Web3 User Rise Strategies: How to Build Successful Community Marketing

In the Web3 space, many projects experience a rapid rise in a short period, only to quickly lose users and ultimately fall into a "death spiral" and fail. Compared to traditional fields, the impact of the cryptocurrency market on Web3 projects is more direct and severe: during a bull market, there is a flourishing of projects, while a bear market eliminates most of them. These failed projects often share a common characteristic: in a bear market environment, the project token price continues to decline, leading to the failure of token incentives or even harming user interests, ultimately resulting in a significant loss of users.

User growth is a long-term goal of the product, with the core being to build a positive system between the product and users, gradually gaining market share through continuous iteration, and achieving stable rise in user scale and value. In 2022, the number of active addresses for mainstream dApps such as NFT, DeFi, GameFi, and trading markets generally saw a significant decline, while social media applications showed a rapid growth trend. This article will share some thoughts on Web3 user growth.

Basic ideas for Web3 user rise

Although the cycles of the cryptocurrency market have a huge impact on user growth, entrepreneurs should not be constrained by macro factors. The primary task of user growth is to find the "market" that matches the product, namely the "M" in PMF(Product Market Fit). Focus should be on niche markets that align with one's product characteristics and resource advantages, rather than greedily trying to satisfy the entire large market. For Chinese entrepreneurs, giving up the Chinese-speaking community and Chinese user groups is unwise, as it is equivalent to abandoning one-third of the potential user base worldwide.

In terms of product design and development, the minimum viable product ( MVP ) is a very effective concept. It refers to launching a basic function that meets the minimum business closure of core scenarios first, and then continuously iterating and optimizing based on market feedback to ultimately create a product that best meets market demand. Developers should not try to develop a perfect "whole" product in one go, but should focus on solving the most urgent "one" problem for users, simplifying the usage process and building a PMF-compliant MVP. In this process, developers often need to say "no" to many seemingly good ideas.

If PMF is the state of product-market fit, then MVP is an effective method to achieve PMF. Launching an MVP that aligns with PMF into the market is the GTM(Go To Market) strategy. The goal of GTM is to acquire and retain users, and the customer acquisition pattern usually follows the "funnel model": from acquiring new users at the top of the funnel to user conversion and retention at the bottom of the funnel, which is a decreasing process in the number of users.

The GTM strategy of Web3 projects has its unique aspects. "Community" is the core element of Web3 GTM and is an important traffic pool for user growth. The GTM strategy of Web3 is often accompanied by community incentive measures mediated by tokens, as well as corresponding referral programs, where old users are rewarded with tokens for referring new users, and new users may also receive rewards as a result.

PMF(Product Market Fit): Identify the market and meet the real needs

Regarding product-market fit (PMF), it is necessary to consider the following key questions:

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

Research shows that a lack of market demand is the primary reason for the failure of entrepreneurial projects, accounting for up to 42%. Therefore, developers should carefully consider these issues during the product planning stage, rather than waiting until the product is about to launch to start looking for a market. People can easily overlook the necessary preliminary market research due to their own biases.

Finding PMF is a cyclical iterative process, which gradually achieves the best match with the market by continuously collecting feedback and validating. The specific steps include:

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

Accurately identifying the target market and user group will directly determine the extent to which the product can meet user needs. By segmenting the large market to lock in target users, we can establish user profiles and analyze needs. Based on understanding user needs, we must also assess corresponding market opportunities. If user needs in a certain market have been well met, it is advisable not to enter recklessly; on the contrary, we should look for new market opportunities that have not yet been fully satisfied.

2. Develop product strategy, clarify value proposition, highlight differentiation advantages.

Users will inevitably compare different products, so the unique selling points of the product are crucial. The value proposition is to highlight the strengths of the product, allowing users to feel that it can better meet their needs. In product strategy, it is necessary to focus on the following three core questions: Which user need is being prioritized? What unique features does the product have to attract users? How can it stand out in competition?

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

After determining the product strategy and value proposition, it is necessary to carefully select the features that the minimum viable product ( MVP ) should include. The purpose of the MVP is to verify whether the development direction is correct and to create sufficient value in areas recognized by the target users. After completing the MVP development, it should be thoroughly tested among the target user group to ensure that feedback is collected from a sufficient number of target users. Based on accurate user feedback, adjust assumptions and return to the early process to iterate on the MVP until a product that closely matches market demand is designed.

