User operation: a simple and easy-to-use user growth methodology

This article introduces in detail the specific implementation methodology of the AARRR growth framework, hoping to provide some ideas for readers engaged in user operations , user growth , and CRM.

1. What is user growth? - Clarify the definition of user growth

Literally speaking, user growth seems to mean "bringing in new users." First of all, I need to correct a misunderstanding that many people have: please do not equate user growth with the first A in AARRR .

There is a set of methodologies for user growth, but it is not a panacea. It does not mean that if I carry out a certain activity, a certain project, or a certain function and it leads to a certain improvement in customer acquisition indicators, then I call it user growth.

In fact, the so-called "growth" covers the market, products, operations and customer service, and drives the company's performance growth through an integrated strategy . This integrated strategy involves the entire user growth model, which is the AARRR that everyone has heard many times.

As the title of this article says, this is a simple and easy-to-use growth methodology. Naturally, I will only talk about the practical aspects. First, let’s talk about the operational framework.

2. Preparation before starting user growth work

1. Setting the right growth targets

In user growth, there is a very cool term - the North Star indicator , which refers to the most important indicator for a company's business. It is unique and points out the direction of the company's progress, just like the North Star guides those who travel far away.

[Key points here] Next is the first methodology: How to formulate the North Star indicator

This is an indicator that demonstrates the core value of the product and is a true reflection of the company's operating conditions;

If it is a loan app, then it must be closely related to the loan amount; if it is an e-commerce app, then it must be closely related to the turnover; if it is a social app, then it must be related to the relationship between users.

This metric reflects the user's activity level;

If the number of users reflects the breadth of user growth, then the activity level reflects the depth of user growth. Now that both popular culture and sports are flourishing, both breadth and depth must flourish together. For example, there is an e-commerce platform that has gone bankrupt called Feifei Mall. Their original core indicator was the number of SKUs. This indicator, which had nothing to do with user activity, eventually led to the platform going astray.

Indicators need to be simple and actionable.

The specific meaning of this indicator must be quickly understood by everyone in the company, and this is an indicator we can change through hard work.

For example, the North Star indicator of a P2P financial management APP should not be the total number of transactions, because a compliant P2P must first establish a bid and then raise funds (that is, someone must borrow money before someone else invests). As a financial management operator, you have no way of controlling how many people come to borrow money, so this indicator is not actionable.

1. Support system construction

This is mainly the work of the technical team, which also confirms what I said at the beginning, that user growth is not the responsibility of the operations team, but an integrated strategy. The purpose of building a data system is to record all the operational data we are concerned about and make it available for analysis by the operations team. We can build our own data system or purchase systems such as Sensors, Zhuge IO, and Growing IO.

At the same time, we may need some systems to support our operations, such as a push system for sending messages to users, h5 production for quickly generating activity pages, a CMS system for modifying APP content, a system for operators to independently select users or retrieve data, and so on.

1. Building a growth team

If your company is currently a startup, then everything in your company should be thought of around user growth. At this time, there will be no growth team. The company's leader should serve as the Chief Growth Officer and coordinate user growth for the entire company.

If your company already has a certain business foundation, you can have an independent growth team. I suggest that this growth team should be fast and agile. It can be led by a growth director and 2-3 generalists who can be responsible for both products and operations, plus 1-2 back-end engineers and 2-3 front-end engineers, plus 1 data engineer, to independently carry out user growth work. The team should not be too large, but it must be agile and move in small steps.

3. Carry out user growth based on the user life cycle AARRR model

1. Acquisition

[Key point here] Next is the second methodology:

Framework methodology for acquiring users: locate the audience → determine the channel → formulate the method → ​​optimize the user journey.

Target your audience

Why does business come into being? Everything stems from human needs, so finding people with needs is the first step in doing business. You have to find them first and then get in touch with them.

[Key points here] Three steps to think about positioning the audience:

1. What are the demographic attributes (age, gender, region, income, education, occupation, subculture) of customers who you think most need or want to use the services or products you provide?
2. What are the demographics of the primary customers for products similar to ours?
3. What are the cross-border products that have similar demographic attributes as our products? (For example, China Southern Airlines and Luckin Coffee, Honor of Kings and Hupu)

Determine methods and channels

First, let’s talk about the methods. On the Internet, there are generally the following methods to acquire new customers. I will talk about the specific meanings and applicable products respectively. I can write an article on each method. This article mainly introduces the methodology, and the specific implementation methods are not introduced here.

