How to build a core user growth system from 0 to 1?

What I want to share with you today is how to achieve rapid user growth, and the main topic of sharing is the construction of a user growth system .

To build a model system that suits your own products, to put it simply, is to build a system.

So, building a system centered on user growth means designing a system centered on user growth.

What is a system?

In her book "The Beauty of Systems", Denela Meadows said: A system is a whole composed of a set of interconnected elements that can achieve a certain goal. Any system consists of three components: goals, elements and connections.

Viewed from the outside of the system, the three are indispensable and together they form a whole. If we break down the system and look at it from the inside, using a hierarchical perspective to look at the relationship between the three, the innermost layer is the goal, the outermost layer is the elements, and the middle layer is the connection.

Why should we look at the system from a hierarchical perspective? I think there are at least two benefits.

• First, hierarchical thinking is our innate way of thinking. Looking at the system from a hierarchical perspective and building learning models can help us quickly grasp the framework and form clear cognition in our minds.
• Secondly, the system under hierarchical thinking is also a system construction framework, and graphical expression can help us understand the system and the role and importance of each component more intuitively.

Build a product system with user growth as the core.

Liang Ning said: We need to do user-centered experience design, and also growth-centered model design. Create new growth models and moats based on new infrastructure. All categories are worth redoing.

The user-centric growth model uses hierarchical thinking to view this growth system. The key tasks are three:

Target level: What kind of delivery value can be used to increase user growth? At what time does it grow? This falls under the product category and is used to determine growth strategy.

Element level: In the growth system, what are the core elements for building key causal chains?

Connection level: Are reinforcement loops designed? What kind of reinforcement loop was designed? How to deal with the time lag effect?

Let’s first understand the basics of user growth

1. What is growth?

1. Definition of Growth

Growth is the sustainable development achieved by an enterprise through its own long-term operation and continuous expansion of accumulation.

User growth is about constantly proposing growth hypotheses, conducting experiments, and using data analysis to verify the correctness of the hypotheses, repeating this cycle over and over again. User growth is aimed at growth and is results-oriented, so that strategies can be implemented.

2. Seven strategic factors driving growth

(1) Supply

The original market gap can be filled by creating effective supply products to achieve growth. The width and depth of the supply product line determines the growth of users. The more sufficient the supply and the wider the user coverage, the more it can drive user growth. The core of supply-driven growth: matching supply and demand and matching efficiency.

(2) User

The mere growth in the number of users does not necessarily lead to an increase in revenue and profits. Only the growth in high-quality users can lead to an increase in revenue and profits. The core of user-driven growth: increasing revenue and reducing costs to promote growth.

(3) Activities

The core of activity-driven growth: large-scale discounts and promotions in the short term to generate huge brand exposure, combined with large-scale channel promotion to achieve large-scale user growth.

(4) Products

The Internet connects suppliers and demanders. Products are tools for connection, and tools determine the efficiency of user acquisition and conversion. The core of product-driven growth: product innovation continuously lowers the user threshold, expands the target user group, and improves user conversion rate.

(5) Data

Improve data-driven growth indicators and systems:

• Establish company/product core strategic indicators
• Establish a data system from traffic to user growth
• Establish a supply-side operational efficiency data system
• Establish product data system

The core of data-driven growth: quantify things so that the business can be analyzed, traced, and summarized. Through data analysis, we can effectively diagnose growth bottlenecks and solve problems in a targeted manner.

(6) Channels

The attributes of the channel determine the quality of users and the degree of matching of the population, and the size of the channel determines the number of processes. The core of channel-driven growth: find process gaps, find accurate users, and acquire customers through high-conversion and low-cost methods.

(7) Brand

We must remember one sentence: brand means conversion rate. The core of brand-driven growth: When brand factors occupy the minds of users, they can weaken the impact of other factors on users' purchasing decisions and increase purchase conversion rates.

2. Four key factors affecting growth

1. Target market space determines growth potential

The first thing to consider when choosing a market is the size of the market, that is, whether the market has sufficient future growth potential. If the market space is not large enough, you need to consider horizontal scalability, that is, whether it has the ability to expand horizontally without major changes to the product solution.

If you want to maintain sustained growth, either the space in the same market must be large enough, or you must have the ability to expand horizontally, starting from a small point and then replicating and expanding horizontally.

2. The invisible funnel determines the growth bottleneck

The invisible funnel refers to factors that cannot be discovered through existing operational data but will greatly affect the user growth conversion rate.

User conversion is a key link in user growth. Its essence is to solve some key bottlenecks that affect user conversion. It requires in-depth research on target users, refining users' core needs, checking whether user needs are met, and what factors affect users' purchasing decisions. Then, through product innovation, lower the user usage threshold, classify users, increase the effective supply of more target users, eliminate growth interference factors, and achieve growth.

