Web3 User Rise Strategy: Finding Product-Market Fit and Launching Community Marketing

In the Web3 space, many projects experience a good rise in the short term but face the problem of rapid user loss. Compared to traditional industries, the impact of the cryptocurrency market on Web3 projects is more direct and profound. Projects thrive during bull markets, while bear markets can lead to the demise of most projects. A common characteristic of this phenomenon is that in a bear market environment, the prices of project tokens continue to decline, rendering token incentives ineffective or even harming user interests, ultimately leading to a large loss of users.

User rise as a long-term goal of the product lies in building an ecosystem between the product and users, continuously iterating to gain market share and achieve sustained rise in user scale and value. In 2022, the number of active addresses for leading applications in multiple Web3 fields saw a significant decline, while social media applications showed a rapid rise trend.

Basic Ideas for Web3 User Rise

Although the cyclical nature of the cryptocurrency market has a significant impact on user growth, entrepreneurs should not be constrained by macro factors. The primary task of user growth is to find a market that matches the product, that is to achieve Product Market Fit, PMF. It is important to focus on specific market segments rather than trying to satisfy the entire market. For Chinese entrepreneurs, it is unwise to give up the familiar Chinese-speaking community and user base, as this is equivalent to abandoning one-third of the potential user base globally.

In product development, the concept of Minimum Viable Product ( (MVP) is worth adopting. It emphasizes the importance of first launching a basic version with core functionalities that can meet the most fundamental business loop, and then iterating and optimizing based on market feedback. Developers should avoid trying to create a "perfect" product from the start and instead focus on solving the most urgent problem for users, simplifying the usage process, and building an MVP that aligns with PMF.

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

Compared to the GTM strategies of traditional Web2 projects, the GTM connotation of Web3 is richer. "Community" has become a unique domain of Web3 GTM and is a key traffic pool for user growth. Web3's GTM strategies are usually accompanied by token-based community incentive measures and corresponding referral programs, where existing users are incentivized with tokens to bring in new users, who may also receive rewards as a result.

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

When considering product-market fit, it's important to think about the following key questions:

1. What is the motivation for developing this product or feature?
2. Can the product or feature meet market demand?
3. Why choose to develop this product or feature now instead of later?

According to CBInsights' research, the lack of market demand is the primary reason for the failure of startup projects, accounting for as much as 42%. Therefore, developers should fully consider market demand during the product planning stage, rather than waiting until the product is about to launch to start looking for the market. People are prone to overlook the necessary market research work in the early stages due to their own biases.

Finding PMF is a cyclical iterative process that gradually achieves the best product-market fit through continuous feedback collection and validation. In the subsequent validation process, specific steps can be revisited and optimized based on feedback to improve product and market alignment.

1. Identify the niche market, target the user group, and discover unmet needs.

Accurately identifying the niche market and target users is key to determining whether a product can meet user needs. By segmenting the larger market to identify the target user group, a user profile database can be established and demand analysis conducted. After understanding the target user needs, it is also necessary to evaluate whether these needs represent good market opportunities. If user needs in a certain market are already well met, then new market opportunities should be sought.

2. Develop product strategy, define 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 value proposition is to highlight the product's strengths, allowing users to feel that this product can better meet their needs than its competitors. When formulating a product strategy, three core questions need to be considered: which need does the product focus on satisfying? What unique features does the product have to attract users? How does the product stand out in competition?

3. Selected MVP feature set to complete user demand testing

Once the product strategy and value proposition are clarified, the next step should be to select the features needed for the Minimum Viable Product ) MVP (. The purpose of the MVP is to validate whether the development direction is correct and to create sufficient value in areas that target users find valuable. After completing the MVP, it should be thoroughly tested among the target user group to ensure that enough feedback is collected from users in the target market. Based on accurate user feedback, adjust assumptions and return to earlier process steps to iterate the MVP until a product that closely matches the market is designed.