Kotler uses a separate chapter in "Marketing Management" to introduce integrated marketing communications, which is also the secret of marketing. User growth must use a combination of measures in the user acquisition stage, that is, integrating the above channels to work together.

Based on different channels, we can use different methods:

Develop integrated marketing strategies

The so-called formulation of a reasonable strategy means choosing appropriate channels based on current products and using appropriate marketing methods. But never violate some basic rules of user growth, such as taking small steps and continuous iteration.

The channel we choose at the beginning is not necessarily the most suitable one, and it needs to be continuously iterated and optimized during the growth process.

Optimizing the user journey

Optimizing the user journey refers to the process from user contact to completion of the first experience, which includes advertising optimization, landing page optimization, download channel stability optimization, registration page optimization, and new user usage guidance.

As for how to optimize, the first thing is to benchmark against similar products. Throughout the entire user journey, do we make users go through fewer or more processes than others? Can the extra steps be omitted?

The second is to act according to the data, take small steps and iterate quickly. This is why I said at the beginning of the article that we need a CMS system, because this can ensure that the optimization of the user journey can be quickly iterated.

Pay attention to cost control

In attracting new users, in addition to the number of new users, another important indicator is the customer acquisition cost. The customer acquisition cost is an overall indicator, which means all the costs used for traffic and brand divided by the number of new users generated in the current time period. This is the customer acquisition cost of a single user.

We cannot just target a certain channel, as this would be unfair to brand advertising.

Case: Investigating the customer acquisition cost of a loan product

When I was working for an Internet finance company, our boss learned from some channel agents that the cost of acquiring customers through NetEase's information flow advertising was about 100 yuan per registered user. This made our boss very anxious. Who could afford a customer acquisition cost of 100 yuan? This made him completely lose confidence in the information flow channel. But in fact, the information flow channel is a combination of brand and effect. After seeing the relevant advertisements, users may download the relevant loan APP from the app store, or download it next time they need a loan, and these are all the effects brought by this advertisement. Therefore, when calculating the cost of acquiring customers, we must have an integrated marketing communication mindset.

A loan advertisement in a certain information flow

1. Activation

Activation refers to the process of enabling users to discover the value of a product and motivating them to use the product repeatedly. Generally speaking, if a user uses the product a second time and completes the main process after fully experiencing the product's main process for the first time, I consider the user activation to be successful.

For example, a user uses a coupon from an e-commerce company to buy a piece of fruit for free. If the user never comes back, then the user is not an activated user and is usually just a freeloader. However, if the user comes back and buys an apple at a normal price, then the user is considered to have been successfully activated.

This is different from the views in many growth books. The reason for this definition is that when I was working at Vipshop, I participated in a second-order repurchase project. Simply put, it is to get users to purchase a second order.

Most users’ first order was made with discounts that exceeded their affordability, so it is very difficult to get these users to place a second order. Therefore, I believe that activation should allow users to discover the value of the product, rather than just letting them know how to take advantage of it.

Here, I have to reiterate that user growth is a complete set of methodologies and cannot be used independently. Preferential measures such as 0 yuan gift vouchers will definitely attract a large number of freeloaders. It may be a good medicine for acquiring users, but it is a poison for activating users. Therefore, user growth must be considered from the perspective of the entire AARRR.

[Key point here] Next is the third methodology:

Framework methodology for activating users: define activation → design guidance paths and methods.

Find the value of the product and define what user activation is;

E-commerce products such as JD.com should provide users with the value of helping them quickly and easily select their favorite products and obtain them at a suitable price.

For e-commerce products like Vipshop, the value they provide to users is to allow them to discover products they like and enjoy the feeling of shopping on an e-commerce platform with weakened search.

Therefore, for the above two products, once a user completes an order, they are considered activated.

Social products such as Kugou provide users with the value of enjoying singing Karaoke anytime and anywhere and sharing their own works with friends.

Therefore, the activation of Kugou should be when the user finishes singing a song.

Design can guide users to discover the value of the product path;

The moment you discover the value of your product is called the Aha Moment in growth hacking.

