First of all, the interviewer doesn’t really want you to launch a product in such a short time, because the interviewer can’t. What the interviewer really wants to see with this question is whether you have a business approach.
One of the most common methods of user growth in operations is the AARRR model method. You can use examples to illustrate your skills to the interviewer.
What, you don’t know this yet? Don’t worry, I will talk about this method from the following parts of the system, you can present to the interviewer after learning.
Part 1: Operational analysis methods: What is the AARRR model?
Part 2: What are the metrics for each part of the operation? What are the classic cases?
Part 3: How to summarize operating secrets in one diagram?
Part 1: Operational analysis methods: What is the AARRR model?
AARRR model is not only applicable to the Internet industry, it can also be applied to various industries facing mass consumers to help business growth.
AARRR model corresponds to five important links of product operation, which are as follows:
The first is Acquisition: how do people find us?
The second step is user Activation: how was the user’s first experience?
The third component is Retention: Will users come back?
The fourth link is Revenue: how to earn more money?
Refer Viral marketing: Will users tell others?
Acquisition: How do users find us?
In the Internet industry, many startups die not because their business or product is bad, but because their acquisition costs are high and there is no way to bring them down. Sean started his career in Silicon Valley at Dropbox, a cloud storage startup. The company started out with a cost of up to $400 per user, and offered a paid service for $99 a year.
Sean offered two suggestions for low-cost customers: one is language — market matching, the other is channel — product matching.
1. Language — market matching
Language — market matching — is how you speak to your audience.
It’s really the ability to grab the user’s attention. Now the average amount of time people spend on an online message is eight seconds. If you can’t tell a user what your product does for him in eight seconds, you’ve missed an opportunity to get a customer.
When the iPod came out in 2001, Jobs could have explained in his message why his player was different and better, but he didn’t. He wisely decided not to use any description of the MP3 player’s functionality. With a simple and charming phrase — “Put 1,000 songs in your pocket” — he reinvented the concept of portable players.
Channel – Product matching refers to the channel in which the product is placed in order to reach the user directly.
Channels can be divided into three categories, one is word-of-mouth channel, suitable for viral marketing; One is organic channel, suitable for search engine optimization, content marketing; The other is payment channels. What are the payment channels?
1) Display space advertising
In the top of the website or mobile App, the opening screen of the App, etc. Open screen advertisement means that when users open mobile App, there will be several seconds of advertising time. For example, weibo and Zhihu will show you an open screen advertisement first.
This type of AD is usually paid for by CPM (Cost Per Mille), which is how many people saw the AD.
2) Search advertising
Such as search engines (Google, Baidu, etc.) keyword search, e-commerce search ads such as Taobao Zhichao, etc. Advertisers bid for a search term, and users see search results ranked by the advertiser’s bid.
This type of AD is CPC (Cost Per Click), which is how many people Click on the AD.
3) Information flow advertising
For example, advertisements in weibo, Toutiao, Zhihu and Moments of friends (information flow). The ads are based on users’ interests and preferences. This type of advertising is either paid Per click (CPC) or Cost Per Action (CPA).
CPA (Cost Per Action) includes:
CPD (Cost Per Download) : charges based on the number of App downloads. Cost Per Install (CPI) : charges based on the number of activated apps. Cost Per Sales (CPS) : the user is charged according to the purchased users or Sales volume. Know who your target audience is and where your target audience is when you put your product into the channel. If you’re an enterprise app, advertising on an entertainment site is a bad idea. Currently, all the major advertising platforms support three types of payment: Pay-per-view (CPM), pay-per-click (CPC), and pay-per-delivery (CPA). Advertisers can choose flexibly according to their own product needs.
3. Classic cases
Let’s take a look at how to acquire users through a few examples.
Case 1: Netflix (NFLX), the US streaming video giant
In 2017, Netflix (NFLX), the Us streaming video giant, achieved the seemingly impossible goal of becoming the world’s largest entertainment provider with more subscribers than all us cable TV subscribers combined.
