How to build a user growth system from scratch?

Recently, I have received a lot of inquiries about how to build an operation system. Based on my own experience with several products, the earlier the operation is involved, the better. We should make good operation plans in advance to ensure that user growth is on a healthy and sustainable path.

So how should we build an operating system from scratch?

1. Explore core features, check user retention , and find the magic number that drives user growth

The biggest taboo in product development is to create a bunch of functions right from the start and then let operations do the promotion . Insufficient user growth means poor promotion. Such cases are not uncommon. How to find product features that can truly drive user growth in the early stages of a product is a very important topic.

In the early days of Facebook's development, data analysis revealed that the trick to keeping a user and continuing to use Facebook is to get the user to add 7 friends within 10 days.

In the early stages of LinkedIn’s development, it didn’t know how to improve retention , so it analyzed two or three hundred different indicators and eventually discovered that for users who added five contacts within a week, their retention rate /usage frequency/stay time were 3-5 times that of users who did not add five contacts. This is the magic number they found to drive growth. After finding this digital magic, LinkedIn began to add social relationships to each product entrance to strengthen the product function, allowing more users to add 5 contacts in the first week, and the growth rate entered the fast lane thereafter;

Similarly, in 2009, Twitter's user churn rate reached 75%. Josh Elman, then product head of the growth team, did an interesting reverse thinking thing. He did not study why those 75% of users left, but instead studied in depth why the remaining 25% of users stayed. As a result, he found that these 25% of users followed more than 30 users, so they redesigned the product and recommended followers after registration to increase the number of followers of new users and ultimately improve retention rate.

In domestic social products such as Sina Weibo and Renren, you will see that when you use them for the first time, they will recommend you to follow big Vs by default. This is the principle behind it.

Let me give you another example: I recently need to build a data system for a stock product. Faced with such a new product, how should I discover the core functions of this product?

The stock trading software I use is Snowball. In order to avoid data loss after reinstallation, I took the initiative to complete the registration. Reverse reasoning: Why do I keep using this product? Because I added a few stocks in the early stage of using this product, and then I paid attention to the rise and fall of these stocks from time to time, so for this product, I am a retained user. This is just an empirical judgment. We can verify whether this is true through user behavior retention rate data.

So when I build this product data indicator, I should first analyze whether the user retention rate will be higher if they add more than a few stocks to their favorites. If the data proves this is true, then we should strengthen such product functions in terms of operations and products, such as directly recommending a few stocks to users, or quickly guiding users to complete the stocks they want to follow, and then guiding users to register and log in if they want to save data; the same principle can be replicated in other functions, such as following the data of experts, and retaining the data of participating in the simulated stock trading competition;

The above cases can be summarized into the following elements:

Network effect density — how many connections a user achieves in a few days;

Content addition rate — how much content is added to the product by users;

Access frequency — a single user accesses the product at least once every few days;

If it is a transactional product, then refer to my previous article "How to Redefine New Users and Solve the Problem of New User Growth" to learn how to guide users to quickly complete their first transaction;

2. Lay a user growth strategy for the product and establish a user growth channel

1. Newbie guide

New users have a cognitive process for the platform, allowing them to quickly understand who we are and what products and services we provide? What kind of protection is there?

Let’s take financial management as an example. Many users do not know how to invest and are confused about the differences between current, fixed and transferable accounts. How does the platform ensure the security of users’ funds? How new users should invest, how to earn returns and where the funds go are all issues that users are concerned about. If these user concerns are not eliminated, it will be difficult for users to complete their first transaction.

In addition, we should continue to obtain information from user feedback, such as which product features or services users have questions about on the platform, and regularly obtain the most frequently asked questions from the customer service team, so as to design new user guides in a targeted manner.

For example, if customer service reports that many users do not know how to use the trial bonus, then our novice guide should strengthen the information about what the trial bonus is and how to use it.

2. Newbie Privileges

When I was in charge of the operations of Baidu Nuomi , we analyzed a set of numbers. Our analysis found that among the daily active DAUs on mobile devices, there are hundreds of thousands of users who download the app on other days but have never placed an order. What does this data show? What this means is that users are quite interested in you, but lack the motivation to place an order, and the number of these users is not small. It is imperative to provide a good guide for novices and newbie privileges on the APP homepage to stimulate users to complete their first order. Therefore, I pushed for the launch of a newbie zone and strengthened it on the APP homepage. After the launch, the number of new customers and the conversion rate of new customers increased significantly.