MVP(Minimum Viable Product): rapid iteration, reduce detours

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

• What are the core elements that make up the product/function?
• What specific problems can it solve?
• What are the future iteration plans?
• What is the core value of the product/function?

The concept of MVP is to develop a usable product that reflects the project's innovation points with the least development cost and in the shortest time. Although this product is simple, it can quickly validate ideas. Compared to the approach of pursuing perfection, MVP allows developers to focus their energy on the most important aspects, avoiding excessive resource expenditure on peripheral or auxiliary features.

The MVP is not the final perfect product; its purpose is to quickly bring it to market to test feasibility. By continuously adjusting direction through market validation, it ultimately iterates into a product with market space and profitability. In fact, the MVP doesn't even have to be a mainnet product; it can be a well-designed testnet product to avoid wasting a lot of resources to create a product that the market does not recognize.

Developers should deliver the MVP to the target user group for testing, collect their feedback on the product, and verify whether they have accurately identified the niche market and target users. If the direction is correct, they should quickly increase the product's exposure to allow seed users to start using it.

Developing an MVP requires the ability to simplify complexity, defining key features around core needs, and focusing on the primary path before considering details and auxiliary functions. This ability essentially involves grasping the business rhythm, launching suitable features at the right moment, aiming for relevance rather than abundance.

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

Regarding the GTM strategy for product launch, the following questions need to be considered:

• How do products interact with users?
• Do you need help users learn to use the product?
• What is the frequency of user usage?
• Where to launch the product? Local, domestic, or international market?
• Which channels to collaborate with?
• Are there any restrictions on partnership channels?

The GTM strategy of Web3 not only includes acquiring users but also managing a rich "community". Community members include not only users but also developers, investors, and other stakeholders. Outstanding Web3 projects often have a strong community foundation. Some projects adhere to the "community first" principle, some are led by "community-driven" decisions, and some directly realize "community ownership". Only by continuously meeting user needs and maximizing user experience can a highly engaged and quality community be established.

Web3 has changed the traditional user acquisition model. Token rewards provide new ideas for solving the cold start problem. Project teams do not invest funds in traditional marketing, but use token rewards to attract early users when network effects have not yet emerged. 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 often contribute to the community more significantly than BD personnel in traditional internet projects.

1. Acquire new users

Task-based interactive airdrops are an important GTM strategy, referring to the distribution of tokens to users who complete specific tasks in the project direction, and sometimes additional conditions may be attached. This method can acquire the first batch of seed users at a lower cost and is a commonly used project cold start strategy.

Publishing tasks on the Web3 task interaction platform and guiding users to engage with the product is a win-win situation. The project side gains traffic; users can obtain on-chain activity proofs and token rewards, while accumulating usage experience.

2. Increase activity and retention rate

Relying solely on token incentives is not enough to enhance user stickiness. Since the cryptocurrency market entered a bear market in 2021, "users come quickly and leave quickly" has become a major challenge. Project teams should focus more on how to convert first-time users into loyal users, continuously optimize products, hold community events, and improve user experience. Hosting AMAs on Twitter Space, Discord, and Telegram is a common method to increase community engagement.

3. Recommendation and Self-Propagation

Self-propagation refers to promoting products to more new users through existing users. If existing users have a good experience, they will spontaneously share in the community or recommend to friends, which is the lowest cost and widest coverage customer acquisition method. To encourage users to share, project parties need to design reasonable incentive mechanisms, which can be token rewards or physical gifts such as logo-branded clothing, skateboards, mugs, etc. In addition, analyzing the on-chain behavior data of new and old users also helps improve conversion rates and optimize operational strategies.

The referral program breaks down the costs originally used for advertising into rewards for existing users who refer new users and rewards for new user registrations, that is: Advertising Cost = Rewards for Existing Users + Rewards for New Users. This approach significantly reduces customer acquisition costs and is more efficient than directly purchasing keywords or information flow ads. Although it is not a novel practice, 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 recommendations and self-propagation amplify community strength. These three steps are all aimed at generating revenue, because only with an increase in users can scalable profitability be achieved.