Web3 User Rise Strategy: How to Build a High-Quality Community

Web3 projects often face the dilemma of rapid user growth followed by swift loss. Unlike traditional sectors, the market cycles of cryptocurrencies have a significant impact on Web3 projects; during bull markets, projects thrive, while in bear markets, many projects struggle to survive. In bear market conditions, many projects see a continuous decline in token prices, incentive measures become ineffective, and even harm user interests, leading to a massive loss of users.

To achieve long-term stable user growth, the core lies in continuously improving the ecosystem between the product and users, expanding market share through continuous iteration, and steadily enhancing user scale and value. In 2022, with the exception of social media applications, the number of active users for mainstream dApps such as NFTs, DeFi, and GameFi has seen varying degrees of decline. This article will explore how Web3 projects can effectively promote user growth.

Basic Ideas for Web3 User Growth

Although the cryptocurrency market cycles have a significant impact on user growth, entrepreneurs should not be limited by macro factors. The primary task for user growth is to identify the target market for the product, specifically the "market" in product-market fit (PMF). One should not blindly pursue the entire market, but instead position suitable niche markets based on product characteristics and resource advantages. For Chinese entrepreneurs, it is unwise to abandon the familiar Chinese-speaking community and user base, as this is equivalent to giving up one-third of the potential customer base globally.

In product design and development, the minimum viable product ( MVP ) is a great concept. It refers to launching the basic functions that can meet the core scenario's minimum business loop first, and then continuously iterating and optimizing based on market feedback, ultimately creating a product that best meets market demands. Developers should focus on solving the most urgent "one" problem for users, simplifying the usage process, and building an MVP product that aligns with PMF. During this process, it often requires saying "no" to many good ideas.

If PMF is the ideal state of product-market fit, then MVP is an effective way to achieve PMF. Launching an MVP that meets PMF into the market is the GTM( Go To Market) strategy. The goal of GTM is to acquire and retain users, usually following the "funnel model": from acquiring new customers at the top of the funnel to user conversion and retention at the bottom of the funnel, it is a process of decreasing user numbers.

The GTM of traditional Web2 projects includes aspects such as pricing, marketing, and sales, focusing on metrics like website click-through rates and average user revenue. In contrast, the GTM of Web3 is more enriched in meaning. "Community" is a unique domain of Web3 GTM and an important channel for user growth. Web3 GTM strategies are often accompanied by token-based community incentive measures and corresponding referral programs, where existing users are rewarded with tokens for referring new users, who may also receive rewards as a result.

PMF: Identify the market, satisfy real needs

When considering the product-market fit ( PMF ), it is necessary to think about the following questions:

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

According to a survey by CBInsights, the lack of market demand is the primary reason for the failure of startup projects, accounting for as much as 42%. Therefore, developers should consider these issues during the product planning stage, rather than waiting until the product is about to be launched to look for the market. People tend to overlook the necessary market research work in the early stages 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. In subsequent validations, specific steps are returned based on feedback information for optimization and improvement, in order to enhance the product's fit with the market.

1. Lock in target segments and user groups, 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 target user groups, a user profile library can be established and demand analysis conducted. After establishing the target user profile, the next step is to understand their needs. In attempting to create value for users, it is also essential to identify good market opportunities corresponding to these needs. If user needs in a certain market have already been well met, it is best not to enter that market, but to seek new market opportunities instead. When it is found that user needs in a certain market have not been well met, consideration can be given to entering that market.

2. Develop product strategy, clarify value proposition, highlight differentiation and core competitiveness

Users inevitably compare various competing products with yours, so user satisfaction largely depends on the uniqueness of the product. The so-called value proposition is to highlight the product's strengths, allowing users to experience how this product can better meet their needs than competing products. Among the various needs that the product can satisfy, which one should we focus on? What unique features does the product have to attract users? How can the product excel in competition? These are the three core questions that need to be answered when formulating product strategy.

3. Selected MVP feature set for user demand testing

Once the product strategy and value proposition are clarified, the next step should be to choose the features that the minimum viable product ( MVP ) should include. It can be a very frustrating experience for developers to spend a lot of time and energy working hard only to find that users simply do not like the product. After repeated attempts, it is likely that funding will be exhausted. The purpose of the MVP is to determine whether the development direction is correct and then to create sufficient value in areas that users find valuable. After completing the MVP, it should be thoroughly tested within the target user group to ensure that enough feedback is collected from users in the target market. Otherwise, that feedback may lead the product iteration in the wrong direction. Based on accurate user feedback, readjust assumptions and return to the earlier process steps to iterate the MVP until a product that closely matches the market is designed.