Case 1: Group buying privileges for new users: new users can enjoy a delicious meal for only one cent

Another small detail is the logic problem of product display in the novice area. Many people may wonder whether the Newbie Zone will still be displayed to users after they complete their first transaction. We have discussed this many times. Some people hold the view that as long as a transaction has taken place, it should not be displayed to the user. But in fact, the novice zone carries not only the users themselves, but also a function for users to spread the word. If users can no longer see the novice area after a transaction, they will not be able to find the entrance when they want to recommend the product to people around them, which will be a loss in the early stages of the product. Therefore, I suggest that you give a fixed position in the early stage of product development, and then decide whether to display it to users based on whether the users are new users after the maturity stage;

Case 2: Financial experience bonus, novice privileges

3. Establish efficient user link channels

The Internet is an eye-catching economy. The total time each user spends on their mobile phone is limited, and the time that can be allocated to each APP is even less. If we want to increase the transaction conversion rate of users during their visit to the APP, we need to find ways to improve the channels and methods of contacting users, increase the opportunities for users to visit the APP as much as possible, and pull users back online from the offline state. Only when you are online more times and for longer periods of time will you be more likely to convert into transactions.

Take China Merchants Bank as an example: If you use China Merchants Bank's bank card, you will receive a text message reminder and push notification from China Merchants Bank every time you make a purchase. If you have linked your WeChat public account , you will also receive a WeChat notification. This not only makes users feel that their funds are safe, but also increases the chances of multiple contacts with users. There will be an activity link behind each notification SMS, either about loans or lucky draws. What was originally a notification text message was developed into an advertising space that efficiently reaches users, increasing the chances of multiple contacts with users.

Referring to the case of China Merchants Bank, I also added a similar strategy to the notification text messages on our platform to guide users to download the APP, and the effect was surprisingly good. This is a typical case of increasing user engagement and improving user conversion .

The principle of WeChat is similar to that of SMS, but WeChat and push have almost no cost. There is a cost for each text message sent. Therefore, many companies are now importing users to WeChat to establish more user connection scenarios, while also saving user reach costs. (Don’t ask me why I want to transfer users to WeChat. All users are a subset of WeChat users. Does WeChat still need your users?)

In terms of push, more than 90% of companies on the market use full push, which has a very low reach rate, and the content cannot be personalized. The open rate is also very low, and it may even be blocked by many users, and in serious cases even lead to uninstallation. Even so, push has to be sent. During the period when I was in charge of the operations of Baidu Nuomi, we insisted on sending out full push notifications every day. One day, a senior executive said that this was too intrusive to users, so we only allowed push notifications to be sent twice a week. As a result, the daily DAU decreased by hundreds of thousands. You can imagine the important role of push notifications in boosting daily activity. So how can we maximize the push effect, reduce disturbance to users and increase user opening rate? The answer is only one: personalization. Below is the push of a stock APP. Users can subscribe and close by themselves, which ensures that the push notifications they receive are the content they need. In addition, users may receive more than one push notification a day and interact with the APP multiple times a day, which improves user activity and increases the chances of user transaction conversion.

4) Design an incentive mechanism for user growth and guide user growth in a task-based manner. In the previous article "Redefining New Users" series, we talked about how to formulate corresponding operation strategies based on user nodes. There are two types of user growth: one is push and the other is pull. Pull is to drive the natural growth of users through core supply, which belongs to the best users; in addition, most users need to rely on operational means and incentive mechanisms to move forward. For example, what will be given after the user completes registration, what will be given for the first investment, and what will be given for repeat investment. Through these means, we can expand the user base at each stage, and then select truly high-quality users from these user groups;

The following are two examples to illustrate this.

Figure 1, users are encouraged to complete their first investment and to invest a larger amount for the first time.

Activity plan: You will be given experience money for your first investment. The more you invest, the more you will get.

The starting point of this plan has two aspects. One is to tell users that I can give you experience money after you complete your first investment (the experience money can be converted into cash); the other is to tell users that the more you invest, the more I will give you. As I mentioned before in "Redefining New Users", new users should be defined from multiple dimensions. The higher the amount of the user's first investment, the higher the user retention rate.

Figure 2, incentive registration, first investment and reinvestment.

Activity plan: Free experience bonus for registration, free experience bonus for first investment, and free experience bonus for reinvestment. All three key user paths are taken into account in one activity. The importance of reinvestment was mentioned before in "Redefining New Users", so this activity plan hopes to guide users to complete three key growth paths in succession.

3. Establish core data indicators, build funnel conversion models, explore effective channels, and efficiently support user growth

In the early stages of a product, it is important to find a healthy channel for user growth, connect all aspects of product conversion rate, and establish an operational model that drives data and supports product iteration. Make adequate preparations before large-scale promotion.

In the early stages of a business, you don’t necessarily need a lot of data indicators; you only need to focus on the final target data. Take finance as an example: there is only one core indicator, which is the investment amount. The following is the breakdown around this indicator:

Investment amount = UV registration conversion rate investment conversion rate * customer unit price

Then we break down how many new registered users are needed, how many investment users are needed, how much traffic is needed, and what kind of channels have high-quality users . Especially in the early stages of a business when there is no budget for promotion, it is important to analyze where high-quality users come from, what the approximate conversion rate is, and how much each new customer costs, so as to prepare for subsequent large-scale market promotion and spend the limited budget on the most valuable channels.

