Web3 User Rise: Community-Driven "Go-to-Market" Strategy

In the Web3 space, we often see some projects achieving a good rise in the short term, but users quickly churn, ultimately falling into a "death spiral" and failing. Compared to traditional sectors, Web3 projects are more affected by the cryptocurrency market: everything thrives in a bull market, while many projects perish in a bear market. These failed projects typically experience a continuous decline in token prices in a bear market environment, with incentive mechanisms failing or even harming user interests, leading to significant user attrition.

User growth is a long-term goal of the product, focusing on building an ecosystem between the product and users, continuously iterating the product, gradually gaining market share, and achieving sustained rise in user scale and value. In 2022, the number of active addresses for most Web3 applications saw a decline, while social media applications exhibited a rapid growth trend.

Basic Ideas for Web3 User rise

Although the cryptocurrency market cycle has 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 product-market fit (PMF). It is important to position the appropriate niche market based on product characteristics and resource advantages, rather than greedily pursuing the entire market. For Chinese entrepreneurs, giving up the Chinese-speaking community and Chinese users is unwise, as it is equivalent to giving up a third of the global user base.

In product development, the Minimum Viable Product ( MVP ) is a great concept. It refers to launching basic features first to meet the minimal business loop of core scenarios, and then iteratively optimizing based on market feedback, ultimately developing a product that best fits market and user needs. Developers should not attempt to develop a perfect "whole" product all at once, but should focus on solving the user's biggest "one" problem, simplifying the usage process, and building an MVP that aligns with PMF.

If PMF refers to the state of product-market fit, then MVP is the effective way to achieve PMF. Launching an MVP that meets PMF to the market is the "go-to-market" ( GTM ) strategy. The goal of GTM is to acquire and retain users, usually following the "funnel model": from customer acquisition at the top to user conversion and retention at the bottom, it is a process where the number of users gradually decreases.

The GTM strategy of Web3 is richer than that of 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 often accompanied by token-based community incentives and corresponding referral programs, where existing users are rewarded with tokens for referring new users, and new users may also receive rewards.

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

Regarding PMF, the following issues should be considered:

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

The lack of market demand is the primary reason for the failure of entrepreneurial projects. Therefore, developers should consider these issues during the product planning phase, rather than waiting until the product is about to launch to search for the market. People are prone to overlook necessary market research due to personal biases.

Finding PMF is a cyclical iterative process, gradually achieving product-market fit by continuously collecting feedback and validating. In subsequent validations, specific steps are optimized and improved based on feedback information to enhance the product's alignment with the market.

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

Identifying the right niche market and target users will determine the extent to which the product can meet user needs. By segmenting the large market to identify the target user group, 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. While trying to create value for users, it is also important to look for corresponding market opportunities. If the user needs in a certain market have already been well met, it is advisable not to enter that market again, but to seek new market opportunities.

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

Users inevitably compare your product with various competitors, so user satisfaction largely depends on the highlights of the product, which constitute the product's differentiation. The value proposition is to highlight the product's features, allowing users to experience that the product meets their needs better than competitors. Among the various needs that the product can satisfy, which one should we focus on? What unique features does the product have to please users? How does the product succeed in competition? These are the three core questions of product strategy.

3. Selected MVP feature set, completed user demand testing

Once the product strategy and value proposition are clarified, it is time to carefully select the features that the MVP should include. The purpose of the MVP is to determine whether the development direction is correct, and then to create sufficient value at points that the target users find valuable. After completing the MVP, it should be thoroughly tested within the target user group to ensure that enough feedback from the target market users is collected. Otherwise, the product iteration may be directed in the wrong direction due to incorrect user feedback. Based on accurate user feedback, readjust the hypotheses and return to the early process steps to iterate the MVP until a product that is highly aligned with the market is designed.

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

Regarding MVP, the following issues are mainly considered:

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

MVP means developing a usable product that can showcase the project's highlights and innovations with minimal development costs and in the shortest time. Although this product is simple, it can quickly validate ideas. People generally pursue perfection and feel that missing certain features would be terrible, but that's not the case. Without the MVP approach, not only could a lot of time be wasted on secondary features in the development of the first version, but there could also be many detours in subsequent version updates. By adopting the MVP mindset to develop products, attention can be focused on more important aspects.

The MVP is not the most perfect product; its purpose is to quickly launch into the market to test feasibility. By validating market demand, it continuously adjusts direction and iterates to create a product with market space and protocol revenue. In fact, the MVP does not even need to be a mainnet product; it only needs to be a well-designed testnet product that allows users to experience it clearly. This can avoid spending a lot of money developing 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 the product is needed, thus validating the ideas behind the initial version regarding market segmentation and target user group. If the ideas are correct, they should quickly increase the product's visibility in the market, allowing these seed users to truly start using the product.

Hold more internal product meetings to discuss which features are unnecessary at this stage. After eliminating these features, what's left is the MVP. Developing an MVP requires the ability to simplify complexity, defining core functionalities around fundamental needs, first addressing the key path nodes, and then developing detailed branches and other auxiliary features. This ability to simplify complexity is actually about grasping the rhythm of business and user development: launching corresponding product features at the right time, not seeking to cover everything, but aiming to do it right.

Going to the market ( GTM ): Attracting new users and retaining old ones, managing the community well.

Regarding GTM, the main considerations are as follows:

• How do products interact with users?
• Do you need help teaching users how to use the product?
• How often do users use it?
• Where is the product launched? Locally, domestically, or internationally?
• Which channels to collaborate with?
• Are there any restrictions on cooperation channels?

In Web2, GTM usually acquires users through marketing methods. In Web3, GTM not only acquires users through marketing but also manages a more enriched "community". The community includes not only users but also developers, investors, and partners, all of whom are stakeholders in Web3 projects. Each excellent 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 let the "community own". Only by continuously meeting user needs and maximizing users' subjective utility of the product can one have a highly engaged and high-quality community.

Web3 has changed the traditional Web2 funnel model. Token rewards provide an alternative solution to the cold start problem. Instead of using funds for traditional marketing to acquire early users, development teams attract users with token rewards during the stage when network effects are not yet apparent. Rewarding the contributions of early 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 in contributing to the community than traditional Web2 business development personnel.

1. Acquire new users

Airdrops with task interactions are important GTM measures, referring to the distribution of tokens by projects to users who must complete specific tasks to have a chance to receive tokens. Sometimes there are additional conditions, such as having to hold specific tokens. Incentivizing early users to complete task interactions is a common method for project cold starts, allowing the acquisition of the first batch of 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 operation. For the project side, it gains traffic; for users, they can obtain proof of on-chain activities, receive airdrop tokens, and accumulate 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 "users come quickly, but leave quickly". User inactivity and difficulty in retention are the main issues facing 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 users with a better experience. Holding AMAs on social platforms is a common method to enhance community activity and popularity.

3. Recommendation and Self-Propagation

Self-propagation refers to promoting products to more new users through existing users. If existing users like and have a good experience with the product, they will spontaneously share it with their community or directly recommend it to friends, which is the lowest cost and the widest way to acquire customers. To encourage users to share, the project team needs to design an incentive mechanism. This can reward project tokens or use physical gifts, such as clothing, skateboards, snowboards, mugs, etc., with logos. In addition, 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 expenses originally used for acquiring new users into rewards for existing users who refer new users and rewards for new users who register, that is, advertising cost = rewards for existing users + rewards for new users. Referrals greatly reduce customer acquisition costs and are more efficient than directly purchasing keywords, information flow ads, etc. Although there is no innovation, it