Web3 User Rise Strategy: How to Achieve Sustainable Development

In the Web3 space, we often see some projects achieve a good rise in the short term, but soon face the dilemma of user attrition, ultimately falling into a "death spiral" and failing. Unlike traditional sectors, Web3 projects are greatly affected by the volatility of the cryptocurrency market: during bull markets, there is a bloom of projects, while bear markets see a large number of projects perishing. These failed projects often share a common characteristic: during market downturns, the project's token price continues to decline, leading to the failure of incentive measures and even harming user interests, ultimately resulting in severe user attrition.

User growth is a long-term goal of the product, focusing on building a positive interaction system between the product and users, gaining market share through continuous iteration, and achieving steady rise in user scale and value. In 2022, the number of active users of various Web3 applications generally saw a decline, including non-fungible tokens (NFT), decentralized finance (DeFi), blockchain games, and decentralized exchanges. In contrast, social media applications showed a rapid rise trend. Here are some thoughts on the growth strategies for Web3 users.

The basic idea of Web3 user rise

Although the cycles of the cryptocurrency market have a significant impact on user growth, entrepreneurs should not be constrained by macro factors. The primary task of user growth is to find the "market" that matches the product, namely the "M" in Product-Market Fit (PMF). It is important to focus on niche markets that align with the product's characteristics and resource advantages, rather than blindly pursuing the entire large market. It is recommended to first deeply cultivate a single market and consider horizontal expansion only after gaining a leading position. For entrepreneurs with a Chinese background, neglecting the Chinese-speaking community and Chinese user groups is unwise, as it amounts to giving up one-third of the potential user base globally.

In product development, the Minimum Viable Product ( MVP ) is a commendable concept. It emphasizes launching basic functions that can meet the minimum business loop for core scenarios first, and then iterating and optimizing based on market feedback. Developers should focus on solving the user's most pressing "single" problem, simplifying the usage process, and building an MVP product that aligns with PMF. During this process, developers often need to say "no" to many seemingly good ideas.

If PMF represents the state of product-market fit, then MVP is an effective way to achieve PMF. Launching an MVP that meets PMF into the market is known as "Go To Market" ( Go To Market, GTM ) strategy. The goal of GTM is to acquire and retain users, usually following the "funnel model": from acquiring new users at the top of the funnel to user conversion and retention at the bottom, it is a process where the number of users gradually decreases.

The GTM strategy of Web3 is richer and more diverse compared to traditional Web2 projects. "Community" is a unique area of Web3 GTM and is a key traffic pool for user growth. Web3 GTM strategies often combine token-based community incentives and corresponding referral programs, where existing users are incentivized with tokens to refer new users, who may also receive rewards as a result.

Product-Market Fit ( PMF ): Identify the market and meet real needs.

When considering product-market fit, several key questions need to be thought about:

1. What is the motivation for developing this product or feature?
2. Can the product or feature meet market demand?
3. Why choose to launch this product or feature at the current time?

According to research by CBInsights, the lack of market demand is the primary reason for startup project failures, accounting for as much as 42%. Therefore, developers should start considering market demand during the product planning phase, rather than waiting until the product is about to launch to start looking for the market. People tend to overlook necessary market research due to personal biases.

Finding PMF is a continuous iterative process that requires constant feedback collection and validation, allowing the product to gradually align with the market. In this process, feedback information should be used to return to specific steps for optimization, in order to improve the product's fit with the market.

1. Lock in on target segments and user groups, and identify unmet needs.

Accurately identifying niche markets and target user groups is key to product success. By segmenting the larger market to determine target users, user personas can be established and needs analyzed. After understanding user needs, it's also necessary to evaluate market opportunities. If user demands in a certain market are already well met, new market opportunities should be sought. When discovering unmet user needs in a certain market, consideration can be given to entry.

2. Develop product strategy, clarify value proposition, highlight differentiated advantages.

Users inevitably compare different products, so the unique highlights of a product are crucial. The value proposition is to highlight the advantages of the product, allowing users to feel that it can better meet their needs than competing products. When formulating a product strategy, it is important to consider the following three core questions: Which specific need are we focusing on? What unique features does the product have to attract users? How can we stand out in the competition?

3. Selected MVP feature set for user需求测试.

Once the product strategy and value proposition are determined, the core features that the minimum viable product (MVP) should include should be screened. The purpose of the MVP is to validate whether the development direction is correct and to create sufficient value in aspects that users find valuable. After completing the MVP, it should be thoroughly tested among the target user group to ensure that the feedback collected comes from a sufficient number of target market users. Based on accurate user feedback, adjust the assumptions and return to previous steps to iterate on the MVP until a product that matches the market closely is designed.

Minimum Viable Product ( MVP ): Rapid iteration to avoid resource waste

When considering the minimum viable product, the following questions need to be addressed:

1. What are the components of the product or feature?
2. What specific problems can it solve?
3. What is the future feature iteration plan?
4. What is the core value of the product or feature?

