APP promotion: 4 core steps to acquire users!

Like any startup, we are experimenting to find the next growth channel. But before we test our user acquisition channels, we need to answer a few important questions.

How much do we expect to spend on this?

We don't want to run meaningless and ineffective ads. We need a benchmark to determine which options are superior and which can be ignored. Below we share how we understand users step by step, use effective methods to acquire users, and what tools and quantitative methods we use in the process.

As an online services company, you need to answer three basic questions before you make financial plans to acquire new customers.

1. What is the total lifetime spend of your paying customers?

We are talking about the cost of the entire life cycle. RJMetrics provides a tool called Nifty Calculator to calculate this value. Here is a simple quick calculation formula:

Monthly cost per paying user - gross profit / monthly churn rate

Gross profit is the sales price of goods minus the basic costs of selling the product, such as support and organizational expenses. Monthly churn rate refers to the percentage of users who leave, cancel their subscriptions, and stop paying, calculated on a monthly basis.

2. Proportion of paying users

Many companies offer free trials or freemium models, so not every registered user will become a paying user. By calculating the percentage of users who convert to paying, and the average amount they pay, you can calculate and know the maximum amount you can spend to acquire a new user.

Number of registered users/number of users who have started paying

Number of registered users/number of users who have started paying

3. Visitor registration success rate

Through a simple registration rate channel analysis, you can know the registration ratio of users coming through a certain advertising channel to the landing page:

Number of visitors/registered users

For e-commerce companies, you can combine steps 2 and 3 together. Since you don’t have any free products, you can calculate: number of visitors / number of orders

If the goal of some of your marketing activities is to obtain some intermediate conversion events, such as obtaining test drive user information, obtaining sales lead data, etc., you can calculate it like this:

Number of visitors/registered users

For e-commerce companies, you can combine steps 2 and 3 together. Since you don’t have any free products, you can calculate: number of visitors / number of orders

If the goal of some of your marketing activities is to obtain some intermediate conversion events, such as obtaining test drive user information, obtaining sales lead data, etc., you can calculate it like this:

Number of visitors/leads

Number of leads/number of singles

Of course, for mobile applications, you will count the number of app installations rather than the number of web page visits.

Now that we have calculated three values: lifetime cost, registration payment rate, and visitor registration rate, we can clearly know how much it costs to acquire a new user and how much it costs to get a user to visit.

1. The cost of acquiring a paying customer

CPPC = Cost per Paying Customer

LTV = Customer Lifetime Value (First Question)

CPCC=LTV/3

One third of your customer lifetime value is the upper limit of how much you’ll pay to acquire a paying customer. However, this restriction does not apply when testing new channels. Because in the end, if your paid customer acquisition cost is lower than your LTV, you can still make money. But if you find a channel that’s doing well, then your optimization goal should be to reduce the cost to one-fifth of the LTV.

2. How much should it cost to register a user?

CPA = Cost per user acquisition

CPPC = Cost per paying customer to acquire

CR = Conversion rate from registered users to paying users (Question 2)

CPA=CPPC*CR

If a portion of your registered users are free or trial users, you need to take this additional factor into account when calculating how much you will earn per user.

One caveat: Some companies that provide enterprise services charge enterprises much more than self-service services. In this case, the conversion rate from self-service to enterprise service needs to be taken into account, because it is impossible to judge based on just a normal user registration.

CPA = the ratio of self-service CPA natively converted to corporate customers LTV of corporate users / 3

Often, your advertising platform will ask you to choose a maximum bid per click, rather than letting you pay based on the actual number of signups. This is the value of the visitor registration rate in the third question, the purpose of which is to calculate the probability of each visit traffic completing the registration.

How much does a single site visit cost?

CPC = cost per click

CPA = cost per user registration

CR = Registration Rate (Question 3)

CPC=CPA*CR

This is the best benchmark to tell you how much each user acquisition costs. Through the above formula, you can see at a glance what your cost is and whether you have made a profit or a loss.

The above companies will show you how to spend your budget, analytics, event tracking, and attribution tools to help you optimize your user acquisition costs across different channels.

For example: users brought in through Baidu's SEM may pay more than users brought in through promotions on social media such as Weibo. As a senior operations staff, you need to evaluate the LTV value of registered users from each channel to decide which channel you should prioritize.

With the above formula, you only need to enter the relevant numbers to easily evaluate each channel. Please note that the above calculations are based on the assumption that there is sufficient traffic. Only in this way can the above calculations be statistically significant. For example, if you find that the LTV value of users on a particular platform is too low or the acquisition cost is too high, you can choose not to use this channel. Or if you find a cheap channel, you can choose to be as willful as a local tycoon.

1. A/B Testing

By organizing your promotion into different sub-sections, you can optimize your conversion rate through A/B testing. You can use A/B testing tools like Optimizely, Leanplum, and WisualWebsiteOptimizer to optimize your website’s landing page, design, or creative, as well as conversion rate.

2. Automated marketing

Event-driven email and notification services, such as Customer.io, Outbound, Vero, and Kahuna, can help optimize the user activation process and increase the purchase rate of registered users through personalized interactive content and real-time interactive channels.

3. Attribution Analysis

If you run a lot of campaigns, there are a lot of tricks to monitor conversion rates and spend. Mobile app tracking tools, such as Umeng, Zhuge, talkingdata, Convertro, etc., can easily tell you which channel performs better. The same GA also provides a complete attribution analysis report.

Source: Zhuge io Data Coach