3. The impact of market penetration on growth

Market penetration refers to the coverage of a product or service in the market, which is a comparison between current demand and potential market demand.

When the industry is in the stage of huge incremental market, on the basis of ensuring product experience, it should prioritize increasing effective market supply and occupy market share as soon as possible. At this time, the competition is about speed of seizing the market and user retention. When entering the stock market stage, the competition is about differentiation based on the same products and services. On the basis of improving the stickiness of existing users and reducing user churn, the main growth goal should be to convert competitors' users.

4. The impact of market competition on growth

From the perspective of the competitive situation, if you are in a lagging position, you need to find differentiated competitive advantages to seek breakthroughs; if you are in a leading position, you need to further consolidate your original user advantages and form barriers to prevent others from easily poaching users later; if the two are evenly matched, you can take the initiative to launch an attack and quickly lock in users and market share. Whoever launches the attack first will have the first-mover advantage.

The basic logic of user growth: supply and demand drive each other, and two-stage cyclic growth. The essence of the Internet is connection, which has a strong network effect. Supply and demand promote each other, and the cycle drives growth.

Product growth model centered on bilateral transactions: high-quality supply is more likely to gain user growth. As the number of users grows, the platform’s voice gradually increases, which is conducive to further acquiring higher-quality supply. The two drive each other to achieve growth.

A product growth model centered on product functions, content, and services: good product functions or services attract user growth. The growth in the number of users is accompanied by the differentiation of user groups and the extension of user needs, which in turn forces the platform to provide more product functions or services.

3. Core Indicators of the Growth System

The North Star Metric has become an important indicator for many companies to guide product development and user growth.

1. The Importance of the North Star Metric

The North Star Metric is the key metric for your product’s success.

Products generate revenue by solving the specific needs of specific users in specific scenarios. The North Star Metric describes the important connection between solving needs and corporate revenue.

In any business company, the North Star metric plays the following three important roles:

1. It can clearly show what needs to be optimized in the future stage of the product and the functional points that can be communicated.
2. It enables colleagues in other product groups within the company to know the real-time progress of the product group so that they can obtain cross-departmental resource assistance when needed.
3. Most importantly, it holds the product accountable for the results.

In most companies, the indicator for measuring the quality of the product team's work is the number of business results, not the final results of the business. If an enterprise does not have a culture that uses business results as its core driving force, it will be difficult for the product team to have a significant impact on business results. Without a North Star, there can be no product-driven business.

The North Star Metric needs to have two parts:

1. This indicator contains the description of the product vision
2. This indicator can directly measure the existing product strategy

A good North Star indicator has three properties:

1. It measures the moment when a customer discovers the value of a product (Measure Customer Value)
2. It can represent the core strategy of the current product (Represent Product Strategy)
3. It is a leading indicator of future revenue, not a lagging indicator.

2. Aha Moment

"Aha Moment" is a term coined by German psychologist and phenomenologist Karl Buhler 100 years ago. It roughly means: "a peculiar, pleasure-oriented experience within the course of thought that pops up with the sudden insight into a previously un-transparent context. In the thinking process, a unique, pleasure-oriented experience will suddenly appear, giving you a deep understanding of the previously opaque environment." Transformed into the Internet's rhetoric, it means: the moment when a product makes the user's eyes light up is when the user truly discovers that the core value of the product can solve their needs. To use the words in "Growth Hacker", Aha Moment is actually some specific behaviors of users after they come into contact with the product. These specific behaviors have a decisive influence on the product retention rate and can be said to be the turning point of product explosion.

What is the importance of the AHA Moment?

In this era of "born from attracting new users and died from retention", most startup products focus only on user growth and ignore the importance of retention. This often leads to a very high churn rate for new users, and some social products even have a second-day retention rate of only 20%. In the long run, the product will not be able to sustain the vicious cycle of high new customers and low retention, and people will abandon the product. Using the "AHA Moment" approach to prescribe the right remedy can effectively solve the above problems.

Key points to identify the value of AHA Moment

Many companies and growth partners have asked how to find the AHA Moment. Currently, there is no clear formula for the AHA Moment. To find the AHA Moment, you need to start from dimensions such as product business, data, and user activity to locate the AHA Moment.

4. Growth System Construction

1. Explore core features, check user retention, and find the magic number that drives user growth

The biggest taboo in product development is to create a bunch of functions right from the start and then let operations do the promotion. Insufficient user growth means poor promotion. Such cases are not uncommon. How to find product features that can truly drive user growth in the early stages of a product is a very important topic.

In the early days of Facebook's development, data analysis revealed that the trick to keeping a user and continuing to use Facebook is to get the user to add 7 friends within 10 days.

