App promotion, 5 core steps to acquire app users
| Many startups are interested in trying to discover the next tipping point through channel monitoring. However, before we test user acquisition channels, we need to ask ourselves the most important question: How much should we spend to acquire users? No one wants to run meaningless ads on ineffective channels. Therefore, we all need some criteria for judgment: What kind of channel is of better quality? Is there any way to help us quickly understand users? What are some effective ways to acquire users? What tools and quantitative methods are worth learning from? Step 0: Three basic questions Before reaching conclusions on the above core questions, you need to clarify the following three concepts: 1. What is the total value of a paying customer during his lifetime? The so-called lifetime value (LTV) is the total revenue that a user brings to your product from the first day they use the product to the last time they log in. It can be seen as a long-term accumulation of ARPU value. Traditional LTV calculations are relatively complex, so business intelligence startup RJ Metrics has developed a calculation tool specifically for this purpose. But we can calculate the total value of a customer’s lifetime through a simple formula: LTV = (average monthly spending of paying users – gross profit) / churn rate. Gross profit is the selling price of the product minus the basic cost of selling the product, such as support and organizational expenses. Monthly churn rate is the percentage of users who leave, cancel their subscriptions, and stop paying, calculated on a monthly basis. 2. Proportion of paying users: When the total lifetime value of paying customers is guaranteed to a certain extent, increasing the proportion of paying users will become an effective way to increase the company's receivables. In the early stages of product promotion, many companies will attract customers by offering free services; then, through value-added services, they will convert some free users into paying users and achieve revenue growth. So, for us not every registered user is paying. Therefore, it is necessary to calculate and improve the proportion and conversion rate of paying users. Proportion of paying users = number of paying users / number of registered users 3 Proportion of successful visitor registrations Through a simple registration rate channel analysis, you can find out the registration conversion rate of users from each channel on the landing page (or the channel download conversion rate of the App): Number of registered users / number of channel visitors For marketing activities, the goal is usually to obtain some intermediate event data, such as test drive user information, sales lead data, etc. At this point, the calculation method should be like this: Number of leads / Number of visitors or Number of orders / Number of leads For e-commerce companies, since there are no free products, the calculation can be simply: Conversion rate = Number of orders / Number of visitors Now we have calculated three values: user lifetime value, registration payment rate, and visitor registration rate, then we can clearly know how much it costs to acquire a new user and how much it costs to acquire a paying user. The next five steps will answer our initial question: What methods and tools can help us gain a deeper understanding of and acquire new users? Step 1: User acquisition cost calculation Excluding CPS (cost per order) on e-commerce platforms, the other two core cost indicators are: CPA and CPC. CPA calculates the cost of getting a user to register, and CPC calculates the cost of getting a click to the site. The calculation of CPA includes two parts for companies providing freemium products: 1. The cost of acquiring a paying user CPPC: the acquisition cost of a single paying user LTV: user lifetime value (Basic question 1) CPCC = LTV / 3 1/3 of the user's lifetime value is the upper limit of your cost to acquire a paying user. This limitation does not apply when testing new channels. But when you find a decent channel, your optimization goal is to reduce the cost to one-fifth of the LTV. 2 How much should it cost to register a user? CPA: Cost of acquiring a single user CPPC: Cost of acquiring a single paying user CR: Paid conversion rate of registered users (Basic Question 2) CPA = CPPC * CR If some of your registered users are free or trial users, you need to consider this additional factor when calculating the cost of acquiring a single user registration. Note: Some companies that provide enterprise services charge much higher fees than self-service services. In this case, the conversion rate from self-service to enterprise service needs to be taken into account. At this time, the formula for acquiring the enterprise service cost will be: Self-service CPA * Enterprise service conversion rate * (Enterprise service LTV/3) Step 2: Calculate the cost of a single inbound traffic . Usually, the advertising platform will let you choose the highest bid for a word click, and will not let you pay the advertising fee according to the actual number of registrations obtained. This is the value of the “visitor registration rate” in Basic Question 3. It will help you understand how much of these channel traffic can be converted into registered users. CPC: Cost per click CPA: Cost per user registration CR: Registration rate (Basic Question 3) CPC = CPA * CR This formula will tell you the cost of acquiring each user. This way you can check the actual user acquisition cost at a glance and see whether you are making a profit or a loss. Step 3: Optimize your channel The above formula tells you how to spend your budget, and event tracking, analysis and attribution tools will help you continuously optimize the user acquisition cost of the channel. For example: the cost of bringing users through Baidu's SEM may be higher than through SNS promotion (Weibo, Zhihu, etc.). As a senior operator, the LTV value of registered users in each channel must be considered, which will determine the choice of channel. With the above formula, you can easily evaluate each channel by just entering the relevant numbers. Please note that the above calculations require sufficient traffic as a basis to be statistically significant. If you find that the user LTV value of a particular platform is too low or the acquisition cost is too high, you can abandon that channel. Or if you find a cheap channel, you might as well give it a try. Step 4: Related Tools 1 A/B Testing A/B testing is essentially a split-group experiment. By creating a test page, this page may be different from the original page in terms of title, font, background color, wording, etc. Then these two pages are pushed to all browsing users at the same time in a random manner. Next, we count the user conversion rates of the two pages respectively to clearly understand the pros and cons of the two designs/creativity. In the past, the technical and resource costs of A/B testing were relatively high, but now with the emergence of a series of visualization tools, such as Optimizely, Leanplum, Taplytics, etc., A/B testing has gradually become a common method for optimizing operational strategies. 2Marketing automation is an event-driven email and notification service. Tools such as Customer.io, Outbound, Vero, and Kahuna can help developers 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 do a lot of activities, there are many tips for monitoring the conversion rate and cost of the activities. The best tool is the data tracking tool of mobile app. GA and domestic tools like Umeng, Zhugeio, Talkingdata, etc. can easily tell you which channel performs better. Step 5: When the team size is limited, identify a convenient and easy-to-use platform tool to obtain the data required for all the above calculations, and then distribute this data to relevant analysis tools. The advantage of these data analysis platforms is that you only need to complete the embedded development once, and you can check the data required for operations at any time and switch to different statistical analysis methods at any time. Whether it is for optimizing internal team collaboration or improving the efficiency of operational strategies, this is the most time-saving way. |
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