This article is based on the speech “AARRR model facing new challenges” by Zhang Tao, vice president of Shence Data. The following will be introduced to you:

  • Problems solved by AARRR model in the past
  • As the environment changes, so do the problems
  • How to review AARRR model to adapt to the new situation?
  • Some thoughts on the new situation, from user growth to product value growth

This paper mainly shares with you from these four aspects, how to reconsider AARRR model in the new situation, thinking about how enterprises “stand out” in the fierce competition in the Internet industry, leading the industry wave of “return to value, product growth”.

1. Problems solved by AARRR model in the past

1. What is AARRR model?

AARRR model is essentially an indicator model, which divides the user life cycle into five stages: Acquisition → Activation → Retention → Retention → Revenue →Referral. Based on this model, the company’s scattered indicators are divided into five stages. Provide a perspective to observe and evaluate the operation status of the company’s customers, and provide a more accurate and effective basis for analyzing problems.

2. AARRR model is the best choice in traffic bonus period — “80 cents” cost to acquire users?

Ten years ago, the well-known Android mobile phone management software Wandoujia enjoyed the flow dividend. At that time, the concepts of buying and selling users and acquiring customer channels had not yet taken shape. It was very cheap to buy a user on Android, and the intermediate price difference between the two sides was only 80 cents. You can’t have users that cost 80 cents to acquire. In recent years, Pindoduo has become extremely popular and created a miracle in the era of mobile Internet in which it can acquire a user at the lowest cost of 90 cents in the wechat system. However, its cost of acquiring customers has skyrocketed in the following years and it is facing great challenges.

In the past, the market competition is small, customers are quite easy, Tencent did not become a domestic ToC heavyweight enterprise, ToC enterprise user ceiling is unlimited, as long as a compass or flashlight can be very easy to get more than 100,000 users, enterprises only need to consider the user into the “pool”, How to carry out step by step activation, retention, monetization, sharing transformation, etc.

Essentially because “entrance” get the user is too simple, and the user does not need to consider for the guest difficulty grail ceiling limit, only need to solve the problem of transformation of the user, so AARRR model is the best choice of the flow of dividend period, through analyze customer life cycle model index, grasp the customer situation, improving customer retention rate.

Second, as the environment changes, so will the problems

At present, the Domestic Internet environment has undergone great changes, mainly reflected in four aspects:

1. More and more powerful competitors

In 2017, the number of practitioners in the Internet industry exceeded 1 million, with a sharp increase in competitors. In addition, entrepreneurs find that there are a large number of powerful giants in e-commerce, social networking, content, tools and other tracks when looking for investors. The market is basically saturated and the competition in the industry is extremely fierce.

2. Changes in users’ access to new products

In the past, APP developers had to obtain customers through APP stores. As long as they recommended or promoted mobile terminals, the number of new users would increase rapidly. But now, social networks and “we media” have become the main traffic, and APP advertisements can be distributed through Tiktok, Instagram and video apps. ASO is no longer the key measure most valued by the boss.

3. Users are no longer fresh

It used to be that in any field, if you satisfied novelty, you were a trailblazer. For example, more than ten years ago, customers could only shop online on THE PC, but suddenly someone found that they could also shop online on the mobile terminal, so they could seize the opportunity to occupy the mobile terminal traffic market. Inke Live was also the first company to broadcast live on the mobile terminal, immediately occupying the live broadcast market on the mobile Internet. But now the market is saturated in various industries, users no longer have a sense of freshness, products to do is not fresher, but stronger.

Every year, there are some phenomenon products, such as the two-dimensional filter developed by Toutiao, which can change photos from real portraits to partial two-dimensional style. Momo developed AI face changing, changing their own face to the face of celebrities, these phenomenon products explode quickly and have high traffic, but will soon disappear. As consumers demand more and more, and demand more and more, they have to be stronger to conquer the market, and temporary novelty is no longer enough to attract retention.

4. Less time for users

At least 50 percent of users’ battery life is reserved for wechat, Weibo, Douyin or some of the frequently used apps, leaving them no time to explore and consume new apps.

As the environment changes, we will meet even greater challenges:

1. Slow growth, no money to burn

At present, a new user in some industries has reached 1500~2000 yuan, and even more than 2000 yuan in the field of online education. Such high cost of acquiring customers makes enterprises flinch.

2. Low user migration cost

In the 2G and 3G era, it is necessary to connect wifi to download high-traffic apps, but now traffic is not so precious. In 2019, the iOS13 update will remove the restriction that applications over 200MB cannot be downloaded under mobile networks. When the user experience product satisfaction is low, it will immediately transfer to other products, and the migration cost will become low, and it is difficult to retain customers. There is also a convenient registration mechanism. Wechat one-click login APP provides great operational convenience for user migration.

