How to understand user growth? Here are 4 cases for you!

1. Growth is the theme of the second half of mobile Internet

Growth is the eternal mission of an enterprise. The founder of Nike once said: "If you're not growing, you're dying." Users are the lifeblood of an enterprise, and user growth can drive enterprise growth: that is, the enterprise can continuously acquire new users, and new users can be retained and continuously generate consumption.

The year 2017 was the year when the price of online traffic reached a critical point. After experiencing a large number of explosive growth industries such as social networking , mobile payment, live streaming , shared travel , and technology finance, the growth rate of mobile Internet users fell from 70% in 10 years to 10%. This also means that the number of mobile Internet users in China has reached its ceiling, and the annual growth rate of 20 to 30 percent, or even higher, will be gone forever. At the same time, the Matthew effect is becoming more and more prominent: the strong will always be strong, and the weak will always be weak. 79% of Chinese users' time every day is occupied by BAT traffic apps. As the traffic entrance, BAT's leading position will become even more difficult to shake.

2. User Growth Model

(1) AARRR model /reservoir model

Enterprise users can figuratively understand it as a large water reservoir, with water taking in one end and leaking at the other. To make the water in the reservoir increase, on the one hand, we need to increase the water intake; on the other hand, we need to reduce the water outflow at the leaking end, which is called "increasing revenue and reducing expenditure", i.e. the number of new users should be greater than the number of lost users. In addition to a large enough water intake, the water inlet also needs to ensure the quality of the water flow and reduce the proportion of impurities such as mud and sand. In other words, the simple growth in the number of registered users does not necessarily bring profits to the company. Only high-quality user growth can continuously drive corporate growth. The user reservoir can also be abstractly understood as a figurative version of the AARRR user growth model.

(2) User life cycle model

(3) RFM model

The RFM model is mainly used to monitor user activity and the possibility of churn during user growth. By using the changes in R and F, we can monitor the possibility of user churn , and then judge the user's value from the M dimension. The recall strategy is: high-value users are recalled first. Red envelope strategy: The basic rule is to combine user maturity and activity. The higher the user's maturity and activity, the lower the red envelope amount.

3. User retention “magic number”

Growth hackers have discovered two “magic numbers” during the user growth process, namely: after one repeat purchase, user retention rate increases by 30%; after five purchases, user retention rate rises to over 60%. Cultivating new users in the first two months after registration is the key to improving retention. Increasing repurchases by new users can greatly enhance users’ brand awareness. The law of “5” purchases leading to loyalty has been widely used in all walks of life.

4. How to operate mature users

After a user has passed the novice stage and the growth stage, he or she will enter the mature stage. The focus of operations during this period is to increase the user's purchase categories, increase the user's purchase frequency and average order value. Taking Cao Cao Special Car as an example, it has established means and mechanisms for cross-category traffic diversion to guide users to consume across categories, and conduct cross-category traffic diversion through the form of related coupons and cross-red envelopes.

Designing rich purchasing scenarios and how to design more scenario-based shopping guides are important means to increase user purchase frequency.

5. Establish a user churn warning mechanism

(1) Core formula:

Lifetime Value (LTV) = Average Revenue Per User (ARPU) * User Lifetime Duration

Duration user life cycle = 1/churn rate

Churn = 1 - retention

(2) Calculate the critical time of loss:

The time interval between the behaviors of most users should be used as the basis, rather than the average value, as the average value will be lengthened due to a small number of users. Taking the following figure as an example, the time interval from registration to first purchase of a certain product user is such that the number of users who complete the purchase within one week can reach more than 80%, that is, 7 days after registration is the critical time for reasonably defining the loss of new users.

The significance of analyzing the churn rate of new users: a product can only be profitable continuously when the number of users grows and the profits generated through purchases are greater than the cost of acquiring users. Once the new user churn rate is too high and the cost of acquiring new users is greater than the profit contributed, the company will be unable to make ends meet.

(3) How to determine whether retention is real or fake

To give a comparative example, the horizontal axis of the figure below represents time; the vertical axis represents the total number of weekly active users. The outermost curve represents the continuous growth of the total number of users, and the outermost curve represents the total number of retained users. Analyzing the two curves below, we can find that on the surface the number of users is increasing. However, if we look beyond the phenomenon to the essence, the user retention in the first picture is constantly decreasing, while the user retention in the second picture tends to be stable in the later period, so the total number of users is constantly increasing. Therefore, retention is a crucial factor in achieving sustainable and real growth.

6. Summary

The core of driving user growth is still the business itself. When we build a user growth operation system, we cannot do too many fancy things for user growth, deviating from the business itself and ending up missing the forest for the trees. Combining the above-mentioned operation model and different growth stages of users, a healthy user growth operation closed-loop system will eventually be formed to achieve sustained and healthy user growth.

The author of this article @操作Jessica is compiled and published by (Qinggua Media). Please indicate the author information and source when reprinting!

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