Find the magic number. The magic number is the number of times users stay and continue to use your product after completing a certain number of certain specified actions. Aha Moment and Magic Number are interrelated. The moment a user reaches Aha Moment is often the moment the magic number is reached.

For example, the magic number of Facebook is 5. When you follow 5 friends, you will find the fun of this application. The retention rate of users who follow 5 friends increases suddenly compared to users who follow 4 friends. Therefore, inducing users to follow 5 users becomes the focus of user activation. Product managers need to design a reasonable path to induce users to follow 5 people.

Where do magic numbers come from? It comes from your small-step and fast testing, and paying attention to data during the testing process. This is why I mentioned the importance of data systems and team agility at the beginning, because testing runs through the entire user growth process.

1. Retention

The definition of retention is relatively simple, which means that users repeatedly create value for the product within a specified period of time. Please note that I am talking about creating value. If a user logs in to an e-commerce app every day but does not make any purchases, in my methodology, this user is not considered retained.

Of course, the definition of generating value varies from company to company. In the game, there is also meaning for players who don’t spend money. It may be that they become one of the entertainment functions for players who spend money.

Why do users continue to create value for products, such as paying for use or purchasing? It is because products continue to provide value to users, and this value can be continuously perceived by users.

In many growth books, new user retention and old user retention are separated. As mentioned above, I have classified new user retention into the category of activated users. Therefore, retention here refers to user retention after activation, that is, old user retention.

[Key points here] Next is the fourth methodology:

Methodology for retaining old users: continuous user communication + increasing user sunk costs + creating additional value.

Many articles and books, when talking about how to retain users, will ask everyone to create a membership incentive system. In fact, the membership incentive system is a superficial concept, and its core should be a concept of "increasing users' sunk costs and creating additional value."

Continuous user communication

The reason why we need to communicate with users continuously is that when the product form has not changed significantly, we need to let users continue to feel the value of the product. Therefore, we need to take a series of measures to communicate with users, and these communication language needs to create as much relevance as possible with users.

There is a key point here: user segmentation.

One of the prerequisites for effective communication is relevance. Users don’t like to hear things that have nothing to do with their own interests.

Divide users into reasonable groups.

Let me briefly describe a case here. When I was working at PPmoney, I established a user automatic marketing system. The main idea was that once the user met certain conditions, SMS marketing would be automatically triggered. These conditions are how I stratify my users.

Generally speaking, we can stratify users according to the following dimensions:

• User operation process (that is, the user has registered but has not filled in the information, has not completed the information, has been granted credit but has not borrowed money, has borrowed money but has not paid it back)
• Demographic attributes of users (age, gender, income, location, occupation, subculture, etc.)
• The user's purchase category (user's preference for category and brand)
• Channel segmentation of users (from which channels the users were acquired)
• User value (classify users through RFM model)

The larger the product, the more detailed the user segmentation needs to be, and efforts should be made to provide different faces for each individual.

In PPmoney, I mainly carried out two-dimensional user classification based on user channels and operation processes. The classification method is as follows:

Among them, the copywriting and profit margin in each small box will be continuously modified and iterated through daily data feedback.

How to find the critical point of the user operation process? How these 7 days and 14 days are found, please read another article by the author:

The basic skills of user operation: user activation and retention

Loss warning

Based on user behavior, we found some common points among lost users. What behaviors did these users do before they lost? For example, we found that after users do not revisit the product for N days, there will be a sudden increase in churn. For users with similar behaviors, we need to communicate with them about churn warnings to prevent user churn, because once users churn, it will be extremely difficult to recall them.

Increase user sunk costs

Although sunk costs should not hinder decision-making in management science, normal people often make decisions in this way: "I spent a lot of money here to become a senior member, so I should continue to buy things here to keep my membership title."

I think paid membership is a way to increase users' sunk costs. In fact, the paid membership product itself is generally not profitable for the platform. When we purchase a paid membership, we will receive some coupons in return. In many cases, the amount of these coupons is even greater than the membership fee of the paid membership. However, once the user pays the membership fee, a sunk cost is incurred, which will make the user more likely to retain.