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

When considering the minimum viable product, the following questions need to be thought about:

1. What components make up the product or feature?
2. What problems can it solve?
3. What are the future iteration plans for this feature?
4. Where is the value of the product or feature?

The concept of MVP is to develop a usable product that showcases the highlights and innovations of the project with minimal development costs and in the shortest time. Although this product is simple, it can quickly validate ideas. Compared to traditional non-MVP methods, MVP allows developers to focus on more important aspects, avoiding excessive time and resources spent on peripheral, auxiliary, or enhanced features.

The purpose of an MVP is not to create a perfect product, but to quickly push it to market to validate feasibility. Through market demand verification, continuously adjust direction, and ultimately iterate to produce a product that has market space and protocol revenue. In fact, an MVP doesn't even need to be a mainnet product; it only needs to be a well-designed testnet product that provides users with a clear experience.

Developers should provide the MVP to the target user group, collect their feedback on product preferences, and verify whether they have identified the right market segment and target user group. If the idea is correct, they can quickly increase the product's exposure in the market, allowing seed users to truly start using the product.

Developing an MVP requires the ability to simplify complexity, defining key functions around core needs, first focusing on the nodes along the critical path, and then refining the details and auxiliary functions. This ability is essentially about grasping the rhythm of business and user development: launching corresponding product features at the right time, not seeking to do everything, but aiming to do it right.

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Go To Market )GTM(: Attracting new users and retaining them, managing the community

When considering the Go To Market strategy, it is necessary to think about the following questions:

1. How does the product interact with users?
2. Do users need help learning to use the product?
3. How often do users use it?
4. Where is the product launched? Local, domestic, or international market?
5. Which channel partners to choose?
6. What restrictions exist for cooperative channels?

In Web3, GTM not only involves acquiring users through marketing means but also includes managing a rich "community". Community members not only include users but also developers, investors, and partners, all of whom are stakeholders in Web3 projects. Successful Web3 projects typically have a strong community foundation. 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 established.

Web3 has changed the user acquisition funnel model of traditional Web2. Token rewards provide new solutions to 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 in the phase where network effects are not yet apparent. From a user loyalty perspective, early users of Web3 may contribute to the community more significantly than traditional Web2 business development personnel.

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1. Acquire new users

Airdrops with task interactions are an important GTM initiative. Projects distribute tokens to users, who must complete specific tasks to have a chance to receive tokens, and sometimes there are additional conditions, such as needing to hold specific tokens. This method is a common project cold-start strategy that can acquire the initial seed users at a lower cost.

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

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2. Increase engagement and retention rate

Relying solely on token incentives is not enough to increase user stickiness. Since the cryptocurrency market entered a bear market in 2021, "users come quickly and go quickly" has become a major challenge for project management. Project teams should focus more on how to convert first-time users into loyal users, continuously optimize products, and carry out community activities to provide better experiences for users. Holding AMAs on Twitter Space, Discord, and Telegram is a common method to improve community activity and enthusiasm.

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3. Recommendation and Self-Propagation

Self-propagation (Referral) refers to promoting products to more new users through existing users. If existing users have a good experience, they will spontaneously share the product within their communities or recommend it to friends, which is the lowest cost and widest reach method of customer acquisition. Project teams need to design appropriate incentive mechanisms to encourage users to share, which can include token rewards or physical gifts. Additionally, analyzing on-chain behavioral data of new and old users helps improve conversion rates and adjust operational strategies.

The referral program breaks down the advertising costs originally used for customer acquisition into rewards for existing users who refer new users and rewards for new users who register. This approach significantly reduces customer acquisition costs and is more efficient than directly purchasing keywords or information flow advertisements. While it is not an innovative measure, it can bring lasting and effective conversion results for the project.

Acquiring new users is the traffic entry point, improving retention rates relies on product value, while recommendations and self-propagation amplify the power of the community. These three steps are aimed at generating revenue, as only by increasing the number of users can scalable profitability be achieved.

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