Case 2: Fitness app Keep
Four-year-old fitness app Keep had more than 130 million users in 2018. How does Keep acquire users in the 0-1 phase?
Wang Ning believes that “the content is the product, the content is the traffic, the content is the user, the content should be solid enough, good enough, wide enough”, let users understand Keep from the perspective of social media.
When the product goes live, tell users that all the good content is aggregated in an app, so they can watch and train with it. Keep’s first wave of users was built entirely on content, which then spread to more people through word of mouth.
Wang Ning gave this action a name called “mine burying plan”, is to pay something first, then slowly harvest something. However, when using a mine plan, you need to know where your audience is, and then you need to get them to like you and feel you.
It took 105 days for Keep to reach one million users from its launch, and the number of users reached one hundred million on the 921st day. Wang ning said that the first one million may take a long time to use, but the first one hundred million will be very fast, less than three years.
Case 3: WhatsApp (similar to Wechat in China)
User pull new must reduce the threshold of user participation. Some apps manage to attract users, but the whole registration process is super locked, and users run away when they look at it.
WhatsApp, China’s equivalent of wechat, was bought by Facebook for $19 billion. WhatsApp has put all its energy into making its product easy to use, even without requiring you to create a username or password. WhatsApp’s word-of-mouth is strong because of its ease of use.
In 2017 and 2018, the wechat public account “Wu Xiaobo Channel” purchased external fattening services, which were divided into three forms: embedded in the graphic messages sent by other public accounts; Through the smart scale screen advertising, scan the code and follow the wechat public account to get weight information push; Through wifi platform, users can realize wifi network only after following wechat public account.
Among them, in 2017, a total of 8,467 newly added public account users followed by external channels were added, accounting for 0.66% of the total number of newly added public account users followed by external channels in 2017. In 2017, the total book amount of the expenses incurred by purchasing powder-adding services was about 10,000 yuan.
In 2018, a total of 417,400 new users of public accounts were added through external channels, accounting for 36.45% of the total new users of public accounts in 2018 and 12.07% of the total 3.458,800 users of public accounts. In 2018, the total book amount of expenses incurred by purchasing powder adding services was about 402,000 yuan. (Source: m.sohu.com/a/307980627_)
4. The first part of acquiring users: What indicators should we pay attention to?
Channel exposure: How many people see product promotion clues
Channel conversion rate: How many users convert as a result of exposure
Daily New Users: The number of new users on a day
Daily app Downloads: How many users download a product per day
Customer acquisition cost (CAC) : The cost of acquiring a customer
Second, the second part of user activation: how is the user’s first experience?
To wake up dormant users, you need to know the product’s “Aha moment.” What is an “aha moment”?
To put it bluntly, it is the moment when users can’t help but admire the product highlights, and it corresponds to the product highlights that impress users. For example, the highlight of netease Cloud Music is the comment. When users open the software, the first thing they do is not listen to songs, but read the comments, and there will be some praise in their hearts.
To activate users, draw a road map to the “Aha moment.” Let’s say your product is a shopping app. Before a new user can experience that aha moment, they must complete the following steps: download the app, find the item they want, put it in their shopping cart, create an account, enter their name, add credit card and shipping information, and click Buy.
Where does the user stay in this sequence of actions? Can’t find what you’re looking for, is it too much trouble to create an account, or is the page setting just wrong? You need to calculate churn per node to improve product performance and user experience accordingly.
For example, in a Taobao store below, the churn rate of each node in the user’s shopping process.
2. Classic case: How does PINDUoduo activate users?
After repeated redundant jumps of e-commerce app, users finally give up payment. Pinduoduo, on the other hand, has only four steps from entering the home page to making payment in order to reduce the shopping process and complexity. You should know that taobao search shopping process has 6 links, browsing shopping process has 7 links. How does Pinduoduo do it?
