Uncovering the magic number behind user growth [5]

"5 times" is a magical number. Users who purchase 5 times become loyal, users who consume 5 times become loyal, users who invest 5 times become loyal, and so on. The number "5" is full of magic and is widely present in every aspect of our lives. Why does this phenomenon exist? What kind of mystery is hidden behind this? Today we will thoroughly explain this mysterious magic number through the analysis of several phenomena and data.

Let me give you a few examples and share this magic number with you.

1. Let’s start with two cases

In fact, if you look closely, you will find that this number is everywhere. The first case is credit card offers. A bank held an activity where new users who spent 88 yuan or more five times within 30 days could receive a 200 yuan coffee coupon.

Get a 200 yuan coffee voucher for 5 credit card purchases

The second case was a restaurant. My colleagues and I were having dinner near the company and we saw that they were organizing a "free meal" event. That is to say, the full amount of consumption on the same day is free of charge, but you need to pay four times the amount of consumption on the same day; in fact, this is very simple, it is equivalent to 20% off after conversion.

Recharge four times, first order free

This campaign is so successful that if you want to get your first order for free, you need to apply for a card and top up your account. It doesn't matter where you go to eat normally, since you have money in this card, you will come here to eat. If you bring your friends along, it is very likely that your friends will apply for a card. This is a geometric growth. Back to the magic number, your first purchase plus four times the recharge, is that about five purchases?

There are many such cases in our lives, such as:

• No annual fee for five credit card purchases;
• No annual fee for five ETC purchases;
• The financial management platform sends out red envelopes, 5 at a time, and so on.

Through these cases, it is not difficult to find that "5" is not an accidental number, but has a certain regularity. Then, I will share with you why it is five times.

2. The principle of magic number

Using the transaction chart of the Internet financial platform, we can see that the user retention rate for those who have not made a purchase within a month is 19.01%. If they make a purchase once, the retention rate reaches 52.85%, an increase of 30%. Therefore, for new users, the platform must encourage users to repurchase and enhance their awareness of the brand.

Retention rate of Internet finance

If a new user makes consecutive purchases within two months of his first purchase, his churn rate will be less than 30%. Therefore, ensuring the cultivation of new users in the first two months is the key to ensuring retention.

The relationship between user purchase frequency and retention rate

We will use data from the entire industry to introduce this to you. You can see that this is the retention rate of users with different purchase frequencies. If you look at its second, third, fourth and fifth retention rates, it actually looks like a funnel, and this funnel basically stabilizes after the fifth purchase. Therefore, when we are doing user operations , we must make full use of the magic number [5 times] and strive to allow users to complete 5 purchases in the shortest possible time to improve overall user loyalty.

Then why five times, and not go further?

This result relies heavily on data analysis . We drew this conclusion from the retention rate curve and found the inflection point. This result will be of great benefit to the subsequent operational strategy.

Because new users require a lot of subsidies, while mature users basically do not need subsidies; of course you also need to spend costs, that is, service costs, but service costs are much lower than the subsidy costs for new users. For example, if we organized an event and the investment amount increased by 500 million yuan, then could we have increased it by 500 million yuan even if we didn’t organize this event? Or let’s say we sent out a bunch of red envelopes, with a usage rate of 50%. Did these red envelopes achieve the effect of attracting new users to recharge?

Therefore, we need to look at operational efficiency from the perspective of the entire company and combine it with sunk costs to effectively promote user retention and growth.

3. The relationship between repurchase and magic number

Users have a strong stereotype effect when purchasing on a platform, so how to guide the growth of new users is an issue that needs to be considered. Let us take a group buying transaction platform as an example to explain this issue.

New users are price sensitive

In the process of attracting new users, new users are extremely sensitive to prices compared to other users. Therefore, it is necessary to provide subsidies for second purchases to new customers, or to issue coupons with lower thresholds after user experience .

From the perspective of categories, new users have strong category loyalty, and the categories they repurchase generally have a high degree of overlap with the categories they purchased for the first time. For example, 60% of users who purchased "hotel travel" for the first time purchased it again the second time; 87.89% of users who purchased "food" for the first time purchased it again the second time.

In view of this rule, it will be more effective to attract users with group buying discounts based on their original group purchases.

As a transaction-based product, the same is true for Internet financial platforms. Once a new user reaches the magic number, his retention and loyalty will increase significantly.

The core of spending money on user growth is to find the optimal leverage ratio, improve the utilization rate of capital costs, and then promote user growth to bring more capital growth.

Why is data driven growth? Because the magic number needs to be found through data analysis. Data analysis will tell you how many times users need to be subsidized to achieve the highest retention rate, and how much subsidy is most appropriate.

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The author of this article is @花大冲 and it is compiled and published by (Qinggua Media). Please indicate the author information and source when reprinting! Site Map