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

In the Web3 space, many projects achieve rapid rise in a short period but then quickly lose users, ultimately falling into a "death spiral." Compared to traditional sectors, the impact of the cryptocurrency market on Web3 projects is more direct and significant. During bull markets, there is a flourishing of projects, while bear markets see many projects struggle to survive. These failing projects often share a common characteristic: during market downturns, the prices of project tokens continue to decline, leading to ineffective incentives and even harming user interests, ultimately resulting in severe user attrition.

User rise is a long-term goal of the product, focusing on building a positive ecosystem between the product and users, gradually expanding market share through continuous iteration, and achieving steady rise in user scale and value. In 2022, active user numbers of mainstream dApps generally saw varying degrees of decline, excluding social media applications. Here are some thoughts on Web3 user rise.

User rise's basic idea

Although market cycles have a significant impact on user growth, entrepreneurs should not be constrained by macro factors. User growth first needs to find a "market" that matches the product, which is the "M" in product market fit (PMF). One should position themselves in a niche market that aligns with their product characteristics and resources, rather than blindly pursuing the entire large market. It is advisable to first deeply cultivate a single market and consider horizontal expansion only after gaining a leading position. For Chinese entrepreneurs, abandoning the Chinese-speaking community and users is unwise, as it is equivalent to giving up a potential user base of one-third of the global population.

In product development, the minimum viable product ( MVP ) is a great concept. It refers to launching the basic functions that can satisfy the core scenario's minimum business loop first, and then iterating and optimizing based on market feedback to ultimately develop a product that best meets market demands. Developers should focus on solving the user's most urgent "one" problem, simplify the usage process, and build an MVP that aligns with product-market fit. During this process, it is often necessary to say "no" to many seemingly good ideas.

If PMF is understood as the state of product-market fit, then MVP is an effective way to achieve PMF. Pushing an MVP that meets PMF to the market is the "Go To Market"(GTM) 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 strategy of Web3 is richer compared to traditional Web2. "Community" is a unique area of Web3 GTM and is an important channel for user growth. The GTM strategy of Web3 projects is typically accompanied by token-based community incentive measures, as well as corresponding referral programs, where old users are incentivized to refer new users through token rewards, and new users may also receive rewards as a result.

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

Regarding product market fit, the following issues need to be considered:

• Why develop this product/feature?
• Can the product/function respond to market demand?
• Why develop this product/feature now instead of later?

According to research by CBInsights, 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 launch to start looking for the market. People tend to overlook necessary market research due to their own biases.

Finding PMF is a cyclical iterative process. By continuously collecting feedback and validating, the product gradually reaches a level that matches the market, and in subsequent validations, specific steps are optimized and improved based on the feedback information to enhance the product's fit with the market.

1. Lock in the target user group and identify unmet needs.

Accurately identifying niche markets and target users will determine the extent to which a product can meet user needs. By segmenting the large market to lock in target user groups, a user profile database can be established and demand analysis conducted. After establishing the target user profiles, the next step is to understand their needs and find corresponding market opportunities. If the user demands in a certain market have already been well met, it is advisable not to enter that market; instead, one should look for new market entry points where demand has not yet been well satisfied.

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

Users will inevitably compare various competitors with your product, so user satisfaction largely depends on the uniqueness of the product. The value proposition is to highlight the product's strengths, allowing users to experience how this product can better meet their needs than competitors. The product strategy needs to answer three core questions: which need to focus on satisfying? What unique features does the product have to attract users? How to win in competition?

3. Filter MVP feature set and complete user requirement testing

After determining the product strategy and value proposition, you should begin to filter the features that the MVP should include. The purpose of the MVP is to determine whether the development direction is correct, and then create sufficient value at points that the target users find valuable. After completing the MVP, it should be thoroughly tested among the target user group to ensure that enough feedback from the target market users is collected. Otherwise, it may lead to the product iteration deviating from the correct direction. Based on precise user feedback, adjust assumptions and return to the early process steps to iterate the MVP until a product that highly matches the market is designed.

