User Growth Primer

The term " user growth " has become very popular at the moment, but when it comes to our understanding of this term, is it something you can't quite put into words? This article does not aim to provide a complete description, but rather to explain “user growth” in a relatively concise manner.

What is user growth?

There are several definitions of user growth. Here is the one that I think best captures the essence: start with the end in mind and use all resources to get more users using core product features more frequently.

This definition covers the manifestations of growth, quality assessment, and goals.

Growth is manifested in the increase in the number of users . This concept does not simply refer to an increase in the number of users. Growth should be a virtuous cycle. While allowing more users to enter your product, you should also allow these users to settle in your product and generate corresponding value.

Therefore, we also need to evaluate the quality of growth, that is, "higher frequency" , but the high frequency here does not necessarily include longer visit duration. For example, when it comes to search products, the purpose of users using the product is to find answers faster, so a better experience is to allow users to get answers quickly rather than staying longer.

The ultimate goal of growth is to get users to “use core product features.” Any product can only have the ability to continuously acquire customers if it has a certain value to users. At the same time, only when users can access the core functions can the company have the possibility of making a profit. For example, shopping coupons for e-commerce products and riding cards for shared bicycles are all designed to allow users to complete orders and shopping as quickly as possible.

In addition, there are two very important concepts regarding user growth: LTV and CAC.

LTV (Live Time Value) means the lifetime value of a customer, which is the sum of all economic benefits a company obtains from all user interactions. It is used to measure the value that corporate customers bring to the company and is defined as an important reference indicator for whether a company can achieve high profits.

CAC (Customer Acquisition Cost) is the total cost of acquiring a user.

Generally speaking, a company has a greater chance of continued survival only when LTV/CAC>3. LTV is achieved through users generating HVA (High Value Action). As the person in charge of user growth, you cannot pursue growth regardless of cost. A broken capital chain is not a fun thing.

What are the steps to increase user growth?

The complete work promotion path of "user growth" consists of goals-projects-organizational guarantees-long-term goals-review, including:

1. Determine the growth goals at each stage based on the company's strategy;
2. Combined with industry characteristics, in-depth thinking, working backwards from the goal to the realization path and corresponding growth projects;
3. Think about organization assurance based on projects, set up closed-loop teams or break down tightly coupled FTs in department walls;
4. Take into account long-term growth goals, think ahead about how to cross the growth curve and start the second curve of user growth;
5. Design and execute specific growth projects under the assumption that individual growth projects will likely fail.

1) Determine the phased growth goals

Doing user growth is somewhat similar to choosing a company strategy. The biggest challenge is not how to do it, but where to prioritize resources. At this time, it is necessary to determine the strategic goals of the business at the current stage. The determination of strategic goals should also be made from the perspective of the entire product or even the entire enterprise. Take ofo in 2017 as an example. At that time, ofo’s daily orders were lower than Mobike, and the judgment at that time was that ofo and Mobike would merge at the end of 2017. So as the person in charge of growth, what would you set as the strategic goal for this stage? (If you think of this, please leave a message and let everyone see if you have the potential to become a Chief Growth Officer)

2) Identify growth projects

Once you have determined your goals, the next step is to determine how you will achieve growth. Alipay’s “Collect Five Blessings” and Pinduoduo’s “Bargaining” are typical growth projects. It is important to be goal-oriented when identifying growth projects.

Taking ofo's red envelope bike as an example, ofo's interim goal at the time was to quickly increase the number of users and orders. When they launched the project, Mobike already had a red envelope bike activity, which covered some Mobike vehicles. Users needed to effectively ride the red envelope bike for more than 2 minutes and park the vehicle in the designated area to get the red envelope. Ofo borrowed from this project, but after analysis, it was found that the core users of shared bicycles are commuters. People use bicycles mainly to save time. Only a small number of users will specifically look for red envelope bikes and put them in designated areas just to receive red envelopes. Therefore, based on this analysis, ofo decided to make the red envelope bike available to everyone. As long as you ride effectively, you can get a red envelope, and there are no requirements for parking locations. Under this strategy, ofo's order volume has grown rapidly and is far ahead of Mobike.

3) Organizational guarantee for growth

You may wonder why we have to put the organizational building point here. Isn’t the team built from the beginning? In fact, the more common form in the market now is the scattered form, where people will form a team and start working on a project when there is one. Hence, there is a saying that a team will be formed after the project is confirmed.

Of course, there are also some things to pay attention to when building a team. Behind a good growth project are endless experiments. Turning subjective cognition into objective cognition as quickly as possible through data-driven iterative testing and exchanging the redundancy of testing for the certainty of growth are important means of achieving user growth. If the test cannot be iterated quickly, the potential for growth cannot be formed. At this time, the support of the team becomes very important. There are four common organizational forms.

1. An existing functional team will be responsible for user growth on a part-time basis. This way of team building may be limited by the original work perspective, "passing the buck", and lack of priority.
2. Establish a dedicated team, led by a Growth Project Manager. The advantage is that there are professional personnel responsible for growth, while the disadvantage is that, except for the person in charge, other members are scattered, making resource allocation difficult.
3. A special team is set up, with BPs sent by product, operation, R&D and other teams. Compared with the first two methods, this method of organization is more efficient, but there is also a situation where the original department and the existing team assessment mechanism are not well coordinated, resulting in inconsistent goals.
4. Establish a special team, with team members dedicated to the specific purpose. The advantage is that you have a complete and stable team, but it may also cause dissatisfaction and non-cooperation because of "interfering" in other departments.

A good team can provide immeasurable help to growth projects. When forming a team, you can make a comprehensive judgment based on the actual situation of the enterprise architecture and the advantages and disadvantages of each form.

4) Crossing the growth curve

Growth projects may be effective in the short term, but may fail in the long term, just like industrial changes. Television may not be bad in itself, but it is gradually declining due to the shift in demand. Therefore, in order to ensure the continuous growth of a product or enterprise, it is necessary to explore new growth curves in a timely and appropriate manner to achieve "secondary growth".

5) Design and execution of growth projects

The specific design and implementation will not be elaborated in detail. Interested friends can read Fan Bing's "Growth Hacker"

Types of Growth Projects

Based on the realization of growth, growth projects can be divided into four categories: funnel, functional, strategic and integrated.

1) Funnel-shaped growth

When doing a funnel-type growth project, we usually break down the user experience process in the product into small links, and improve the overall user LTV by optimizing the conversion rate of each link.

Taking an e-commerce product as an example, the user path can be summarized as product exposure → product landing page → purchase page → click to buy → successful payment. If you want to increase the user's purchase rate, you can find the key nodes from the above funnel and perform targeted optimization.

2) Functional growth

Functional growth refers to adding certain features to a product to increase user growth or activity. Common functions include sharing, inviting red envelopes, bargaining, etc.

3) Strategic growth

An example of a very successful strategic growth is Toutiao, which optimizes content recommendations by analyzing data such as geographic location and user browsing behavior, thereby increasing the number of user views and visit duration. You may not see any changes in appearance, but this product understands you better and encourages you to perform more high-value behaviors.

4) Integrated growth

Integrated growth is aimed at businesses that require online and offline collaboration to form a complete experience closed loop. Taking securities firms as an example, traditional securities firms are constantly optimizing their online businesses in order to solve problems for offline customers or to find new growth points from the Internet.

Author: Azai's Product Notes

Source: Azai's Product Notes