take Pinduoduo and Xiaohongshu as examples

6. Triggering user growth: Is user operation just about attracting new users?

7. User operation: What else can you do to attract new users without fission users?

8. User operation: how can financial products awaken dormant users?

Author: Seven Princes

Source: PR Home