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

Regarding the minimum viable product, the following issues need to be considered:

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

MVP means developing a usable product that showcases the highlights and innovations of a project with minimal development cost and in the shortest time. Although this product is simple, it can quickly validate ideas. People often pursue perfection and think that lacking certain features would be terrible, but in reality, that is not the case. Using a non-MVP approach can not only waste a lot of time on minor features during the development of the first version but may also lead to detours in subsequent updates. On the other hand, developing a product with the MVP mindset allows for a focus on more important aspects.

MVP is not the most perfect product; its purpose is to quickly launch to the market to test feasibility. By validating through market demand, continuously adjusting direction, and iterating a product with market space and revenue. In fact, the MVP doesn't even have to be a mainnet product; it can simply be a well-designed testnet product that provides users with a clear experience. This can avoid investing large amounts of funds to create a product that the market does not recognize.

Developers should deliver the MVP to the target user group, collect their feedback on product preferences, and see if they believe there is a need for the product, in order to validate the ideas behind the initial product regarding market and user positioning. If the ideas are correct, they should quickly increase the product's exposure in the market and get seed users to actually use it.

Hold more internal product meetings to discuss which features are unnecessary at the current stage. What remains after removing them is the MVP. Developing the MVP requires the ability to simplify complexity, defining core functions around fundamental needs, first focusing on key path nodes, then refining detail branches and auxiliary functions. This ability to simplify complexity is essentially about grasping the rhythm and adapting to the pace of business and user development: launching corresponding product features at the right time, not striving for completeness, but for correctness.

Go To Market(GTM): acquire new users and retain them, manage the community

Regarding entering the market, the following issues need to be considered:

• How do products interact with users?
• Do you need help learning to use the product?
• How often do users use it?
• Where are the products released? Locally, domestically, or internationally?
• Which channels to cooperate with?
• Are there any restrictions on cooperative channels?

In Web2, GTM usually acquires users through marketing means. In Web3, GTM not only needs to acquire users but also to manage a more enriched "community." The community not only includes users but also developers, investors, and partners, all of whom are stakeholders in Web3 projects. Each successful Web3 project typically has a strong community. Some projects adhere to the "community first" principle, some projects have decisions "led by the community," and some projects directly allow the "community to own" it. Only by continuously meeting user needs and maximizing the subjective utility of the product for users can a community with high engagement and high quality be achieved.

Web3 has changed the user acquisition funnel of traditional Web2. Token rewards provide a new solution to the cold start problem. Development teams are not using funds for traditional marketing to acquire early users, but instead using token rewards to attract users when the network effects are not yet obvious. Rewarding early users for their contributions will attract more new users, who also hope to receive rewards through their contributions. From the perspective of user loyalty, early users of Web3 are more important to the community than the BD personnel of traditional Web2.

1. Acquire new users

Airdrops with task interactions are important GTM initiatives, referring to the distribution of tokens to users who complete specific tasks directed by the project, sometimes with additional conditions, such as needing to hold a specific token. Incentivizing early users to complete task interactions is a common cold-start method for projects, allowing them to acquire 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 side gains traffic; users receive on-chain activity proof and airdrop 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 cryptocurrency market downturn in 2021, a major challenge faced by projects has been "users come quickly, but leave just as fast." User inactivity and retention difficulties are common issues for current Web3 projects. Project teams should focus more on converting first-time users into loyal users, continuously optimizing products, consistently conducting community activities, and providing better user experiences. Holding AMAs on Twitter Space, Discord, and Telegram is a common method to enhance community engagement and heat.

3. Recommendation and Self-Propagation

Self-propagation refers to promoting products to more new users through existing users. If existing users like it and have a good experience, they will spontaneously share or recommend it to friends in the community, which is the lowest-cost and widest way to acquire customers. To encourage users to share, the project team needs to design incentive mechanisms. They can reward project tokens or use physical prizes, such as logo apparel, skateboards, snowboards, mugs, 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 program breaks down the advertising costs originally used for acquiring new users into rewards for existing users who refer others and rewards for new users who register. This greatly lowers customer acquisition costs and is more efficient than directly purchasing keywords, information flow advertisements, etc. While it is not an innovative approach, 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 recommendations and self-broadcasting in large communities. These three steps are all aimed at generating revenue, as only with an increase in users can scalable profitability be achieved. According to TokenTerminal data from 2022, we can rank the profitability of dApps.

![Thoughts on the rise of Web3 users: How to launch a "Go To Market" strategy in the community?