6. About product growth
Do you need a dedicated growth team? What are the indicators of growth?
- Do growth within the existing team
The core functionality of the product and the strategy cycle related to growth move forward.
- Business formula and key metrics for product growth
1. AARRR
The "AARRR" model proposed by Dave McClure, also known as Pirate Metrics.
AARRR refers to five important links that occur sequentially in the entire cycle of user-product interaction, namely Acquisition , Activation , Retention , Revenue , and Referral .
Which of these five links is the most important, and how should we invest resources to promote overall product growth?
When Dave proposed "AARRR", he proposed a three-step growth process. The first step is to create excellent products. The focus here is on activation and retention. Excellent products can create value for users, making it easier for users to be activated and Retention ; after that, the second step is to promote the product, which focuses on customer acquisition and communication; the last step is to make money, which focuses on monetization efficiency and profits.
"Retention" is the most important indicator
Retention is the most important indicator and the gold standard for product vitality and existence value. Only products that have truly created enough value for users can keep them coming back to use and generate retention. It is the driving force and foundation for product growth.
PS: The RARRA model
"RARRA", in order, is Retention, Activation, Referral, Revenue and Acquisition. It is more radical to put customer acquisition at the end, but the attitude is very clear: it is to do things well first, and then expand the influence.
- Specific business formula for product growth
1. Select a target
All strategies must be based on goals, so we must first choose a clear and quantifiable macro goal, which is a common goal for all product, technology, operations, and marketing teams.
Therefore, selecting a target that is relatively stable within a certain period of time can divide the priorities of various strategies from the source.
2. Disassemble the business formula
Take Geek Time as an example.
Let’s first assume that the current core macro indicator of Geek Time is income, that is, the money earned by selling knowledge-paid products.
Then we can calculate: revenue = number of paying users x unit price of customer
.
Based on this, continue to calculate downwards: number of paid users = number of users x paid conversion rate.
If we classify users according to their age, the formula we get is: revenue = number of new users x conversion rate of new users x unit price of new buyers + number of old users x repurchase rate x unit price of repurchase customers.
Continue to divide, the number of new users can be divided into: traffic x registration conversion rate.
Then we can write the formula as: revenue = traffic x registration conversion rate x new user payment conversion rate x new purchaser unit price + number of old users x repurchase rate x repurchase unit price.
3. Select pivot point
The principle of choosing a key indicator as a fulcrum is whether it can effectively connect the past and drive the entire business formula.
Whether it is the core macro goals or the key indicators for the implementation of operational strategies, they are not static, and they should be adjusted accordingly at any time as the business, market environment, and team change.
- Personal thoughts
Currently, the products I make are still under development, and there is still a period of time before they go online. I can apply the existing growth knowledge to the growth plan of the current product, but the details have to be adjusted according to the launch situation.
Another product of the company just went online two days ago, so you can have a good exchange of growth experience with the product manager.