MVP: Rapid iteration, reducing detours

Regarding the minimum viable product ( MVP ), the main questions to consider are:

• What components make up the product/function?
• What problems can it solve?
• What are the future iteration plans for this feature?
• What is the value of the product/function?

The core of MVP is to develop a usable product that can showcase the project's highlights and innovations with minimal development cost and in the shortest time. Although this product is simple, it can quickly validate ideas. People often pursue perfection, believing that the absence of a certain feature would be disastrous, but in reality, it may not cause any problems. If the MVP approach is not adopted, it is likely to waste a lot of time on secondary features during the development of the first version, and continue to take detours in subsequent version updates. However, when we start developing products with the MVP mindset, we can focus on more important aspects.

MVP is not the most perfect product; its purpose is to quickly launch into the market to test feasibility. By verifying market demand, it continuously adjusts its direction and ultimately iterates into 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 provides users with a clear experience. This approach can avoid investing a large amount of capital into a product that the market does not accept.

Developers should deliver the MVP to the target user group and collect their feedback on product preferences to see if they believe there is a need for this product, thus validating the assumptions behind the initial product regarding the niche market and target user group. If the assumptions are correct, the next step is to quickly increase the product's exposure in the market, allowing seed users to start using the product.

We need to hold more internal product meetings to discuss which features are unnecessary at this stage. After cutting these features, what remains is the MVP. Creating an MVP requires the ability to simplify complexity, defining core functions around fundamental needs, and ensuring that the key nodes on the critical path are well done before perfecting the details and other auxiliary functions. This ability to simplify complexity is essentially about grasping the rhythm, which means launching product features that align with business and user development at the right time, focusing not on quantity but on appropriateness.

GTM: Attract New Users and Retain Old Ones, Manage Community

Regarding the market entry strategy (GTM), the main questions to consider are:

• How does the product interact with users?
• Do you need help learning to use the product?
• How often do users use it?
• Where is the product launched? Locally, domestically, or internationally?
• Which channels to cooperate with?
• Are there any restrictions on cooperation 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 includes not only users but also developers, investors, and partners, all of whom are stakeholders in Web3 projects. Every successful Web3 project typically has a strong community. Some projects adhere to the "community-first" principle, some have decisions that are "community-led," and others directly allow the "community to own". Only by continuously meeting user needs and maximizing the subjective utility of the product for users can a highly engaged and high-quality community be achieved.

In the traditional sense, GTM refers to pushing products to market after development is complete through advertising, launch events, channel training, and other methods. Web3 has changed the traditional Web2 marketing funnel model. Token rewards provide a new approach to solving the cold start problem. Development teams are not investing funds in traditional marketing to acquire early users, but rather using token rewards to attract users during a phase when network effects are not yet evident. Rewarding early contributions from users will attract more new users, who also hope to earn rewards through their contributions. From the perspective of user loyalty, early users in Web3 are more important to community contribution than traditional Web2 business development personnel.

1. Acquire new users

Airdrops with task interactions are an important GTM initiative. The project directs users to distribute tokens, and users need to complete specific tasks to have a chance to receive tokens, sometimes with additional conditions, such as having to hold certain tokens. Incentivizing early users to complete task interactions is a common method for project cold starts, allowing for the acquisition of initial seed users at a lower cost.

Publishing tasks on the Web3 task interaction platform and guiding users to participate in product interactions is a win-win strategy. For project parties, it generates traffic; for users, they can obtain on-chain activity proof and airdrop tokens, while also accumulating platform usage experience during the task interaction process.

2. Increase activity and retention rate

Although token incentives can attract users, relying solely on them is not enough to increase user stickiness. Since the cryptocurrency market entered a bear market in 2021, a major challenge for operating projects has been that "users come quickly and leave just as fast." User inactivity and retention difficulties are significant challenges for current Web3 projects. Project teams should invest more effort in converting first-time users into loyal users, continuously optimizing products, and consistently conducting community activities to provide a better experience for users. Holding AMAs on Twitter Spaces, Discord, and Telegram is a common method to enhance community activity and engagement.

3. Recommendation and Self-Propagation

Self-propagation ( Referral ) refers to the product being spread through existing users.