3. High pressure of mode verification

In the past, the Internet industry, generally do not consider profit first, first of all, the most important is to get customers, as long as there are users is successful. But now, there is a lot of pressure on model verification, and investors care about whether the product can make money in the first year, which is more urgent than whether the product can make a profit in the first year, because many investors have a very simple idea: “if a product can’t make money in the first year, the model can hardly survive”.

Thirdly, the AARRR model should be reviewed to adapt to the new situation

In the context of environmental changes and great challenges, how do we re-view AARRR model and adapt to the Internet environment of the new era? In the early stage of the industry, no clear business model has been formed. Enterprises generally acquire customers first, and then rely on short-term operations to maintain user scale. The general AARRR model is divided into five steps: user acquisition → user activation → user retention → revenue conversion → sharing and new recruitment, which is a linear flow funnel model.

Now the business model is gradually clear, the cost of attracting new customers has become high, and the difficulty of operation and maintenance has increased. The simple growth of the number of users has become a “false proposition”.

1. User acquisition: products with unqualified coefficient of increase are difficult to sustain

In recent years, the hot products in the venture capital circle are all projects with customer attributes or good coefficient of increase. For example, in social e-commerce, each user has a “social circle”, and the operation only needs to focus on a “point”, which can affect a “surface” of users, greatly reducing the cost of acquiring customers.

2. User activation: Diversified product value propositions in the trend of “big” applications

User activation is to find core value experience points for users after acquiring users, so that users can recognize the product and retain it for a long time.

Domestic products have a feature that any product will eventually become a platform to operate multiple business lines and diversified product value propositions. For example, keep, a fitness APP, can record fitness routine, check fitness information, shop, experience offline gyms, and even link relevant hardware devices through the APP. The platform provides users with a lot of rich functions, but when a new user enters the APP, he or she cannot directly learn the core value expressed by the product. This is the choice many enterprises face after expanding their business lines. 3. Retention: Product value boundary of retention “operation” Throughout the transformation process of user growth, user operation has a boundary, which is limited by product value.

The basic retention law — 531, 50 percent next day, 30 percent next week, and 10 percent next month — obviously doesn’t apply to stranger dating apps.

In the following case, a stranger social software still retained nearly 20% after 60 days of operation, which is an excellent product in terms of data. According to this model, daily activity and monthly activity should gradually increase, but two years later, daily activity hit a bottleneck and did not increase significantly. The basic assumption for next month retention is that when a user is willing to use the product for 30 days, he has fully experienced the value of the product, and 60, 90, 120 days…… Stay long term.

However, there is a boundary to this hypothesis. In stranger social software, although retention performed well at 60 days, it extended the cycle line and after 120 days retention dropped sharply to 10% for the second time. Why? Because the data in the early stage of the product is very “beautiful”, I found in the communication with the operation personnel that in the early stage, users use the product to socialize, and in the later stage, after the two parties confirm the relationship, they exchange wechat, and finally the customer transfers. The value boundary of this social product for strangers is about 120 days. After 120 days, the value of the product is exhausted, and the problem cannot be solved only through operation.

So the retention operation itself has a very clear boundary, and that boundary is the ceiling of product value.

Huang Youcan, co-founder of Three Classes, mentioned in The Light of Operation that the product is responsible for defining and providing long-term user value, while the operation is responsible for creating short-term user value and assisting the product mechanism to improve long-term value. This sentence reminds all operations students to be clear about the actual value of operations to the company.

4. Monetization: Payment is the litmus test of value

The long-term monetization model of the product can only be operated if users pay and monetize.

5. Share and Pull New: Sustainable product sharing mechanism & Ecology

From 2017 to 2018, the homogenization of sharing and pulling new means of enterprises in the industry is very serious. Even the operation personnel, known as “sharing and pulling new experts”, have the same means to stimulate users to share products through small games, lottery, red envelopes and other forms, so as to achieve the fission effect and complete pulling new. In this case, attract users are generally “wool pulling”, really retained users very few, only a “beautiful” data, the real value is very low.

Based on the above environmental changes and severe situation, I believe that the operation mode of AARRR model should be improved in China’s Internet industry:


(1) Sharing and user acquisition are equally important and should be combined into one system to think about the topic of user acquisition

(2) The user needs to activate again after the first activation. Multiple product lines to provide more value to the customer, and when the customer has played through the first cycle and the value of the product is exhausted, a second activation is required. And how to activate, transform, retain, and continue on to the next cycle in the subsequent process.

The improved AARRR model changes from a pure process funnel model to a growth iterative model, constantly exposing users to new product values. Do conversion and retention based on one product value point first, then create new product value as users approach the first product value point boundary, or guide users to experience other product value, and continue to complete the next step of conversion and retention.