In the early stages of LinkedIn’s development, it didn’t know how to improve retention, so it analyzed two or three hundred different indicators and eventually discovered that for users who added five contacts within a week, their retention rate/usage frequency/stay time were 3-5 times that of users who did not add five contacts. This is the magic number they found to drive growth. After finding this digital magic, LinkedIn began to add social relationships to each product entrance to strengthen the product function, allowing more users to add 5 contacts in the first week, and the growth rate entered the fast lane thereafter;

Network effect density - how much connection the user achieves within a few days; content increase - how much content is added to the product by users; visit frequency - a single user visits the product at least once every few days; if it is a transaction product, then refer to my previous article "How to Redefine New Users and Solve the Problem of New User Growth" on how to guide users to quickly complete their first transaction.

2. Lay a user growth strategy for the product and establish a user growth channel

1) Newbie Guide

New users have a cognitive process for the platform, allowing them to quickly understand who we are and what products and services we provide? What kind of protection is there?

2) Newbie privileges

When I was in charge of the operations of Baidu Nuomi, we analyzed a set of numbers. Our analysis found that among the daily active DAUs on mobile devices, there are hundreds of thousands of users who download the app on other days but have never placed an order. What does this data show? What this means is that users are quite interested in you, but lack the motivation to place an order, and the number of these users is not small. It is imperative to provide a good guide for novices and newbie privileges on the APP homepage to stimulate users to complete their first order. Therefore, I pushed for the launch of a newbie zone and strengthened it on the APP homepage. After the launch, the number of new customers and the conversion rate of new customers increased significantly.

3) Establish an efficient user link channel

The Internet is an eye-catching economy. The total time each user spends on their mobile phone is limited, and the time that can be allocated to each APP is even less. If we want to increase the transaction conversion rate of users during their visit to the APP, we need to find ways to improve the channels and methods of contacting users, increase the opportunities for users to visit the APP as much as possible, and pull users back online from the offline state. Only when you are online more times and for longer periods of time will you be more likely to convert into transactions.

4) Design user growth incentive mechanism

Task-based guidance of user growth was previously discussed in the "Redefining New Users" series of articles, which talked about how to formulate corresponding operation strategies based on user nodes. There are two types of user growth: one is push and the other is pull. Pull is to drive the natural growth of users through core supply, which belongs to the best users; in addition, most users need to rely on operational means and incentive mechanisms to move forward. For example, what will be given after the user completes registration, what will be given for the first investment, and what will be given for repeat investment. Through these means, the user base at each stage can be expanded, and then truly high-quality users can be screened out from these user groups.

5) Establish core data indicators, build funnel conversion models, explore effective channels, and efficiently support user growth

In the early stages of a product, it is important to find a healthy channel for user growth, connect all aspects of product conversion rate, and establish an operational model that drives data and supports product iteration. Make adequate preparations before large-scale promotion.

In the early stages of a business, you don’t necessarily need a lot of data indicators; you only need to focus on the final target data.

Internet business is a very long funnel, but when we did data analysis in the early stages of our business, we tried to simplify the funnel to see where the core problem lay, and then do in-depth analysis on a single indicator.

6) Establish a mechanism to drive user growth

Create high-quality supply. All Internet products revolve around supply and demand, but the form of supply is different. E-commerce is physical goods, O2O is services, finance is high-quality assets, and community is high-quality content. User growth must first revolve around users’ core needs, continuously hone core supply capabilities, extend beyond users’ core needs, and increase user usage frequency and stickiness.

7) Explore operating models

Is it mainly user operation , content operation, or offline conference marketing?

8) Product functions are gradually added, operations are constantly polished, and new functions drive continuous growth in users

Operations follow products. As products continue to launch new features, operations need to quickly follow up to introduce users to new products, strengthen users' awareness of new products, improve the conversion rate of new products, identify problems users encounter when using the products, and reversely push for product improvements. Operations are deeply involved in the product in the early stages, with continuous operations and iterations. Operations need to polish out a complete closed loop of product iteration from product release, importing users, collecting problem feedback, viewing data, analyzing conversion rate, retention and other data, proposing product iteration requirements, and product iteration.

In summary, user growth revolves around three aspects: supply, demand, and platform. How we can build a sound operating system to efficiently support user growth, improve operational efficiency as much as possible, and save operating costs is an eternal proposition for corporate development.

We need to establish a multi-module operation model during the development of our business to support the rapid development of the entire business. It mainly includes establishing an operating system from several lines:

• Based on the user life cycle, a user funnel model is established, and the operation model is established based on the user life cycle value.
• Based on the supply side, we established a highly efficient ordering model, and based on categories and profit margins, we established an operating model.
• Using the platform conversion rate as a clue, establish a highly efficient traffic distribution and transaction conversion model, and establish an operation model based on product conversion rate.

Author: Mr. Gump

Source: Mr. Gump