Web3 User Rise Strategy: From Product-Market Fit to Community Operations

In the Web3 space, we often see some projects achieve rapid rise in a short period, but users quickly churn, ultimately falling into a "death spiral" and failing. Unlike traditional sectors, Web3 projects are greatly affected by the cryptocurrency market: everything takes off in a bull market, while a bear market sees many projects perish. These projects often experience a continuous decline in token prices against the backdrop of a bear market, leading to ineffective incentives and even harming user interests, resulting in significant user churn.

User rise is a long-term goal of the product, and the core is to build a healthy system between the product and users, continuously iterating the product, gradually gaining market share, and achieving sustained rise in user scale and value. In 2022, the number of active users in most Web3 applications declined, but social media applications showed a rapid upward trend. Here are some thoughts on Web3 user rise.

Basic Approach to Web3 User Rise

Although the cyclical nature of the crypto market has a significant impact on user growth, entrepreneurs should not be constrained by macro factors. The primary task of user growth is to find a "market" that matches the product, namely the "M" in PMF(Product Market Fit). Instead of blindly pursuing the entire large market, one should identify suitable segments based on product characteristics and resource positioning. It is advisable to first deepen development and consider horizontal expansion only after gaining a leading position in a single market. For Chinese entrepreneurs, it is unwise to give up the familiar Chinese-speaking community and users, as this is equivalent to abandoning one-third of the world's potential users.

In terms of product design and development, the minimum viable product ( MVP ) is a great concept. First, launch the basic functions that meet the core scenario's minimum business closed loop, and then iterate and optimize based on market feedback, ultimately forming a product that best fits market and user needs. Developers should not try to develop a perfect product all at once, but should focus on solving the user's most urgent "one" problem, simplify the usage process, and build an MVP that meets PMF. This process often requires saying "no" to a lot of good ideas.

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

The GTM of traditional Web2 projects includes aspects such as pricing, marketing, and sales, focusing on metrics like website click-through rates, average revenue per user, and transaction time. The GTM of Web3 is richer in connotation, with "community" being its unique category and an important traffic pool for user growth. The GTM strategies of Web3 are often accompanied by community incentive measures mediated by tokens, as well as corresponding referral programs, incentivizing existing users to refer new users through token rewards.

PMF(Product Market Fit): Identify the market, meet the real demand

Regarding product market fit (PMF), the following issues should be considered:

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

According to research, the lack of market demand is the primary reason for the failure of entrepreneurial projects, accounting for as much as 42%. Therefore, developers should consider these issues during the product planning phase, rather than waiting until the product is about to go live to find the market. People tend to overlook the importance of preliminary market research due to personal biases.

Finding PMF is a cyclical iterative process, continuously collecting feedback and validating to gradually align the product with the market. In subsequent validations, it returns to specific steps for optimization based on feedback to improve the product's fit with the market.

1. Identify the niche market, target the user group, and discover unmet needs.

Identifying the right niche market and target users will determine the extent to which the product can meet user needs. By segmenting the large market, target user groups can be locked in, user persona databases can be established, and needs can be analyzed. After understanding the needs of the target users, corresponding market opportunities must be sought. If the user needs of a certain market have been well met, it is better not to enter that market; instead, one should look for new markets where needs have not yet been well met.

2. Develop product strategy, clarify value proposition, highlight differentiation and core competitiveness.

Users will inevitably compare various competitors with your product, so user satisfaction largely depends on the highlights of the product, which constitute the product's differentiation. The value proposition emphasizes the product's highlights, making users feel that the product can better meet their needs than competitors. The product strategy needs to consider: which need to focus on satisfying? What unique features does the product have? How to win in the competition?

3. Selected MVP feature set, completed user requirement testing

After clarifying the product strategy and value proposition, it is necessary to carefully select the feature set of the minimum viable product ( MVP ). The goal of the MVP is to determine whether the development direction is correct and to create sufficient value at points that users find valuable. After completing the MVP, it should be thoroughly tested among the target user group to ensure that enough feedback is collected from the target market users. Otherwise, the product iteration may lead in the wrong direction. Based on precise user feedback, adjust assumptions and return to earlier process steps to iterate the MVP until a product that highly fits the market is designed.

MVP(Minimum Viable Product): Rapid iteration, reducing detours

Regarding the Minimum Viable Product (MVP), the following issues should be considered:

• What are the components of the product/function?
• What problems can be solved?
• What are the future iteration plans?
• What is the value of the product/function?

