Acquiring new users: things operators should know

With the end of the mobile Internet traffic dividend period, the cost of acquiring a new user has greatly exceeded the past, even to a level that a startup company cannot afford. Startups in the financial sector may even spend four-digit CAC to acquire an investment user. The importance of CAC and LTV becomes more and more prominent.

One time at the company, a picture suddenly exploded in the company group.

It was a big box of drinks, peach flavored. It turned out that a bento O2O company came to the company to invite us to register (shao). Just scan and follow the WeChat QR code to get a bottle of drink, and there are discounts on first orders.

It's true that when colleagues in the same operations meet, their eyes are filled with tears!

The food delivery company sent two girls to launch a cute offensive against our programmers , and a product manager was responsible for sales and collecting user feedback. There is also an old lady whose job I don’t know, but she spreads the glory of maternal love to users.

I did a quick calculation of the cost of getting attention.

The two delivery girls are paid 150*2=300 per day as interns. The auntie is charged 200 per day. Since product managers are not responsible for field marketing full-time, their costs are not included. Drinks are 2 yuan a bottle.

This takeaway took two hours to sweep our building at noon. Assuming that it is most convenient to scan the building during lunch time, there are about 30 people in our company who will receive it, and we expect to add 100 new followers throughout the day.

Then the user's WeChat attention cost:

(Field promotion labor cost + beverage cost)/100 people = 7 yuan.

The transportation of goods, the material costs of flyers, etc. are not included. In order to increase the order volume, the subsequent first-order preferential policy will require more investment costs.

Looking at the reading count of historical messages of the service account, the increase is relatively slow, and it is speculated that the user unfollow rate is relatively high. Because WeChat public accounts can check how many friends are following them, when I checked again while writing this article, no colleagues from the company were following them.

Although some people will follow a public account just for a bottle of beverage, it is actually not that easy to acquire users.

What is CAC

More important than the number of users is the cost of acquiring users.

Customer Acquisition Cost:

Get the cost of each new user. Simply put, CAC = total investment in new users / total number of new users.

The total investment here generally only calculates the new users, and does not include the salaries of product managers and programmers as new costs. If there is a full-time salesperson responsible for adding new users, the salary of this salesperson needs to be included in the CAC.

In the early stages of a product, operations staff, PMs, and even R&D personnel should all pay attention to the CAC indicator. It is almost inextricably linked to the commercial viability of the product.

The operators spend 500 yuan to acquire a new user, and if the product cannot earn back the 500 yuan from this user in the subsequent series of commercial operations, then the sustainability model of the product is questionable. This is no longer an era where one can continue to obtain financing based on concepts.

Analysis of CAC

We need to conduct an in-depth analysis of CAC and not calculate it based on total investment/total number of new users. Instead, we need to distinguish different channels and calculate them separately.

New users will learn about and register for products through various channels, such as sharing in Moments, advertising , app stores , SEO , etc. Different channels have different input-output ratios.

From the data in the example, we found that advertising has the lowest cost-effectiveness, and although sharing in Moments brings fewer users, the cost is also low. Operations and products can be optimized based on sharing mechanisms to allow more users to participate in sharing.

Calculating the CAC of different channels is only the first step. We not only need new users to register, but also want them to stay and use the app.

If the people using the product are not the target users, then having a lot of registrations is meaningless and will become a vanity metric. After all, we won't be excited about a women's menstrual management app having hundreds of thousands of male users.

Here comes the retention rate .

Originally, the CAC of App Store A is higher than that of App Store B. However, considering the retained users, the actual CAC of App Store A is lower than that of App Store B. Because the quality of users in different channels is different, users of App Store A are obviously more suitable for the product. Although it is a bit more expensive, it is actually better.

After introducing retained users, the actual gap between CACs became even larger. So is advertising an inevitable choice?

In the gaming industry, the next-day retention rate will experience large fluctuations, and it is difficult to recall users. Many game operators calculate retention after seven days. At this time, CAC = new investment / new retained users after seven days. By the same token, if the operator uses activities, red envelopes, etc. to incentivize new users to register, it is also recommended to extend the retention observation time (freeloaders will only uninstall after receiving activity gifts). A channel that can retain users is a good channel.

Are retention rates completely reliable? Not necessarily. Some gray industries provide services to brush registered users. Through manual or machine simulation, fake users are allowed to pretend to log in in subsequent time periods. The retention rate is not low. Therefore, we also need to compare the retention rate or user operation rate to see outliers.

Business-oriented operations can further subdivide CAC. For example, in finance, the average cost of acquiring a paying investment user will be calculated.