From the first activation to the second activation is the most difficult gap to cross. Only by doing a good job in continuous activation, providing customers with the guide path of experience products and expanding the boundary value of products can enterprises keep customers for a long time.

Based on the improved AARRR model, the whole process is divided into the following three levels:

(1) External embodiment of product value: user acquisition, sharing and innovation;

(2) Effective delivery of product value: user activation;

(3) Continuous expression of product value: user retention, revenue conversion.

The user’s life cycle is like a process of “falling in love”. The first level is acquaintance, the second level is confession and marriage proposal, and the third level is a long life after marriage.

Fourth, return to core value, from user growth to product value growth

(I) External embodiment of product value: user acquisition, sharing and new

Event marketing, channel creation, business partnerships, etc., are all about acquiring users. How do you attract users to your product and guide them to improve retention?

1. Direct Scenario: The brand story can come later

A large number of advertisements are put on popular social apps such as Weibo, Douyin and Instagram. However, with the improvement of technology and user demand, in the past two years, Instagram often does not put the brand story or logo of the whole APP, but creates a specific scene to attract users and gain favor.

For example, when a user visits an Instagram page for a game, the APP is actually quite complex, but its promotion is only in one specific scene, telling the user that “you can turn your head into Iron Man!” Users are immediately drawn to the specific scene and enter the page. Direct scene, no longer let users listen to the stereotypical brand story, directly show the product connotation, attract customers to get intuitive experience, after attracting new customers to complete the transfer of corporate culture background for customers to strengthen contact, improve retention rate.

2. Focus on subsequent transformations: Make sure you’re getting value for every dollar

User acquisition is just as important as sharing, and keep an eye on subsequent conversions to make sure you’re getting your money’s worth. If the Marketing Department and the channel department only focus on attracting new users and do not understand the subsequent activation, conversion and payment of new users, then the whole process is incomplete and the real-time experience status of users is not grasped, so as to ensure the maximization of the value of attracting new activities.

3. Small details bring big improvements: Focus on data and iterate quickly

After analyzing the background of App Store data, it is found that the conversion rate of details page is only about 10%. The entrance of App Store is very hidden. When users have searched, classified, ranked and found details page, they show great willingness to use it. However, because the details are not attractive, users do not enter the details page to browse the content.

To this end, the company has optimized the title, illustration and application introduction, resulting in a great increase in the conversion rate. The efficient and low-cost improvement method is in sharp contrast to the way of “throwing money” to solve the problem. The gap between the two is “whether to face the problem, use your head and think deeply”. Problems that can be solved at little or no cost simply by thinking deeply don’t cost a lot of money.

In the whole process of sharing fission, the following four key steps need to be completed and optimized for efficient dissemination of fission pages:

The first step: from the perspective of communicators, how to cultivate more quality communicators to share information;

The second step: from the perspective of communication, how to improve the opening rate of information transmission;

Step 3: from the perspective of the recipient, how to improve the recipient’s new transformation;

Step 4: From the fission point of view, how to improve the receiver’s fission propagation behavior.

In real operation, many companies only pay attention to the first and the fourth step, in the process of product research and development, to be able to test only the disseminator and fission results, two middle link is limited testing, unable to accurately verify, so in the testing process can avoid transmission and receiver two link, finally cannot get effective dissemination of fission.

For example, how to increase the open rate of spreading information? Before sharing, the operation personnel can conduct experiments in a small area to verify the effect of sharing. The operation personnel can plan details such as the title, pictures and copywriting, such as how the title is displayed in moments, whether the length of the title is appropriate, whether the graphic collocation is reasonable and whether the copywriting is attractive. Different user groups to share to the scene after should present a different page and open the page after the user whether to pay, etc., can be verified through data monitoring means, the operating personnel should put all situation for “distributors” planning is clear, “distributors” just do as communication effect can achieve what we want.

The spread fission effect formula is shown in the figure above. Only by increasing the intermediate conversion rate can fission be achieved and new users can be acquired.

So how do you stimulate more sharing?

1. Build “light” content

Dai Yusen, co-founder of Jumei Youpin, summed up content that is more easily shared by users as “light packaging”. For example, scallops in moments of friends clock 432 days, keep running 3.2 kilometers, wechat reading 100 books and other information, sharing themselves do not need to pay high cost, can share information in social circle, express attitude and lifestyle, make themselves superior to others. What is “reload”? For example, the social circle shares a photo of reading in a Turkish library, a picture of a five-star hotel and other high-cost sharing content. All the above content sharing results from the superiority of the product value to users and stimulate sharing.