Pinduoduo reduces the complexity of online shopping through four methods:
1) Pinduoduo’s home page directly recommends products without putting invalid information, and you don’t need to click many times to reach the product page;
2) Pinduoduo does not have a shopping cart, and each product is purchased and paid directly, which reduces consumers’ hesitation time;
3) All products are free of shipping, reducing the need to communicate with customer service;
4) Pay first and then make a group, Pinduoduo puts the group link after the payment link, so that consumers can complete the payment with the group purchase price in advance, and then find someone to make a group. If the group is successful, it will be shipped, and if it is not successful, it will be refunded. The payment link will be advanced to lock consumers as soon as possible.
You can also use gamification to wake users up by giving them rewards, such as clocking in, points, coupons, etc.
Before we look at how Pindoduo uses gameplay to stimulate activity, let’s talk about a psychological “loss aversion” phenomenon. You’ve all heard the story of losing $100 and finding it again, but you still feel miserable. The pain of losing $100 is greater than the joy of gaining $100. The pain of a loss is much greater than the satisfaction of a gain.
Spell duo duo makes good use of this psychology, why are we happy to forward spell group? Do they really care about a few dollars? What they care about is not losing money. Not putting together a team means losing money. With this mentality, you can see groups full of links to groups and bargains.
Daily Active Users: indicates the number of users who log in to or use a product in a day. For example, the number of people who open my wechat account in one day. Similarly, there are weekly active users and monthly active users.
Active Rate (Active user percentage) : The percentage of active users in the total number of users at a given time. According to time, it can be divided into daily active rate (DAU), weekly active rate (WAU), monthly active rate (MAU) and so on.
The following are the active users of the three e-commerce companies in March 2018. We can see that PINDUoduo plays group games based on wechat ecology, and the monthly active number of small programs is much higher than taobao and JINGdong.
If it’s a web product, there are two other metrics to measure web activity.
PV (PageView) is the number of page views, each page opened by the user can be regarded as a PV, the user saw ten pages, then PV is 10.
UV (Unique Visitor) is the number of people who visit a web page at a given time. No matter how many pages a user visits in the same day, he is considered a unique visitor. How do you know if the user is the same person? Technically, it is determined by web cache cookie or IP. If those two change, the user counts as a brand new visitor.
The third link is retention: Will users come back?
1. Classic case
Case 1: Amazon Membership service
When Amazon launched its membership service, many analysts said the plan was bound to fail because shipping costs in the U.S. were high, and amazon would lose money on a $99 membership that gave members free shipping for a year. But the real goal for Amazon is to change people’s habits so that they get used to membership discounts and free shipping, so that they don’t go to other stores to buy things, and that improves retention.
Case 2: Ant Forest game
Ant Forest is alibaba launched is a nurturance class of small games, in alipay can be opened to see. By May 2018, Ant Forest had amassed 350 million users, successfully driving up the user activity That Alipay craves.
User activates the ant account after the forest, a part of her daily behavior, such as “subway”, “walk”, “purchase movie tickets online would be considered” emission reduction behavior, then, these behaviors will be converted to a certain energy, display on the personal home page, the user simply click on the screen of energy, you can charge.
The ant forest has planted more than 10 million real trees. If we plant a tree that requires users to use ant forest online for 2 months (in fact, it takes more than 2 months), it’s a great way to increase user engagement and retention.
2. Retention of users in the third part: What indicators should we pay attention to?
Next-day retention :(of users added on the same day, the number of users who used the product on the second day)/the total number of users added on the first day
Day 3 retention :(of day 1 new users, the number of users who used the product on day 3)/day 1 total new users
Day 7 retention :(of the users added on day 1, the number of users who used the product on day 7)/day 1 total users added
Day 30 retention :(of the users added on day 1, the number of users who have used the product on day 30)/total users added on day 1
For example, if an app has 100 new users on the first day and 30 of those 100 users open the app on the second day, the retention rate of the next day =30/100=30%. If 10 out of 100 people open the app on day 7, then 7-day retention =10/100=10%
Facebook has a famous 40-20-10 rule that says 40% of new users are retained the next day, 20% for 7 days, and 10% for 30 days.
