Web3 User Rise Strategy: How to Build Successful Products and Communities

In the Web3 field, the short-term explosive rise and rapid decline of products is a common phenomenon. Many projects experience significant user loss during the downturn of the cryptocurrency market, eventually falling into a "death spiral." Unlike traditional fields, Web3 projects are more susceptible to the fluctuations in token prices. Therefore, developing effective user growth strategies is crucial for the long-term development of Web3 projects.

The core of user growth lies in continuously improving the ecosystem composed of products and users, gaining market share through continuous iterations, and achieving sustained rise in user scale and value. In 2022, apart from social media applications, the number of active users in major Web3 sectors experienced varying degrees of decline. This article will explore the key factors and strategies for Web3 user growth.

The Basic Ideas for Web3 User Rise

Although the macro environment can affect user growth, entrepreneurs should not be constrained by it. The primary task of user growth is to find a niche market that matches the product, which is the "M" in PMF(Product Market Fit). Focus should be on niche markets that align with the product's characteristics and resource advantages, rather than blindly pursuing the entire market. For Chinese entrepreneurs, abandoning the Chinese-speaking community and user base is unwise, as it is equivalent to giving up one-third of the potential global user base.

In product development, the minimum viable product ( MVP ) is a great concept. It refers to launching basic functions that can meet the minimum business loop for core scenarios, and then continuously iterating and optimizing based on market feedback to ultimately create a product that best meets market demand. Developers should focus on solving the user's most urgent "one" problem, simplifying the usage process, and building an MVP product that aligns with PMF.

If PMF is the ideal state of product-market fit, then MVP is an effective way to achieve PMF. Pushing an MVP that meets PMF to the market is the GTM(Go To Market) strategy. The goal of GTM is to acquire and retain users, usually following the "funnel model": from the top of customer acquisition and growth to the bottom of user conversion and retention, it is a process of decreasing user numbers.

The GTM strategy of Web3 is richer compared to Web2. The "community" is a unique domain of Web3 GTM and an important traffic pool for user growth. The GTM strategy of Web3 often combines token incentive measures and referral programs, rewarding old users for referring new users with tokens, and new users may also receive rewards as a result.

PMF: Identify the market and meet real needs

When formulating the PMF strategy, it is necessary to consider the following questions:

• Why develop this product/feature?
• Do the products/features meet market demand?
• Why develop this product/feature now instead of later?

According to research, lack of market demand is the primary reason for the failure of entrepreneurial projects, accounting for as much as 42%. Therefore, developers should conduct market research during the product planning stage, rather than waiting until the product is about to launch to look for the market.

Finding PMF is a cyclical and iterative process that requires continuous feedback collection and validation to gradually achieve the best fit between the product and the market. Specific steps include:

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

2. Formulate product strategy, clarify value proposition, highlight differentiated advantages and core competitiveness.

3. Selected MVP feature set, completed user demand testing.

Through this process, it can ensure that the product development direction is correct and create sufficient value in aspects recognized by target users. Continuously adjust and optimize the product based on accurate user feedback until a higher market match is achieved.

MVP: Quick iteration, avoid detours

When designing the MVP, the following issues need to be considered:

• What is the core composition of the product/function?
• What problems can it solve?
• What is the future iteration plan?
• Where is the value of the product/function?

The goal of MVP is to develop a usable product that reflects the project's highlights and innovations with minimal development cost and in the shortest time possible. Although the functionality is simple, it can quickly validate ideas. Using the MVP approach can avoid spending a lot of time on non-core features in the early stages of development and can also help to take fewer detours in subsequent version updates.

The MVP is not a perfect product; its purpose is to quickly launch to the market to test feasibility. By validating market demand, it continually adjusts direction until it iterates into a product with market space and revenue potential. The MVP can even be a carefully designed testnet product to avoid investing a large amount of money into developing a product that the market does not recognize.

Developers should provide the MVP to the target user group, collect their feedback on the product, and verify whether the initial idea is accurate. If the idea is correct, they should quickly increase the product's exposure and allow seed users to genuinely start using it.

Hold an internal product meeting to discuss which features are non-essential at the current stage. The remaining features will constitute the MVP. Developing the MVP requires the ability to simplify complex issues, define key functionalities around core needs, prioritize the main nodes, and then consider details and auxiliary features. This ability also reflects the grasp of the business development pace: launching suitable features at the right time, focusing on accuracy rather than comprehensiveness.

GTM: Attract New Users and Retain Old Ones, Carefully Operate the Community

When formulating the GTM strategy, the following issues need to be considered:

• How do products interact with users?
• Do you need help teaching users how to use the product?
• How frequently do users use it?
• Where to launch products? Locally, domestically, or internationally?
• Which cooperation channels to choose?
• What are the restrictions on collaboration channels?

The GTM strategy of Web3 not only includes traditional marketing methods to acquire users, but also involves operating a rich "community". Community members include not only users, but also developers, investors, and other stakeholders. Excellent Web3 projects often have strong community support. 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 approach to solving the cold start problem. Development teams are not investing funds into traditional marketing, but rather using token rewards to attract users when the network effects are not yet obvious. 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 are more important to the community than traditional Web2 business development personnel.

The key elements of the GTM strategy include:

1. Acquire new users

Airdrops with task interactions are an important GTM strategy, where project teams distribute tokens to users who complete specific tasks. This is a commonly used cold start method that can acquire the first batch of seed users at a low cost. Publishing tasks on Web3 task interaction platforms and guiding users to participate in product interactions is a win-win situation. Project teams gain traffic, while users receive on-chain activity proof, token rewards, and usage experience.

2. Increase activity and retention rates

Relying solely on token incentives is insufficient to rise user stickiness. "Users come quickly, and leave just as fast" is a challenge faced by current Web3 projects. Project teams should focus more on how to convert first-time users into loyal users, continuously optimize products, engage in community activities, and improve user experience. Holding AMAs on Twitter Space, Discord, and Telegram is a common method to enhance community engagement.

3. Recommendation and Self-Propagation

Self-propagation refers to promoting a product to new users through existing users. If existing users have a good experience, they will spontaneously share or recommend it to friends in the community, which is the lowest cost and most widespread customer acquisition method. Project teams need to design incentive mechanisms to encourage users to share, which can reward project tokens or physical gifts. At the same time, it's important 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 customer acquisition into rewards for existing users who refer new users 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 advertisements. Although it is not a new concept, it can bring lasting and effective conversion results for the project.

Acquiring new users is the traffic entrance, improving retention relies on product value, and recommendations and self-propagation amplify community power. These three steps are all aimed at generating revenue, as only with an increase in users can scalable profitability be achieved.

In summary, formulating effective user growth strategies is crucial for the long-term success of Web3 projects. Identifying market positioning, creating MVP products that meet demand, developing comprehensive GTM strategies, and emphasizing community building are all key aspects that Web3 entrepreneurs need to seriously consider and practice.