2. Let users tell you the value of your product

For example, iOS and Android have a similar feature to add buried spot monitoring screenshots to apps. What’s the “surprise” of the product? Users capture the screen to save or share the screen capture interface. By recording the screen capture interface in the background, they can learn more new product values that users are interested in. For example, when using Tuhu Car maintenance APP, “My vehicle” needs to be added. Some users want to share their vehicle list, and the interface is spread through sharing. Only then do developers find that a function template has the value of sharing and spreading!

(II) Effective transmission of product value: user activation

1. Boot new users

One customer had a problem with a seven-point difference between the number of new user activations and the number of visitors to the front page. Why such a big difference? Experience after the products, we found that the new user guide to slide 4 screen, slide to the last screen to enter the home page, the front three did not enter the home page of the portal page, and our customers reflect unable to enter the home page, because the former three page in the new user guide can lead to loss of users, customers don’t believe at first “users have installed the APP, Show use intention is very strong, because this does not enter the home page?”

In the end, the answer turned out to be exactly what we expected. After we added the home page button to the first three pages, the conversion rate of new users to the home page immediately increased by 98.9%. In the process of designing and testing products, developers and bosses have strong motivation to experience the whole process, but users may give up for some unknown reason. It is a necessary prerequisite to provide convenient access for customers.

2. aha moment

Aha moment, to put it simply, is to get the user to find something exciting about the product, to use a feature for the first time, and to feel that it meets or exceeds their expectations.

3. Create the first exchange of value

Generally speaking, the three steps mentioned above are needed to activate users, but in the fierce competition environment of the Internet industry, the key problem is that the product is too cool. When users experience the product, multiple blocking pop-ups pop up on the interface to divert users’ attention. As a platform owner, how can users get the core value of the product when they experience the product for the first time and realize retention conversion?

There is a simple model to solve the problem of too many cool points, which is to re-analyze product opportunities and classify all lines of business into functional modules by penetration and frequency.

  • Penetration rate: how many monthly active users use this functional module based on monthly active penetration rate;
  • Frequency: the number of times a user uses this function module in a month.

As shown in the figure above, permeability as X-axis and frequency as Y-axis divide the functional module into four quadrants:

Quadrant 1: high permeability and frequency. It shows that existing user groups have clear product needs, just need and repeated use. Under normal circumstances, when guiding users to experience product functions for the first time, users should first experience the product of this module, and then establish trust relationship and retain users.

Quadrant 2: Low permeability, high frequency. Indicates that the number of users in the current market is small, but as long as the users who use this function will use it repeatedly, this function is suitable for some users personalized recommendation. Recommend products with similar functions for such user groups, analyze the behavior data of new users using products by using simple Lookalike technology or user portraits, find new functions matching the function module of quadrant 2, and guide users to activate the second function.

Quadrant 3: Low permeability, low frequency. It is not recommended to recommend this quadrant function module because it is time-consuming and has low value.

Quadrant 4: High permeability, low frequency. This quadrant function is applicable to most groups. Although the frequency is low, users generally experience this function and it has recommendation value. When no matching type can be found through Lookalike, the fourth quadrant function module is recommended for the user.

Based on the characteristics of penetration rate and frequency, product values are classified and recommended for users through functional modules, personalized activation guidance path is planned, and the most appropriate activation value is found to achieve a win-win situation.

(III) Continuous expression of product value: user retention and revenue transformation

The value performance of a product ultimately comes in two areas: retention and monetization.

The first aspect is to expand intermediate retention. In the figure above, yellow represents retention, building a user growth system, completing recall strategies, campaign operations, etc.

The second aspect, expand product value boundary. As shown in the figure above, green represents the boundary of product value, which cannot be broken by the operation students. Therefore, product research and development is required to expand the space of product value and provide the possibility for user retention and transformation.


To sum up, enterprises should continuously transfer value internally, establish user growth path, let users form the habit of using products, and finally retain; Look for external value-added value, create new use scenarios, enhance function expansion, expand product value space, and extend the boundary cycle. Both internal and external aspects are equally important. Internal students need to operate and constantly touch the boundary, while external students need products to expand the value of products and make full use of user flow.

conclusion

After a series of studies on the problems, changes and solutions faced by the AARRR model, the improved AARRR model can be divided into the following three levels:

On the left is the means of operation, and on the right is the value of product. All means of operation ultimately return to the product itself, that is, “production and transportation are integrated”. Daily means are aligned and integrated with each other’s goals.

With the change of the industry, AARRR model is no longer a simple linear funnel, but a growth iteration based on the continuous expansion of product value, and constantly help users experience new product value. Only by crossing the gap, can AARRR model be truly used to achieve corporate profits in the New era of Chinese Internet environment.

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