Internet business is a very long funnel, but when we did data analysis in the early stages of our business, we tried to simplify the funnel to see where the core problem lay, and then do in-depth analysis on a single indicator.

Taking finance as an example, from traffic acquisition to the final investment amount, there are several steps involved, including registration, real-name registration, card binding, and investment. At the beginning, we can ignore the registration process and go directly from traffic to investment users, or even directly to investment amount. When you need to conduct an in-depth analysis of a single channel, you can then analyze the process indicators. Don’t be fooled by vanity indicators in the early stage (vanity indicators are related to the final target value, but not directly enough. For example, the number of registered users seems to be related to the transaction volume, but no matter how large the number of registered users is, it is still meaningless if they cannot be converted into investment users. We can directly analyze the conversion from UV to investment users);

Here is a practical example to illustrate, as shown in the figure below:

We can see that the first channel has a large amount of traffic and registered users, but the final investment amount is very small, which means that the users brought by this channel are not of high quality, and it only brings about the growth of vanity indicators.

We can see that the second channel is within the normal range. There is no particularly large fluctuation in each funnel link, but there is still a decline in the investment amount link. The reason may be that the average order value is relatively low. Therefore, the operation focus of this channel is to increase the average order value.

The two channels at the bottom are high-quality channels. Although their traffic is not large, they bring a large number of investment users and investment amounts. The average order value of users is relatively high, and the user churn in each link is also low. If the budget is limited, all expenses should be spent on these two channels.

For actual budget allocation, you can also refer to the following four-quadrant division model.

4. Establish a mechanism to drive user growth

Create high-quality supply. All Internet products revolve around supply and demand, but the forms of supply are different. E-commerce is physical goods, O2O is services, finance is high-quality assets, and communities are high-quality content. User growth must first revolve around users’ core needs, continuously hone core supply capabilities, extend beyond users’ core needs, and increase user usage frequency and stickiness.

Let’s take finance as an example. The core of Internet finance that drives user growth is still high-quality assets. The second main methods of user growth may be points, user levels, lotteries, e-commerce, etc. The purpose is to increase the user investment scenarios and investment frequency as much as possible. I will elaborate on this topic in a separate article later. I also talked about this in my previous article "Internet Finance Operation Model and Customer Acquisition Strategy".

5. Explore the operation model: Is it mainly based on user operation , content operation , or offline conference marketing ?

The financial industry is a business that is strongly driven by user operations. Currently, the types of online financial management provided are relatively simple. The user's 28th law is also very obvious. One high net worth user is equivalent to tens of thousands of ordinary users. How to screen and tap into these high net worth users in order to perform differentiated operations is an important goal of the Internet finance industry. That type of points-based operating model is a very important operating model in this industry.

Let me give you another example to illustrate this. A friend of mine is in the women's accessories business, and this kind of business requires strong content operations. By setting the scene through content, users can have a strong sense of immersion.

For example, data analysis companies like growingIO may have an operating model that involves more conference marketing and participation in many industry forums. Because they are a To B business, they gather their precise target customers in these places.

Therefore, how to explore an operating model that suits one's own business growth based on one's own business attributes is a very important topic. It is recommended to refer to the operating models of related industries. For example, the industry operating models that the financial industry can learn from include: gaming industry, telecommunications industry, traditional banking industry, etc., and draw inspiration from the operating models of these industries.

6. Product functions are gradually added, operations are constantly polished, and new functions drive continuous growth in users

Operations follow products. As products continue to launch new features, operations need to quickly follow up to introduce users to new products, strengthen users' awareness of new products, improve the conversion rate of new products, identify problems users encounter when using the products, and reversely push for product improvements. Operations are deeply involved in the product in the early stages, with continuous operations and iterations. Operations need to polish out a complete closed loop of product iteration from product release, importing users, collecting problem feedback, viewing data, analyzing conversion rate, retention and other data, proposing product iteration requirements, and product iteration.

In summary, user growth revolves around three aspects: supply, demand, and platform. How we can build a sound operating system to efficiently support user growth, improve operational efficiency as much as possible, and save operating costs is an eternal proposition for corporate development.

We need to establish a multi-module operation model during the development of our business to support the rapid development of the entire business. It mainly includes establishing an operating system from several lines:

Based on the user life cycle , a user funnel model is established, and the operation model is established based on the user life cycle value.

Based on the supply side, we established a highly efficient ordering model, and based on categories and profit margins, we established an operating model.

Using the platform conversion rate as a clue, establish a highly efficient traffic distribution and transaction conversion model, and establish an operation model based on product conversion rate.

As shown in the following figure: Several core business logics of an O2O business

Source: Xiaoma Kuaijie