Below are the daily live and retention rates of Mobile Taobao and Pinduoduo. (Questmobile). We can see that the next-day retention rates of mobile Taobao and Pinduoduo are around 30%. Jingdong retention is relatively poor.
Business models and ways of monetizing vary, but there is one concept that needs to be emphasized: a pinch point. It refers to a place where potential revenue is lost.
For e-commerce enterprises, it is a danger zone for users from selecting goods to finishing the purchase, and many people will give up the purchase halfway. To evaluate these common pinch points, analyze why users give up at these points.
1. Google Docs
For a while, Facebook found itself losing users so much that its confirmation page for logging out said, “Do you want to log out? Check it out, check it out again, and if you’re ready to log out, you can log out.”
Facebook later changed the confirmation page to include a page before the logout ended. ‘Are you sure you want to log off?
If you want to log off, these people will no longer see you, and you will no longer pay attention to the new situation of these friends, do you want to reconsider?
This thing increases retention by 3%, which is the equivalent of 3 million Facebook losses a year averted.
2. The fourth link to increase income: What indicators should we pay attention to?
Note the distinction between “users” and “paying users”, which also affects the revenue calculation. (A reference to “users” below, if not specified as “paying users,” is worth all users (both paying and non-paying users).)
Customer unit price: the average amount of goods purchased by each user. Unit price = total sales/total number of customers
PUR(Pay User Rate) : percentage of paid users
ARPPU(Average Revenue Per Paying User) : The Average Revenue generated by Paying users over a given period of time (excluding non-paying users). ARPPU= total revenue/paid users
LTV (Lift Time Value) : refers to the total revenue generated by an average user from their first login to their last login. Often used in the game industry.
Repurchase rate: the number of users who consume more than twice in a certain period of time/the total number of users who purchase. For example, if there are 10 users who purchase the product and 5 users make repeated purchases, the repeat purchase rate =5 users who purchase the product repeatedly / 10 (total number of users who purchase the product =50%)
Sales = user conversion rate/unit price * frequency of purchase
(Purchase frequency refers to the number of times a consumer or user buys a particular product or type of product in a given period of time.)
As an example, by March 30, 2018, the consumption of a single pindoduo buyer in the past 12 months was 673.9 yuan (unit price), while the annual consumption of Alibaba users was 8,696 yuan and jingdong users was 4,426 yuan, several times or even more than ten times of pindoduo.
Using an epidemic analogy, Malcolm Gladwell’s book The Tipping Point makes The Point that there is not only one way to trigger an epidemic, but three things are required for an epidemic to occur:
1. The infectious agent itself
2. The environment needed for infectious agents to function
3, people spread infectious behavior
The infectious agent itself
Contagiousness itself means knowing your product well. Try to ask yourself a question: Does my product really address the pain points of my users?
If you’re writing articles, consider what real value your articles bring to your users. If you are doing catering, whether your dishes are really liked by users.
The environment in which the infectious agent works
Where are your users? Corresponding to the first link of AARRR model (acquisition of users) we talked about earlier. Think about the environments (community, university, etc.) in which users of your product are most likely to use it.
The act of transmitting an infectious agent
After you have a deep insight into your product and find your target audience, you should also consider the purpose for which people will share your product and let more people see your product. This condition corresponds to the fifth link of AARRR model (recommendation, viral marketing).
1. Classic case
For example, Didi achieves self-dissemination of its products through super marketing tools such as hongbao.
It should be noted that we should adhere to the concept of treating every marketing as a product experience. Hot spots should not just be gimmicks, but hope to take into account some inclusive marketing activities, which can really bring benefits to consumers.
