User Operations: 2 Must-Know Formulas for User Growth!

As the growth rate of mobile users slows down and customer acquisition channels become increasingly single under the monopoly of giants, user growth is becoming increasingly difficult. "Customer acquisition", an important part of user growth, is also undergoing a transformation from extensive competition to refined competition. Here we first talk about the "number" of customer acquisition.

Return on investment (ROI) = customer acquisition revenue / customer acquisition cost.

1. Customer acquisition cost = customer acquisition cost / number of customers acquired

There are many ways to acquire customers, which can be roughly divided into two categories: natural customer acquisition and purchased customer acquisition. Natural customer acquisition is when users actively install and activate the app, while purchased customer acquisition requires costs to guide users to activate the app. Purchasing costs can be divided into monetary costs and user costs. For example, the volume exchange cooperation that was popular in the past few years belongs to user costs. The red envelope fission that has emerged in the past two years is actually also a kind of monetary cost, but the money is given to "users" rather than "media."

Here we focus on the monetary cost of purchasing and acquiring customers. In purchasing and acquiring customers, the expenditure is easy to obtain, but the calculation of the number of customers acquired is relatively complicated. For example, in the mobile application market, the new volume and natural increase are mixed together and there is no way to separate them, so we can only calculate a relative value.

I personally recommend that before launching the app on the market, you first have a clear statistical analysis of the natural growth and use the growth to calculate the purchase quantity of the app market. At the same time, you can also suspend the delivery for a few days regularly to observe the gap between the current natural volume and the original level, and adjust the base of natural increment in real time.

In fact, it is not easy to accurately count natural quantities. If advertisers buy traffic from the App Market and Toutiao and Guangdiantong media at the same time, the problem of App Market "hijacking" often occurs.

Take Toutiao’s Android app as an example: when a user clicks on an ad on Toutiao to download an app, what is downloaded is an apk installation package. Before installation, mobile phone manufacturers often recommend that you download the app from their own app store for security reasons, resulting in the user's installation channel actually being the app market channel (if you are not clear about the concept of Android channels, please search on Baidu). This often results in a corresponding increase in new purchases in application market channels when the purchase volume of media such as Toutiao increases.

Of course, non-app market media such as Toutiao are also aware of this situation and have introduced corresponding measures, namely, direct data attribution between the media and advertisers. The general logic is: the media sends the user information of clicking the advertisement to the advertiser, and the advertiser compares it with the device activated by itself (or other behaviors), and after attribution, it can be calibrated to the media source.

Since there is no universal standard applicable to all media, the cost of accessing each media will be relatively high. There are also service providers on the market, such as Reyun Data, which can help advertisers quickly access and test data. But my personal suggestion is that it is best developed by your own team. The reasons will be explained in detail in a later article.

After obtaining the customer acquisition expenditure and number of customers relatively accurately, the customer acquisition cost can be easily calculated. However, the fact that Media A’s customer acquisition cost of 8 yuan is less than Media B’s 10 yuan does not necessarily mean that Media A is better. The customer acquisition benefits of different media must also be considered.

2. Customer acquisition revenue = total customer acquisition revenue / number of customers acquired

When calculating customer acquisition revenue, the more popular algorithm is LTV, which is the user's lifetime value. It should be noted here that LTV cannot only calculate the value of users who generate revenue, but the average value of all acquired users. There is no universal formula for calculating LTV, but it can be calculated by regression using data from some historically similar users.

It should be pointed out here that the benefits of users with different behaviors are different. Here we can use the reverse method. For example, we can first calculate the LTV differences of users with different retention (second retention, 7 retention, 30 retention), and then reversely calculate the differences in core behaviors of users with different retention when they first start.

Why calculate core behavioral differences?

Many companies evaluate the effectiveness of their advertising campaigns based on retention indicators, but retention is lagging, and the retention of today's users can only be determined the day after tomorrow (the third day). Today’s investment is no longer the era of “extensive” competition in the past. Investment efficiency is an important factor affecting the development of a company. Therefore, if we can find the relationship between core behaviors and retention, the timeliness of delivery will be greatly improved. Of course, retention is used as an example here simply because it is a relatively simple and universal method.

According to the above formula, if the customer acquisition cost of media A is 10 yuan, the LTV is 12 yuan, and the return on investment is 120%. The customer acquisition cost of media B is 5 yuan, the LTV is 4 yuan, and the return on investment is only 80%. Obviously, media A is better than media B. It should be pointed out that customer acquisition costs and LTV are dynamically changing and require real-time data verification and optimization.

In terms of product revenue sources, many apps rely mainly on advertising monetization. When calculating customer acquisition revenue, it is necessary to consider marginal benefits and not be blindly optimistic. First, users' behavior and willingness to click on ads will decrease as ad exposure increases. Second, many apps have no bargaining power, and their advertising revenue depends on alliances such as Toutiao, Guangdiantong, and Baidu.

Clarifying the above two formulas can help you be more precise and efficient in market launch, which can not only “increase revenue” but also “reduce expenditure” and help the development of the company.

Related reading:

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

2. APP user growth: How to use data analysis 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?

Source: kober