AARRR Model | Activation: The Blue Ocean Behind the Red Ocean of Customer Acquisition

The AARRR funnel model is a customer life cycle model proposed by Dave McClure in 2007. It explains the five indicators for achieving user growth, namely: Acquisition, Activation, Retention, Revenue, and Referral.

It is also called the Pirate Model because of its predatory growth approach, which can help us better understand the principles of acquiring and maintaining customers.

Among these five indicators, we will start with Activation, first because among these five indicators, the most important one is user activation. Because it is easy to attract traffic, but retention and monetization are more difficult. In comparison, user activation has a higher ROI, is easier to achieve, and can also lay a solid foundation for the following three Rs.

Secondly, good customer acquisition methods are often inseparable from self-propagation, so it is more reasonable to explain customer acquisition and self-propagation in the same article.

Since the development of the Internet industry, major Internet companies have all experienced long or short stages of desperately trying to acquire more users, and have invested a lot of resources in the customer acquisition stage, such as purchasing traffic and finding the best customer acquisition channels. However, as the Internet's demographic dividend gradually disappears, although it is easy to attract traffic, the cost has increased dramatically and the ROI is getting lower and lower. Customer acquisition for various apps has become a red ocean.

At the beginning of 2018, Pinduoduo released its first full-year financial report since the company's IPO. Although sales expenses increased by 900% year-on-year, the company's stock price plummeted due to losses exceeding expectations. The reason behind this was the company's huge customer acquisition costs, but the capital market did not buy it.

Studies have shown that the cost of acquiring a new user is five times the cost of activating an existing user. Against the backdrop of increasing customer acquisition costs, investing resources in activating existing users is far more cost-effective than investing in customer acquisition. So today we will discuss the common methods and key indicators for activating new users .

The key to increasing new user activation rate is to allow new users to experience the product’s “Aha moment” faster.

The so-called "aha moment" is actually the sense of satisfaction that the core functions of the product bring to users. If users can experience the "aha moment" when experiencing the product for the first time and leave a good first impression, they will most likely become retained users of the product.

At the same time, in addition to guiding users to experience the core functions of the product, it is best to increase the sunk cost of users leaving through content creation, social relationships and other means. After this, users will be more likely to become loyal users of the product.

New User Activation

According to the user conversion formula proposed by Sean Ellis in "Growth Hacker": Conversion = Desire - Friction, in order to convert more newly attracted users into retained users, you can either increase the user's desire, that is, make the product more perfect; or you can reduce friction, that is, eliminate obstacles for users to smoothly experience the core functions of the product.

However, making a product more perfect is often more difficult than reducing user friction. When facing new users, the focus of major apps to reduce new user friction naturally falls on optimizing the new user experience. Next, we will take stock of the methods used by various apps to optimize the new user experience.

Optimize your landing page

The landing page is the first page that new users see after downloading and opening the app. This series of pages is the first official meeting between the product and the user. It must clearly convey the product relevance, demonstrate the product value, and provide a clear call to action. This is the “Conversion Trinity” proposed by Brian Eisenberg, the godfather of conversion rate optimization.

Relevance refers to the match between the product and the visitor’s goals and desires: “Is this what they want?”.

For example, the mobile office platform DingTalk. Users often download such products with a clear purpose, and the product landing page also clearly conveys the core functions of the product to users - free industry solutions, smart office hardware, office digitization, and intelligent collaboration, responding to users' desires as soon as the screen opens.

Demonstrating product value means quickly and concisely answering visitors’ questions: “What can I get from this?” “What’s the highlight of this product?”

Here we take the quality e-commerce NetEase Yanxuan as an example:

Against the backdrop of the obvious advantages of the leading e-commerce platforms, NetEase Yanxuan focuses on differentiated competition and emerged with the slogan of "quality e-commerce", which can be clearly seen from its landing page. The balanced and restrained Nordic style page, with words such as "quality", "life inspiration", "strict selection", and "fully self-operated", shows the core value of the product.

Finally, the call to action provides visitors with an extremely attractive next step. At specific user operation nodes, gestures can be used to provide users with necessary operation instructions to reduce user operation costs.

Creating a learning flow

Take advantage of the moment when users first come into contact with your product, because when people first come into contact with your product is also when they are most eager to figure out how to use it. We must seize this opportunity to tell users the core value of the product and create a "learning flow" .