2. Recommendation for the fifth part: What indicators should we pay attention to?
Forwarding rate: indicates the number of users forwarding a function/the number of users viewing the function. For example, if my wechat public account (monkey chat character) pushes an article to 30,000 users and the number of users forwarding this article is 3,000, then the forwarding rate =3000 (the number of users forwarding this article) / 30,000 (the number of users seeing this article) = 10%
Conversion rate: The calculation method depends on the specific business scenario. Let’s take some chestnuts.
For example, taobao conversion rate = the number of customers who purchase in a certain period of time/the number of all visitors who arrive at the store. If 100 users see the promotion information of your store and are attracted to enter the store on The day of Double 11, 10 of them finally buy things in the store, Conversion rate =10 (number of customers who make a purchase) /100 (number of all visitors to the store) =10%
Advertising conversion rate = the number of people who click on the advertisement to enter the promotion website/the number of people who see the advertisement. For example, we often use Baidu and there will be advertisements in the search results. If 100 people see the advertisement and 10 of them click on the advertisement to enter the promotion website, Conversion rate =10 (number of people who click on the AD to get to the promoted site) / 100 (number of people who see the AD) =10%
K-factor: Measures the effect of recommendation, that is, how many new users can be brought by a user who initiates a recommendation.
K factor = (the number of invitations each user sends to his friends) * (the conversion rate of people receiving invitations to new users).
Assuming the average user sends invitations to 20 friends and the average conversion rate is 10%, K =20*10%=2. The result is not bad.
When K>1, the user base snowballed. If K<1, then the user base stops self-propagating at a certain size.
Part 3: How to summarize operating secrets in one diagram?
1) Analysis method of APP operation: What is AARRR model? 2) What are the indicators of each link of APP operation? What are the classic cases?
Now, part 3: How to sum up the secrets of app operation in one chart?
No growth is the curse of a startup. As long as it doesn’t grow, the user base will shrink and slowly get worse and worse. AARRR models can help us analyze the user behavior of the product, and you can specify different operational strategies at different stages.
AARRR model includes five links of product operation, which are as follows:
1) The first step is user acquisition: how do users find us?
The indicators of this link are,
Channel exposure: How many people see product promotion clues
Channel conversion rate: How many users convert as a result of exposure
Daily app Downloads: How many users download a product per day
Daily Number of New Users (DNU) : Indicates the number of new users per day
Acquisition cost CAC: The cost of acquiring a customer
2) The second step is to activate the user: how is the user’s first experience?
The indicators of this link are,
Daily Active Users (DAU)
Daily activity rate, weekly activity rate, etc
3) The third link is Retention: Will users come back?
The indicators of this link are,
Next-day retention :(of users added on the same day, the number of users who used the product on the second day)/the total number of users added on the first day;
Day 3 retention :(of day 1 new users, the number of users who used the product on day 3)/day 1 total new users;
Day 7 retention :(of the users added on day 1, the number of users who used the product on day 7)/day 1 total users added;
Day 30 retention :(of the users added on day 1, the number of users who have used the product on day 30)/total users added on day 1.
4) The fourth link is Revenue increase: how to earn more money?
Note the distinction between “users” and “paying users”, which also affects the revenue calculation. The indicators of this link are,
Customer unit price: the average amount of goods purchased by each user. Unit price = total sales/total number of customers
PUR(Pay User Rate) : percentage of paid users
ARPPU(Average Revenue Per Paying Users) : The Average Revenue of Paying users (excluding non-paying users). ARPPU= total revenue/paid users
LTV(Lift Time Value) : Lifetime Value, which refers to the total revenue generated for a game by an average user from the first login to the last login. Often used in the game industry.
Repurchase rate: the number of users who consume more than twice in a certain period of time/the total number of users who purchase. For example, if there are 10 users who purchase the product and 5 users make repeated purchases, the repeat purchase rate =5 users who purchase the product repeatedly / 10 (total number of users who purchase the product =50%)
5) Refer viral marketing: Will users tell others?
Forwarding rate, conversion rate, K factor
The secrets of the operation can be summed up in the following chart, which is worth saving for review at any time.