User acquisition channels

Common channels for acquiring users are as follows:

• Communication: There are usually spontaneous communication among users and event marketing communication driven by operations.
• Promotion: including but not limited to application market , advertising, SEM /SEO, ASO , etc.
• Offline promotion: Due to the development of O2O, the promotion effects are uneven. It depends on the attributes of the user, such as hospital doctors in mobile medical care, or students on campus. They all have regional aggregation attributes. Long before the O2O explosion. I once saw advertisements for takeout orders plastered all over the school toilet. It stood out among the crowd in terms of passing the CET-6 and taking roll call. There was no APP at that time, it was a food ordering website. At that time, field promotion was also called campus ambassador. In the early days, this product became popular across the country after it attracted enough users on campus.
• New media : Weibo, WeChat, live broadcast , etc. are all carriers of new media.
• Other channels: Traffic replacement and business cooperation can also add new users.

To give you a personal example, I once ordered a salad from a takeaway, and when I received the salad, I found a flyer for a nearby gym. Have to applaud the boss. Because there is a natural overlap between people who order salads and people who exercise. The design of the flyer itself is a bit poor, otherwise I wouldn’t mind scanning the QR code.
If you are an operator of a pet APP, you will try your best in all operating channels. It is better to try cooperating with pet merchants on Taobao and include product leaflets in every express delivery.

The operating methods of different channels vary greatly, and I don’t have the ability to explain them all in detail, but the methodologies are the same. Vigorously promote channels with low CAC, and find ways to lower the CAC of channels with high CAC.

In addition, good operations need to consider more when acquiring new users.

Not just cost

Optimize your conversion path

Whether it is registration or downloading, conversion rate is involved. Optimizing conversion rate can reduce CAC to a certain extent.

There will be obvious differences in the display and cost of different channels. Many channels may seem to have few downloading users, but the actual situation is that the loss rate of a certain step is too high. At this time, the overall statistics of operations become very important.

For Android apps, you can count the downloads from each channel based on the APKs distributed. However, due to the closed policy of Apple AppStore, iOS cannot accurately count the number of downloads. Only Apple knows whether users who jump to the AppStore from different channels download the app.

In order to better track, many products require users to register before downloading and track conversion rates through userId. This is a good approach.

Channel data analysis has high statistical requirements for data (mainly data matching and classification). Both product and operation should develop the habit of statistics.

Don’t underestimate any detail that can improve your conversion rate. Here is a classic AB testing case: the registration landing page has a button to click to register. A company experimented with which type of copy on a button was more effective in getting users to register. Free registration and immediate registration, the click-through rate of the former is 40% higher than the latter.

So, is your promotional image the best? Whether your copywriting is the most attractive is something you will need to think about and operate for a while.

Secondary recall of new users

As mentioned above, a small number of products will obtain the user’s mobile phone number first. For example, the coupon redemption function commonly seen on WeChat sharing requires registration before downloading. If you are a careful operator, you will find that a small number of users have not downloaded or opened the APP after registration. This is a waste of cost and benefit. The promotion costs have been spent, but no users have been gained.

The reasons for this situation:

1. Due to network traffic issues, not all users have the patience to download (many games are hundreds of MB in size). Or the user may not want to download in a non-WiFi environment, but forgets to download later.
2. Process issues, such as long page loading times and limited appeal.

Operators can use the mobile phone numbers they have obtained to conduct targeted SMS marketing to these users.

The average price of a text message is 4 cents. Suppose we push 100 registered but non-installed users, the cost is 4 yuan, and the conversion rate is only 1%. Then the cost of reacquiring this user is 4 yuan. Because the CAC of the industry is very high now, the marginal cost of SMS investment is negligible, which is a reasonable expense.

I have been doing this through constant AB testing. Send SMS messages to users who registered but did not install the app to invite them to install it again, and the conversion rate eventually settled at 15%. So as long as there is room for optimization, optimize it.

Cost of adding new users

With the end of the mobile Internet traffic dividend period, the cost of acquiring a new user has greatly exceeded the past, even to a level that a startup company cannot afford. Startups in the financial sector may even spend four-digit CAC to acquire an investment user.

The importance of CAC and LTV becomes more and more prominent.

Operations need to calculate CAC, not just because of the need for user volume or cost control. It is the need of business model.

If the CAC of channel A is 50 yuan, the CAC of channel B is 60 yuan. So should we cut off channel B and vigorously develop channel A? No, the actual choice of channel or not depends on LTV (for the discussion on LTV, see my previous article). If a company can earn 100 yuan from one user, then any channel with a CAC below 100 yuan is acceptable. 50 yuan and 60 yuan are just the size of profit margin. But if a certain channel exceeds 100 yuan, it is necessary to weigh whether it is worth investing.

The business model of a product allows the company to earn 100 yuan from one user. But the market is always full of competition. The influx of sharks will stir up the blue ocean into a bloody storm, and the CAC will continue to increase. This is another kind of cruelty and sadness.

Mobile application product promotion service: APP promotion service Qinggua Media advertising

Author of this article@ This article is compiled and published by Qinlue (top APP promotion). Please indicate the author information and source when reprinting!