For example, Twitter has designed a learning flow to allow users to more fully experience the core value of the product. Twitter recommends topic categories to users (such as fashion, sports, and news), encourages them to follow celebrities, and finally improves their personal profiles.

At the end of the learning flow, users have not only completed their registration and created their own personalized profile, but their homepage is also filled with content that interests them. In this way, Twitter successfully makes users decide to use the product on their first visit, experience its "aha moment" and establish storage value, killing several birds with one stone. (Note: Josh Elman, "Three Growth Hacking Strategies")

If some users do not buy into the above-mentioned “learning flow” and do not cooperate, we can also use new user gamification or novice tasks to complete the function of the learning flow. The underlying strategies that gamification leverages are psychological concepts – commitment and consistency.

Once people take an action, no matter how small, as long as it is not too difficult, they will be more inclined to continue taking that action in the future. Instead of providing users with product descriptions, it is better to let users start the experience through some simple steps, and then gradually experience the core functions of the product through step-by-step guidance.

In addition, some other principles in psychology can be used - flow . When the difficulty of the challenges people face is just right - not so difficult that they want to give up, nor so simple that they are bored, people are in a flow state, have a stronger desire to experience the product, and are more willing to immerse themselves in it.

In addition, another principle in psychology can be used - reciprocity . People are more likely to do something because of reciprocity. This is actually the reward mechanism of the product. By providing rewards, people can be trained to perform certain behaviors as a conditioned reflex.

When users complete each task, they can get certain rewards. The more time users spend on the product and the more personal information they put in, the higher their loyalty to the product will be. This is what is often called stored value in psychology. This type of method is suitable for single-user products, such as tool products, such as Evernote and Mubu.

As shown in the picture above, after the new user officially enters the app, the app will gradually prompt what to do next through pop-up boxes at several key links. The screen also highlights "New" in the lower right corner, so that users can start the operation faster and experience a complete process. At the same time, as a tool product, users can also find product documentation in the app, where they can check the app's more detailed functions.

There are also gaming products. I believe there is no need to give too many examples. Everyone should have experienced the novice tutorials in the game. In fact, this way of playing has developed step by step from the game.

When users are not interested in some steps in the "game" and skip them, such as requiring users to register the app, import contact data, invite new people, etc. This part can be embedded in the app in the form of novice tasks, allowing users to complete these tasks when they have accumulated enough loyalty to the product or want to obtain task rewards more.

In short, the function of "learning flow" is not limited to allowing users to feel the core value of users, but can be further extended to allow users to accumulate more sunk costs in the product. Activating new users will be crucial to the continued increase in subsequent user value.

In addition, this method can not only be used for the activation of new users, but it is also a good strategy for the activation of new activities. We will discuss this part in detail in Growth Hacking: The third part of the AARRR model - retention.

The setting of rewards in the "learning flow" also needs to be carefully considered. If the "learning flow" can bring challenges, fun and meaningful rewards, then it may become a powerful means of activation. But if the rewards offered are of no value or have nothing to do with the core value of the user experience, users will feel tricked or confused. Especially when your gamification design becomes more and more homogenized and not interesting enough for users, the setting of rewards becomes even more important.

Types of rewards available

The most common rewards we receive are "real money" benefits such as newbie red envelopes, exclusive products for newcomers, limited-time free trials for members, etc., provided by these platforms when we just register for various multi-role products, such as major e-commerce platforms or social service platforms such as food delivery and group buying platforms.

For example, when you register as a new user of NetEase Yanxuan, NetEase provides user activation rewards such as a must-buy list for new users, new user red envelopes, and a 30-day free membership trial. The purpose is to allow users to complete their first order as soon as possible, experience NetEase Yanxuan's carefully selected products, and enhance new user stickiness .

When the methods of winning and displaying rewards can create surprise and fun for users, and make them feel instant satisfaction or even surprise, your new user activation activities can not only accumulate good word-of-mouth, but may even trigger a screen-sweeping effect and achieve unexpected results.

The user information collection work of "Zhiqun" is carried out through questionnaires. The reward for filling out the questionnaire is a detailed career assessment report . In order to obtain a true and effective assessment report, users are naturally willing to provide detailed and reliable personal information.

For enterprises, the marginal cost of providing reports is almost zero, but the personal information that users fill in in order to obtain free career assessment reports is very valuable to enterprises.

This can also be learned from the review pages that are frequently seen in the circle of friends, taking advantage of users' curiosity about themselves, their desire for affirmation, and their desire to compare with others. When the activity achieves a screen-sweeping effect, users will definitely hope that they can also complete this task and unlock the review behind it.