Create additional value

In the above, I mentioned a core idea : "Why do users continue to generate value for products, such as paying for use or purchasing, because the product continues to provide value to users." If we provide users with more additional value, they will continue to buy. The simplest example is Haidilao. Unlike ordinary hotpot restaurants, their amazing service provides extra value to users, but users also give back to Haidilao with real money, so Haidilao's business has always been so good.

In Internet products, we often use user incentive systems such as points redemption to create value for users. Here I would like to introduce an idea - cross-border benefits. For example, Alipay's platinum members can enjoy priority boarding when taking a flight at many domestic airports. This is a cross-border benefit. The product itself cannot provide this value to users, so we provide value to users through cross-border benefits. In addition, the idea behind credit cards and star-rated hotel co-branded cards is to enhance the value created for users through cross-border benefits.

Speaking of user incentive systems, I have written an article titled "Understand in one article: How to build various user incentive systems?" 》 contains a detailed introduction to the methodology.

User loyalty

The highest level of user retention is to make users loyal to the product. Please read another article by the author:

"In-depth analysis: How to improve user loyalty to products? 》Learn how to make users loyal to your product.

1. User Monetization (Revenue)

There are three ways to monetize users: selling virtual items that have no meaning in real life through games or live broadcasts, monetizing through advertising through huge traffic, and selling meaningful real-world goods and services through e-commerce.

Since I am not a commercial product manager and have no practical experience in this area, and I don’t want to talk about it on paper, I can only share some examples with you here. The specific methodology is still waiting for the experts to supplement.

1. User Recommendation

Just think about it, when would you share the content of the APP to WeChat?

• Scenario 1: After purchasing Luckin Coffee, share the coupon with friends and get one for yourself.
• Scene 2: The Chongqing hotpot restaurant in a shopping mall is very authentic. Share its address with friends from Dianping.com.
• Scenario 3: Reaching the top rank in Honor of Kings for the first time and showing off to your friends.

These three scenarios correspond to different levels of user recommendation motivations, and each level is more advanced than the previous one.

• The first level of motivation: incentives through external driving forces, such as subsidies and concessions.
• The second motivation: Because a product is very good, you recommend it to your friends, which is word of mouth.
• The third motivation: because the product activates the internal psychological incentives of certain users, such as showing off, creating, etc.

Similarly, when we encourage users to recommend products, we can start from the basics and gradually move on to the deeper aspects, embedding some user motivations into products and operations.

[Key point here] Next is the fifth methodology: Create sharing capabilities → Design sharing bait.

Create sharing capabilities

First of all, the product must have sharing capabilities, and product managers must consider users’ sharing scenarios when designing products and add sharing controls to all scenarios where users may share.

Designing sharing bait

Then, design sharing bait. The so-called sharing bait is the user sharing motivation I described in the previous article. In addition to the second level of motivation, the first and third levels of motivation can actually be designed.

The first motivation: subsidies and concessions

These motivations have been used a lot in the Internet circle. The most common way to play it now is to share it on WeChat Moments after completing the order, so that both friends and yourself can get coupons; another way is for old users to bring in new users, and old users can recommend new users to register and use it, and both parties can get coupons.

What I need to remind everyone here is that due to the different forms of products and the different levels of profit concessions that companies can accept, these gameplays regarding coupon amounts, issuance timing, covered categories, validity periods, etc. require user growth personnel to continuously test and iterate these functions at work. (I have mentioned the idea of ​​small steps and continuous iteration more than once in this article)

When I was working at PPmoney, as the designer of the MGM function of the lending APP, I put this into practice myself. In the first version of our MGM, old and new users each received a coupon. However, in practice, we found that this coupon became quite useless for old users because they were still within the payment period. So we quickly iterated a version and changed the coupon into a cash incentive.

The third level of motivation: intrinsic motivation

If you can embed intrinsic motivation into your product, users will share it even more enthusiastically!

Internal motivations generally include: venting, showing off, recording, and boasting.

Tencent Charity: The painting-selling activity that went viral on WeChat Moments at the time was a perfect example of how people wanted to vent their compassion and show off their enthusiasm for charity.

Running check-in: Running check-in is a way to show your love for life and your commitment to becoming better, and it is also a record.

To promote product dissemination, neither the operations team nor the product team can act independently. The growth team must be closely integrated with operations and products to embed internal motivation into the product.

Source: Liang Yanhao