Key points and strategies for Web3 user growth

The success or failure of a Web3 project is often tied to user growth. Many projects attract users quickly at the beginning, but soon face the problem of user churn, and eventually fall into a “death spiral” and fail. Unlike traditional fields, the impact of the cryptocurrency market on Web3 projects is more direct and significant: a hundred flowers bloom in a bull market, and most projects are eliminated in a bear market. These failed projects usually have a common characteristic: in a bear market environment, the price of the project’s token continues to fall, resulting in the failure of token incentives or even the damage to the interests of users, and ultimately causing serious user churn.

User growth is the long-term goal of the product, and the core lies in building a benign interaction system between the product and the user, and gradually expanding the market share through continuous iterative optimization of the product, so as to achieve the continuous growth of user scale and value. In 2022, the number of active users in most Web3 app categories has declined to varying degrees, but social media apps have shown a rapid growth trend. Here are some thoughts on Web3 user growth strategies.

Basic Strategies for Web3 User Rise

While the cryptocurrency market cycle has a significant impact on user growth, entrepreneurs should not be constrained by macro factors. The first task of user growth is to find the “market” that matches the product, that is, the “M” in the product-market matching (PMF). It is important to accurately position the market segment suitable for itself according to product characteristics and resource advantages, rather than blindly pursuing the entire market. It is recommended to deepen the single market first, and then consider horizontal expansion after gaining a leading position. For Chinese entrepreneurs, it is unwise to give up the Chinese-speaking community and user group that they are good at, which is equivalent to giving up one-third of the world’s potential customers.

When it comes to product development, the minimum viable product (MVP) is a good idea. It refers to the first launch of products with core functions that can meet the most basic business closed-loop, and then continuously iterate and optimize according to market feedback, and finally form the most suitable products for the market and user needs. Developers should avoid pursuing the perfect “whole” product from the beginning, and instead focus on solving the most pressing “one” problem for users, simplifying the use process, and creating an MVP product that complies with PMF. In this process, developers often need to say “no” to many seemingly good ideas.

If PMF is the ideal state of matching products with the market, then MVP is an effective way to achieve PMF. Bringing PMF-compliant MVPs to market is what is known as the GTM(Go To Market) strategy. The goal of GTM is to acquire and retain users, which usually follows the “funnel model”: from customer acquisition at the top of the funnel to user conversion and retention at the bottom of the funnel, it is a process of decreasing the number of users.

The GTM of traditional Web2 projects includes pricing, marketing, and sales, and focuses on metrics such as website click-through rate, average user revenue, and time to order. While the Web2 GTM framework provides a mature approach, Web3 GTM is much richer. “Community” is a unique area of Web3 GTM and is an important channel for user growth. Web3’s GTM strategy is often accompanied by token-based community incentives, as well as a corresponding referral program, where old users are rewarded with tokens for referring new users, and new users may also be rewarded for this.

! [Thoughts on Web3 User Growth: How to Start a “Go To Market” Strategy in the Community?] ](https://img-cdn.gateio.im/webp-social/moments-84adbf85ef0a381c7929896a6e89b9e7.webp)

PMF: Identify the market and meet the real demand

Regarding the (PMF) of product-market fit, the following questions need to be considered:

1. Why develop this product/feature?
2. Can the product/feature meet the market demand?
3. Why develop this product/feature now instead of in the future?

According to the survey, lack of market demand is the top reason for the failure of entrepreneurial projects, accounting for 42%, far exceeding factors such as lack of funds and unsuitable teams. Therefore, developers should carefully consider this issue at the product planning stage, rather than waiting until the product is about to go live to start looking for a market. It’s easy to overlook the necessary market research work because of personal bias and stubbornness.

Finding a PMF is a cyclical and iterative process. By continuously collecting feedback and verifying, the product gradually reaches the degree of matching with the market, and in the subsequent verification, it returns specific steps according to the feedback information to optimize and improve, so as to improve the fit between the product and the market.