Below are several large-scale H5 activities that NetEase has launched. If they can be linked to the core value of the product, it will be icing on the cake.

In addition, other common and effective rewards include status. For example, the U.S. "black card" requires a certain amount of consumption and certain conditions to be met before it can be obtained. It is a symbol of status and can obtain service privileges that cannot be bought with money, so American tycoons flock to it.

The points and level systems that various apps are using are actually a symbol of status. It should be noted that the so-called status must be associated with rights, authority or physical objects, otherwise such rewards will appear worthless, fail to stimulate users' enthusiasm for participation, and even have a bad impact on users.

Another way to set rewards is to be consistent with the core value of the product. For example, the task reward of Baidu Netdisk is to increase the permanent free capacity of the netdisk for new users. Compared with providing permanent free capacity of online disk and sending X yuan cash red envelope to users, it is more difficult for users to measure the value of free capacity, but it better reflects the value of the product itself. Therefore, it is more attractive for users to participate and the cost consumed by enterprises is greatly reduced.

Simplify the registration process

After new users understand the core value of the product and receive rewards, they need to be guided to register as official users of the product. Although many products often require users to register on the welcome page before they can start using the product.

But this is likely to increase the user churn rate. After all, the registration process is actually a process of leaking user personal information. Guiding users into a new user experience first not only allows them to experience the aha moment first, but also increases the sunk cost of the time and energy they invest and makes them less likely to give up.

At this point, users are more likely to provide you with their personal information. You can guide users to register in a way that requires them to register in order to use all the functions of the product.

In order to reduce user loss during the registration process, the registration process needs to be simplified.

Single sign-on , that is, logging in through a social account, is a method commonly used by major companies, which is for multi-user products. For example, social products, especially social products among acquaintances, are even more important. Many Tencent products have formed a very powerful moat by relying on this strategy.

As for other personal information supplements, they can be obtained in various ways through novice task rewards. After that, users can be labeled and grouped.

In addition, you should make good use of the time when users first come into contact with the product, because this is the time when users are most patient with the product. You can use this time to guide users to add their favorite content and follow celebrities within the product, such as the popular influencers and traffic stars that Weibo recommends to you to follow after you first register on Weibo.

The first page after opening 36Kr is that the app allows you to choose your identity as a working person, student or other. After selecting your identity, the system will recommend modules that suit your interests for you to choose.

Baidu or various information apps allow you to select the tags you are interested in, music apps allow you to select the type of music you are interested in, etc. Afterwards, the “information search for people” achieved through algorithms such as artificial intelligence will be more targeted and more effective.

Social Relationships

Nowadays, all kinds of products are aiming at social interaction, and the importance of social relationships to products is self-evident. For example: WeChat Reading, through WeChat login, guide users to enter the WeChat relationship chain, and then use friends’ reading to activate users, rankings and reading book coins and other activities to maintain user stickiness, team drawing unlimited cards and other activities to attract new users, everything revolves around social relationships.

The introduction of product social relationships can be divided into sedimentation from existing relationships and attracting new ones . The former is mainly backed by WeChat, and the channel is basically monopolized by Tencent products.

As for non-Tencent products, they need to quickly consolidate users’ social relationships by attracting new users.

Attracting new customers by using new ones is called fission. The underlying logic is people’s love of taking advantage of small opportunities and competitiveness . From a psychological perspective, it is people’s narcissism and aggressiveness .

Although this overlaps with the last step of Referral in the AARRR model, since many new user experiences also regard attracting new users as an important part, we will briefly mention it here.

When talking about fission, we have to mention Pinduoduo. In addition to the fission method famous for "group buying", Pinduoduo also had the "help out and get cash" activity that once dominated the screen.

I don’t know if you have ever seen the “harassment” of friends sending “click for me” links on Pinduoduo. If a certain number of new users are attracted, users can withdraw 200 yuan in cash. Although the large rewards of real money have nothing to do with the core value of the product, they are attractive enough, which is why they have been widely swiped. And its ROI must have been calculated in detail by Pinduoduo and is firmly controlled within the normal customer acquisition cost.

In addition to group buying, there is also the option of sharing with friends to receive "feedback money" like NetEase Yanxuan. This actually reflects NetEase Yanxuan's confidence in its own products that "good products are not afraid of comparison." With the accumulation of social relationships, there will be more ways to play within the app, such as Taobao's Double Eleven team stacking cats and Pinduoduo's small circle games. Users' sharing after shopping can also penetrate and spread more deeply among friends.