MVP is a usable product developed with the least development cost and the shortest time that can reflect the highlights and innovations of the project. Although it is minimal, it can quickly validate ideas. People often pursue perfection and feel that the lack of a certain feature is terrible, but in reality, it is often insignificant. Using a non-MVP approach may not only waste a lot of time on secondary features in the development of the first version, but also lead to many detours in subsequent updates. Adopting the MVP mindset allows attention to be focused on more important areas.

An MVP is not necessarily the perfect product; its purpose is to quickly launch to the market to test feasibility. By validating through market demand, the direction is continuously adjusted to iterate products that have market space and revenue. An MVP doesn't even have to be a mainnet product; it just needs to be a well-designed testnet product that allows users to have a clear experience. This can help avoid spending a lot of money on products that the market does not accept.

The MVP should be delivered to the target user group to collect their feedback on product preferences and see if they believe this product is necessary, thereby testing whether the initial ideas about the market segmentation and target user group are correct. If the ideas are correct, quickly increase the product's visibility in the market and let seed users truly start using the product.

Hold multiple internal product meetings to discuss which features are not needed in the current stage. What remains after cutting those is the MVP. Creating an MVP requires the ability to simplify, defining core functions around fundamental needs, and focusing on the key path nodes before considering detailed branches and auxiliary functions. This ability to simplify is actually about grasping the rhythm, aligning with the pace of business and user development: launching corresponding product features at the right time, not seeking completeness, but rather relevance.

GTM(Go To Market): Attract new users and retain old ones, manage the community

Regarding the go-to-market (GTM) strategy, the following issues should be considered:

• How do products interact with users?
• Do you need help learning to use the product?
• How often do users use it?
• Where to launch the product? Locally, domestically, or internationally?
• Which channels to cooperate with?
• What are the restrictions on cooperation channels?

In Web2, GTM typically acquires users through marketing. In Web3, GTM not only acquires users through marketing but also manages a "community" with richer connotations. The community includes users, developers, investors, and partners, all of whom are stakeholders in Web3 projects. Excellent Web3 projects usually have strong communities. Some projects adhere to the "community-first" principle, some have decisions that are "community-led", and others allow the "community to own" the project. Only by continuously meeting user needs and maximizing the subjective utility of the product for users can a high level of engagement and a high-quality community be achieved.

Web3 has changed the traditional funnel model of Web2. Token rewards provide a new solution to the cold start problem. Instead of investing funds in traditional marketing to acquire early users, development teams attract users with token rewards when network effects are not yet apparent. Rewarding users for their early contributions will attract more new users, who also hope to receive rewards through their contributions. From the perspective of user loyalty, early users in Web3 contribute to the community more significantly than BD personnel in traditional Web2.

1. Acquire new users

Task interactive airdrops are an important GTM strategy, referring to the distribution of tokens to users who complete specific tasks in the project direction, sometimes with additional conditions such as the requirement to hold a specific token. Incentivizing early users to complete task interactions is a common cold-start method for projects, allowing for the acquisition of the first batch of seed users at a low cost.

Publishing tasks on the Web3 task interaction platform and guiding users to participate in product interactions is a win-win operation. The project party gains traffic; users receive on-chain activity proof and airdropped tokens, and can also accumulate platform usage experience.

2. Increase activity and retention rate

Relying solely on token incentives is insufficient to increase user stickiness. Since the bear market of 2021, "users come quickly and leave quickly" has become a significant challenge for project management. User inactivity and difficulty in retention are persistent issues for current Web3 projects. Project teams should invest more energy in converting first-time users into loyal users, continuously optimize products, carry out community activities, and provide a better user experience. Holding AMAs on Twitter Space, Discord, and Telegram is a common method to enhance community activity and enthusiasm.

3. Recommendation and Self-Propagation

Self-propagating Referral refers to promoting products to more new users through existing users. If existing users like and have a good experience with the product, they will voluntarily share it in communities or recommend it to friends, which is the lowest cost and the widest way to acquire customers. Project parties need to design incentive mechanisms to encourage users to share, which can reward project tokens or physical gifts such as logo-branded clothing, skateboards, cups, etc. Additionally, it is necessary to analyze the on-chain behavior data of new and old users to improve conversion rates and adjust operational strategies.

The referral system breaks down the advertising costs originally used for acquiring new users into rewards for existing users who refer new users and rewards for new users upon registration. This greatly reduces customer acquisition costs and is more efficient than directly purchasing keywords or information flow advertisements. Although not innovative, it can bring lasting and effective conversion results for the project.

Acquiring new users is the traffic entry point, improving retention relies on product value, and leveraging the power of large communities through recommendations and self-broadcasting. All three steps aim to create revenue, and only with an increase in users can scalable profitability be achieved.