Key steps include:

1. Identify the niche market, determine the target user group, and discover unmet needs.
2. Develop a product strategy, clarify the value proposition, and highlight differentiated advantages and core competitiveness
3. Selected MVP feature set, and finally completed user requirement testing.

! [Thoughts on Web3 User Growth: How to Start a “Go To Market” Strategy in the Community?] ](https://img-cdn.gateio.im/webp-social/moments-447278c6397646b95ffc86604851c641.webp)

MVP: Iterate quickly and reduce detours

The core idea of the minimum viable product (MVP) is to develop a usable product that reflects the highlights and innovations of the project with minimal development costs and in the shortest amount of time. This minimalist product enables quick validation of ideas. People tend to strive for perfection and think that missing certain features would be terrible, but in reality this is not the case. Taking a non-MVP approach can not only cost a lot of time on minor features in the first release, but it can also be prone to detours in subsequent updates. Developing a product with an MVP mindset allows you to focus your attention on what matters most.

The MVP is not the most perfect product, and its purpose is to get to market quickly to test the feasibility. Through the verification of market demand, we will constantly adjust the direction, and finally iterate a product with market space and protocol revenue. In fact, the MVP doesn’t even need to be a mainnet product, it just needs to be a well-designed testnet product that can be clearly experienced by users. In this way, you can avoid investing a lot of money to make a product that is not recognized by the market.

Developers should test the assumptions about the market and user base behind the initial product by handing out the MVP to the target user group, gathering feedback on their product preferences and understanding whether they really need the product. If the assumptions are correct, it is important to quickly increase the visibility of the product in the market so that these seed users can actually start using the product.

Hold more internal product meetings to discuss which features are not necessary at this stage. Once these features are removed, all that remains is the MVP. Developing an MVP requires the ability to cut down the complex, define key features around core requirements, get the main nodes right first, and then consider the details of branching and accessibility. This ability to simplify the complex is actually grasping the rhythm and conforming to the rhythm of business and user development: launching the corresponding product functions at the right time, not seeking more but complete, but seeking accuracy.

! [Thoughts on Web3 User Growth: How to Start a “Go To Market” Strategy in the Community?] ](https://img-cdn.gateio.im/webp-social/moments-958245cab8744790ebe2316ef3597875.webp)

GTM: Attract new ones and keep old ones, and run a good community

In Web3, GTM is often used to acquire users and run a richer “community” through marketing. The community includes not only users, but also developers, investors, and partners, all of whom are stakeholders in Web3 projects. Every good Web3 project usually has a strong community. Some projects are “community-first”, some are “community-driven” in decision-making, and some are directly “community-owned”. Only by continuously meeting the needs of users and maximizing the subjective utility of users on the product can we have a high-engagement and high-quality community.

Web3 has changed the user acquisition model of traditional Web2. Token rewards provide a new solution to the problem of cold starts. Instead of investing money in traditional marketing to acquire early adopters, the development team uses token rewards to attract users at a stage where the network effect is not yet apparent. Rewarding users for their early contributions attracts more new users who also want to be rewarded for their contributions. From the perspective of user loyalty, the contribution of early Web3 users to the community is more important than that of traditional Web2 BD personnel.

The key points of the GTM strategy include:

1. Acquire new users: Use the airdrop activity of task interaction to publish tasks on the Web3 task platform to guide users to participate in product interaction.

2. Increase engagement and retention: Continuously optimize products, host community events, and provide a better user experience. Holding AMAs on Twitter Space, Discord, and Telegram is a common way to increase community activity.

3. Referrals & Self-Communication: Design incentives to encourage existing users to recommend products to their social circles. Project tokens can be rewarded, or physical giveaways can be employed. Analyze user on-chain behavior data to improve conversion rates and adjust operational strategies.

Acquiring new users is the traffic entrance, improving the retention rate depends on the value of the product, and promotion and self-dissemination amplify the power of the community. All three of these steps are designed to generate revenue, as profitability at scale can only be achieved if users increase. According to market data, the profitability of different types of dApps varies significantly, and developers should pay attention to the positioning and development potential of their projects in the industry.