The concept of MVP is to develop a usable product that reflects the highlights and innovations of the project with the minimum development cost and in the shortest time. This minimalist product can quickly validate ideas. Many people have a perfectionist mindset, believing that the lack of certain features will affect the quality of the product, but in reality, this mindset often leads to resource waste. In contrast, adopting the MVP approach allows developers to focus on the most important aspects.

The purpose of MVP is not to pursue perfection, but to quickly push to market to validate feasibility. By validating market demand, continuously adjusting direction, and ultimately developing products with market space and profitability. In fact, MVP does not even need to be a mainnet product; it can be a well-designed testnet product that provides users with a clear experience. This can prevent the investment of large amounts of capital in developing products that are not recognized by the market.

Developers should deliver the MVP to the target user group for testing, collect their feedback on product preferences, and verify whether the segmentation and target user group are correctly identified. If the initial validation is successful, they can quickly increase the product's exposure in the market, allowing these seed users to genuinely start using the product.

When developing an MVP, it is necessary to hold frequent internal product meetings to discuss which features are non-essential at the current stage. After removing these features, what remains is the core of the MVP. Developing an MVP requires the ability to simplify complexity, define core functions around fundamental needs, focus on key path nodes first, and then consider detailed branches and auxiliary functions. This ability is essentially about grasping the project's rhythm, ensuring that suitable product features are launched at the right time for business and user development, aiming to do the right things rather than doing many things comprehensively.

Going to market ( GTM ): rise in new users retention, deepening the community

When formulating market entry strategies, the following issues need to be considered:

1. How do products interact with users?
2. Do users need help learning to use the product?
3. How frequently do users use it?
4. In which regions is the product launched? Local, domestic, or international market?
5. Which channel partners to choose?
6. What restrictions exist for cooperative channels?

In the Web3 field, GTM is not just about acquiring users through marketing methods, but more importantly, nurturing a rich "community." This community includes not only users but also developers, investors, and partners, all of whom are stakeholders in Web3 projects. Every successful Web3 project usually has strong community support. Some projects adhere to the "community-first" principle, while others have decisions led by the "community," and even some projects achieve "community ownership" directly. Only by continuously meeting user needs and maximizing users' subjective utility can a highly engaged and high-quality community be established.

Web3 has changed the traditional user acquisition model. Token rewards provide a new solution to the cold start problem. Project teams do not invest money in traditional marketing to acquire early users, but instead use token rewards to attract users during the stage when network effects have not yet manifested. Rewarding users for their early contributions can attract more new users, who also hope to receive rewards through their contributions. From the perspective of user loyalty, early users of Web3 contribute to the community in a way that is more important than traditional Web2 business developers.

1. Acquire new users

Airdrops with task interactions are an important GTM strategy. Projects distribute tokens to users, who need to complete specific tasks to have a chance of receiving the tokens, and sometimes additional conditions may apply, such as having to hold specific tokens. This incentive method for early users to complete task interactions is a common cold-start approach for projects, enabling them to acquire the first batch of seed users at a lower cost.

Publishing tasks on the Web3 task interaction platform and guiding users to participate in product interactions is a win-win operation. For project parties, it brings traffic; for users, they can obtain on-chain activity proofs and airdrop tokens, as well as accumulate platform usage experience during the task interaction process.

2. Increase activity and retention rates

Although token incentives can attract users, relying solely on this is not enough to increase user stickiness. Since the cryptocurrency market entered a bear market in 2021, "users come quickly and leave quickly" has become a major challenge for project operations. User inactivity and retention difficulties are the main issues faced by current Web3 projects. Project teams should invest more effort in converting first-time users into loyal users, continuously optimizing products, and regularly conducting community activities to provide a better experience for users. Holding AMAs (Ask Me Anything) on Twitter Spaces, Discord, and Telegram is a common method to enhance community activity and engagement.

3. Promotion and Self-Propagation

Self-promotion (Referral) refers to the method of promoting products to more new users through existing users. If existing users are satisfied with the product and have a good experience, they will spontaneously share it in the community or recommend it to friends, which is the lowest-cost and most extensive customer acquisition method. To encourage users to share, the project team needs to design attractive incentive mechanisms. Token rewards can be provided, or physical gifts can be used, such as clothing, skateboards, snowboards, mugs, etc., printed with the project logo. Additionally, it is necessary to analyze the on-chain behavior data of both new and old users to improve conversion rates and adjust operational strategies.

The referral program breaks down the advertising costs originally used for acquiring new users into rewards for existing users who refer others and rewards for new users upon registration. This approach significantly reduces customer acquisition costs and is more efficient than directly purchasing keywords or information flow ads. Although this method is not novel, it can bring lasting and effective conversion results for the project.

Acquiring new users is the traffic entry point.