In addition, there is another means of activating users through "social relationships" - water army . These water armies may just be "fake users" created by the system to increase your activity. They are used to become your followers or the first person to like your content, so that you can feel the product's aha moment as soon as possible. But as users gain a deeper understanding of the product, they will slowly recognize these “fake people”.

But for users who have fully experienced the core value of the product, discovering these "dummies" may not be a big deal to them. In addition, with the continuous development of artificial intelligence technology, "dummies" may also achieve good interaction with users.

Trigger

After downloading the product, some users may exit the app without completing the entire process of the new user experience for various reasons, or they may complete the user experience but do not decide to use the core value of the product at the moment.

If you don’t do something at this time, users may never open your product again, and the only thing waiting for your product in the end is user loss. The presence of triggers prevents this from happening.

A trigger refers to any prompt that stimulates people to take action, such as email notifications (EDM), registered mobile text message push (MMS), product mobile push (push), etc. The first two methods require that the user has provided us with relevant contact information, so in the user activation stage, we mainly use push to achieve user reactivation.

According to the user behavior formula, behavior = (desire - friction) * boost + reward . We have already mentioned desire, friction and reward before. The push here is actually boost.

The behavioral formula can not only be used for user activation, but can be used in all stages of the AARRR model. In order to explain the triggers more deeply, the examples given here are not all examples from the activation stage.

During the user activation stage, the motivation for the product to contact users should be to remind users that there is an opportunity that is obviously valuable to them, and this opportunity also needs to be in line with the core value of the App. Triggers can be divided into the following types:

(1) Stimulant triggers

Stimulate action among users who are highly capable but less motivated. For example, purchase notifications - encouraging users to take advantage of short-term discounts to purchase products; state changes - such as the price of an item in the shopping cart has been reduced.

(2) Signal triggers

Help highly motivated and capable users move in the right direction and encourage them to repeat actions. Such as new feature notifications - sharing news about product upgrades; friend behavior changes - a friend takes an action, such as a friend in Ant Forest stealing your water.

(3) Assistive Triggers

Help users who have high motivation but low ability to take action. For example, create an account - encourage users who download the product to register and create an account; user recall - remind users who have not visited the website or app for a while to come back again.

(4) Internal triggers

Triggers are core habits that inspire long-term usage. Such as top user rewards - let those users who use the product a lot know that they are special, encourage them to use the product more and establish a closer connection with the product.

Since push occurs randomly and cannot be controlled, there is no complete screenshot information here, but I believe that when readers read these examples, the various pushes they usually see have already emerged in their minds one by one.

Key indicators that need to be paid attention to at this stage

During the entire user activation process, from the initial plan formulation to the final case review, data runs through the entire process. During this period, product data needs to be constantly monitored and continuous iterations are carried out based on this.

When organizing experiments with user activation as the goal of the product, we need to always pay attention to the following core data indicators:

1. User activation rate : the percentage of users who experience core functions. Different products have different definitions of core functions, and the definition of user activation is also different. Each product will have its own definition of activation, and the definition of activation should be clear and reasonable.
2. User activation time : refers to the time it takes for a user to enter the product and be activated. The shorter the time, the more successful the activation process design is and the less friction the user feels.
3. DAU/MAU : The ratio of daily active users to monthly active users. Different types of products have different baselines, and this indicator is not reasonable and effective for every product. The larger the ratio, the stronger the user's stickiness to the product and the more obvious the activation effect. However, if the natural rhythm of the product is not very high, such as travel products like Ctrip and job search products like LinkedIn, the product indicators should be changed. Nature cannot be resisted.
4. DAOT : Average daily usage time of users. The longer the usage time, the stronger the user stickiness, but at the same time, it is necessary to prevent the increase of DAOT due to the long product usage process.

Summarize

As customer acquisition costs increase, activating new users becomes increasingly important for user growth and has a higher ROI. By drawing a roadmap to the product's aha moment, creating a funnel report to find the nodes for optimizing the new user experience, determining the definition of user activation, and monitoring the changes in core data indicators during the user activation phase, we continuously design strategies for optimization, iterate repeatedly, and ultimately improve the activation rate to achieve the goal of user growth.

Author: Zhiyang

Source: Zhiyang