Today, the topic I want to share with you is the qualitative change of growth: from AARRR to R AR RA. 01. What problems does the classic growth model bring? The classic growth hacking system is called the "Pirate Rule", which consists of acquisition, activation, retention , monetization, and recommendation. Dave McClure, who proposed this model, believes that all innovative and growing companies should grow according to this model. This growth model has been used for a long time, and many companies even build growth teams based on this model. However, after long-term thinking, I have some different views on this classic growth model. I think if we follow this model to achieve growth, there will be a problem: that is, many companies will focus too much on the "customer acquisition" link. You can think about it, how many companies pay attention to the number of daily active users? In fact, it is less than 10%. Most companies, especially early-stage growth companies, will focus on weekly active users, or directly focus on monetization. In fact, in the United States, there is a saying called the "wheel of vain growth", which means a building built on sand. The first thing many companies do when they start a business is to publicize their growth goals, such as becoming 5 million users within three months and making the number of new users the entire goal. Then they celebrate such vanity indicators crazily internally, making it appear that everything is thriving. At the same time, through extensive publicity and operations in the market, investors are encouraged to make the next round of investment quickly regardless of cost. Some VCs have done research and found that 70% of these companies died. Blindly pursuing vanity indicators, such as downloads and registrations, and spending a lot of time and budget on this false growth will lead to a complete collapse at a certain point. This is the main reason for the death of many startups or innovative product lines. The above picture is a basic statistic from 2017. Basically, most apps will lose 75% of their users in the first three days. In other words, the second-week retention rate of most products is generally less than 30%. In addition to the retention problem of the product itself, there is also the issue of external competition. Since 2008, both Android and Apple apps have been growing rapidly. In 2008, there were only 400-500 apps in our app store . By November 2017, the number of Android and Apple apps reached 2.3 million and 1.75 million respectively, with a total of 4 million. In the past, you could easily attract a large number of users by buying traffic, attracting attention, etc., but in today's competitive environment, it is difficult for us to achieve sustained growth in this way. 02. Pay more attention to retention, and you will get more real growth The two figures above seem very different, but in fact, judging from the data, the difference is very small. The right graph has a churn rate of 90%, and the left graph has a churn rate of 95%. A difference of just 5% resulted in a 100% difference in revenue between the two companies within one year, and a 6-7 times difference in the long-term value of a single user. Of course, the returns to investors will vary even more. If our products and services result in the direct loss of a large number of users, then the more time and energy we spend on acquiring customers, the lower our value. However, this data also tells us that if we pay a little more attention to user stickiness in the early stages, the subsequent value increase will exceed everyone's imagination. 03. Qualitative change in growth: from AARRR to RARRA So here I would like to share with you a redefined growth model, which is no longer AARRR, but RARRA. Because the traditional growth model, in the current market environment, can easily cause companies to deviate from their original intentions and not pursue the core value that the product brings to users, but instead pursue some meaningless vanity indicators, and then quickly decline. First of all, we must make it clear that the core value of a product must be reflected in user retention . Users will come back to use your product repeatedly and even form a habit, which can verify the value of your product. The second is to focus on the new user’s first exposure to the core value, because the better the user activation, the higher the subsequent retention rate of the product. We shouldn’t monetize users quickly after they are activated. Why? Because many startups already have many problems in their early financial models, it is very likely that the more land they sell, the more they lose. At this time, you should focus on user recommendations, or "Referral". It doesn’t mean that we have to use a lot of means to force viral fission, but that we should try our best to let users experience the value of the product and actively recommend it to their friends. What we need to do is to give users the best possible recommendation experience so that they can recommend it to others very smoothly. A good referral flow can bring about sustained growth, because the users who come through recommendations have been screened by the original users, and their matching degree will be much higher. After verifying the value of the product to users and clarifying the financial model and customer acquisition efficiency, we can then work on monetization and customer acquisition. This may be slower, but it will also be more stable and have more power. Many good companies have done a good job of sedimentation and retention in the early stages, and have a very good reputation, and then expanded to achieve real long-term growth. 04. Growth needs to be redefined 4.1 From division thinking to multiplication thinking Simply put, our marketing approach in the past was a positive funnel, led by brand awareness. The market defines many users who are interested in your product through a series of promotions . After users perceive the product, they evaluate it and then purchase it. Then some users grow into mid-level users and recommend your product to others. The conversion efficiency of this funnel is actually very low. Maybe 10,000 people know your brand, 1,000 people are interested in it, 100 people make a purchase, and even fewer people actually become fans. In the new economic situation, we need to give a new definition to Growth. First of all, we need to clarify the core value of our product. Only by clarifying the core value of the product can we operate the core fans in the first phase. After this stage is completed, we can have the confidence to quickly and accurately convey the core value of the product to first-time users, and then to users who have used the product, which is what we often call "user activation" and "user recall." After this step is completed, we need to use various channels and means to reach users with needs and similar needs, expand our market, and convert them into users. Finally, it is delivered to the entire market in the form of a brand. This is a pyramid -shaped reverse funnel. Different from the previous division thinking, this is an ever-expanding multiplication thinking. 4.2 Focus on the North Star Indicator We have previously published some articles about North Star indicators. We strongly recommend that you identify an indicator that can unify the entire company. This indicator not only represents a prediction of future growth, but also represents the company's values. Simply put, North Star indicators are divided into three categories: the first is traffic type, the second is transaction type, and the third is innovation type. Generally speaking, the North Star Indicator for news websites is the first category. Their core goal is to increase more users and seize more user time. The second typical scenario is e-commerce products. Their core appeal is that users complete more transactions within the product. The third category is more content-based products. They need more users to create and produce content within the product. This indicator can not only unite everyone in the company and create a strong centripetal force; more importantly, everyone can use this indicator to measure your work performance, so this is very important. After defining the North Star indicator, we need to break it down into each specific task. For example, at the customer acquisition stage, what should we do? In the past, when we analyzed customer acquisition, we looked at indicators such as installation and registration. However, it is no longer enough to use these simple indicators and dimensions to measure our channels. We have served a large number of clients, and the biggest difficulty they face is that the traditional marketing and delivery methods are no longer effective. They spend a lot of money but fail to acquire high-quality users. Growth slowly entered a bottleneck period. As more and more money was spent, users were lost at an increasingly faster rate, and business growth became slower and slower. Why does this result occur? Because we are using very superficial metrics to measure our growth. Therefore, we strongly recommend that you take retention as the core guiding indicator and use the user's subsequent conversion and retention indicators to measure the customer acquisition efficiency of each channel. This is the real growth. 4.3 Three Stages of Growth Finally, one point I want to talk about is the three stages of growth. - In the first stage, we need to use technology and products to drive growth, which is the lowest cost and most efficient way;
- The second stage is performance marketing. The core of this stage is to find the relationship between core conversion indicators and channels to achieve ROI unification.
- The final stage is to use brand-driven development to cover a larger market.
From my observation, basically all the very successful Internet companies in the past 10 years have followed this growth path. Before I end, I would like to leave you with a message: Growth is connecting more people to the existing value of a Product. I understand this sentence on three levels:- A product must have core value to be worth growing;
- Growth is not simply about piling up users, but about connecting people and existing value;
Author: Zhang Ximeng , authorized to be published by Qinggua Media . Source: GrowingIO |
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