Comprehensive Guide to User Acquisition and Retention for Web3 Projects

Many projects initially invest heavily in user acquisition but often neglect long-term retention strategies. This results in a rapid loss of users after their first interaction, preventing the formation of a stable user base.

While focusing on growth in the incremental market, it's also important to pay attention to the existing market and build a comprehensive system for user acquisition and retention.

The AARRR model, proposed by Dave McClure, is widely used for growth strategies. This guide will explore how Web3 projects can use the AARRR model to build a better system for acquiring and retaining users.

From Acquisition to Activation

Web3 projects face four significant challenges in user acquisition:

• High Entry Barriers and Poor User Experience: Unlike Web2’s multi-channel acquisition strategies, acquiring users in Web3 is more difficult and costly. Operational staff often struggle with limited resources and budgets, hindering their ability to explore various channels.

• Compliance Issues: The complexity and ever-changing nature of regulatory environments require strict adherence to laws and compliance requirements. Achieving compliant user acquisition is challenging, requiring significant time and resources, as well as a deep understanding of regulatory policies across different countries and regions. This increases operational costs and may affect market expansion and user acquisition efficiency.

• Homogeneity: Due to the open-source nature of Web3, many projects have high similarities in features and design, making it hard to stand out in the market. This increases users' options and intensifies competition among projects.

• Low Awareness and Weak Community Culture: The market is highly profit-driven, with users primarily focused on potential gains rather than the intrinsic value of projects. This results in low awareness of the project itself. Overemphasizing token generation events (TGE) to attract users can lead to low user loyalty and hinder the development of the necessary community atmosphere and culture for long-term growth.

To attract users' attention, project teams invest heavily in developing promotional and acquisition strategies. They not only put significant effort into promotional methods but also diversify their channel choices. Increasingly, project teams leverage growth platforms like TaskOn to enhance promotional efficiency and achieve faster growth.

Simplified Task Setup: TaskOn provides a variety of task templates, simplifying the setup of promotional activities and reducing the team's development costs. By using the platform's task templates, project teams can quickly create and launch various promotional activities, saving time and resources.

Expanding Reach: Web3 growth platforms have their native user base. By publishing activities on the platform, projects can maximize their reach. The platform's features allow projects to collaborate with others to launch joint activities, sharing users and further expanding their audience. This increases the project's exposure and influence.

Reducing User Education Workload: Web3 growth platforms often have a user base familiar with Web3 technology and projects. Therefore, posting activities on the platform can reduce the project's user education workload, making it easier for users to understand and participate in promotional activities.

Global Expansion with Compliance: To reduce risks, regions and countries that prohibit cryptocurrency promotions can use regional blocking features. For activities targeting specific regions, settings can limit participation to local users only.

After expanding user traffic through growth platform channels, it's crucial to convert this traffic into real users. Simply having users briefly learn about the project and join the community, only to quickly leave, doesn't count as true acquisition. The project needs to activate the attracted traffic to ensure sustained user engagement.

Interactive Content

Content plays a crucial role in shaping the first impression of new members. Proper content output can subtly adjust users' mindsets. Considering new users may have a profit-driven mentality, the content should be both attractive and educational, helping users understand the project's core value: interactive content.

Using interactive methods like gamification to help users understand the product is the first step in activating users. This process must be simple and easy. Operators can set up Q&A collections to convey key information about the project. As users explore the answers, they gradually build an initial impression of the project.

TaskOn supports comprehensive Q&A  in various formats, including simple questions and multiple-choice questions. The survey mode can also help projects quickly gather user feedback.

Built-in Community

Communities are the main platform for interaction between users and projects. Most communities are currently centered on Discord and Telegram. Users join these communities using their Discord or Telegram accounts, and then follow links to the project's website. However, they still need to connect their Web3 wallet, adding an extra step that increases the risk of user drop-off. Why not consolidate user acquisition and retention on a single page?

Some big-name projects have recognized this issue and opted to build an internal community on their official websites. For example, Arbitrum has a "Community" section on its website where users can immediately start experiencing the product.

Building an internal community on the official website requires substantial team resources, including page design, development, and community management. Community managers need to plan the tasks within the community to convert community users into product users. For most Web3 teams, especially those in the early stages, balancing various aspects without dedicating too many resources and time to community building is challenging.

Is there a mature solution in the market to help project managers quickly set up an internal community?

TaskOn Community

Similar to TaskOn Campaign, TaskOn Community offers various task templates that allow for quick activity creation without using development resources. While a Campaign is time-sensitive and can quickly attract a lot of traffic to your project, a Community is designed to activate and retain users.

With TaskOn Community, you can customize the community's domain and page style, seamlessly integrating it into your official website and creating a truly unified community.

With TaskOn Community, you can customize the community's domain and page style, seamlessly integrating it into your official website and creating a truly unified community.

Retention, Revenue, and Referral

Retention: Incentives & Frequency

Increasing user retention requires enhancing the stickiness of the product, meaning users become dependent on and habitual with the application's features. Achieving this goal requires continuous engagement from operators to ensure users perceive the product's value and uniqueness, encouraging frequent use of its core functions, and making it a part of their daily routine.

To boost the frequency of user engagement, a complete and sustainable incentive system must be established.

A complete and sustainable incentive system is comprised of three parts: points, levels, and rewards.

• Points System: This system quantifies user contributions and participation to boost their activity. Different tasks carry different point values, encouraging users to interact more to accumulate more points.

• Level System: As users accumulate points, they can advance to different levels. Each level not only signifies the user's status on the platform but also ties into the incentive system, allowing high-level or high-point users to unlock more privileges and rewards.

• Incentives: Points and levels alone might not satisfy all users' psychological needs. Therefore, linking points and levels to incentives is crucial for maintaining user enthusiasm and engagement. These incentives can be immediate or long-term:

  Immediate Incentives: These are rewards users can instantly perceive, such as:

• Small Rewards: Immediate Tokens, NFTs, Whitelist spots, Discord Roles, etc.

• Long-term Incentives: These provide users with long-term goals, maintaining their ongoing participation and loyalty, such as:

• Airdrops: Distributing tokens to active users after token launch.

• Continuous Rewards: Monthly or quarterly additional rewards based on user participation.

Users not only receive tangible rewards and incentives but also experience growth and progress within the product, enhancing their sense of belonging and loyalty. This positive user experience effectively increases retention rates and lays a solid foundation for the product's continuous development.

For more information about building Points-based Level System, please refer to the tutorial: The Impact of Points Systems on Web3 Project Growth and Engagement

Once a complete incentive system is established, it is crucial to encourage frequent product use.

Frequency builds habits. Present these behaviors as tasks, so that when users enter the community daily, they are directly informed: What tasks need to be done? How many times do they need to be done? How many more times do I need to do them to be at the top?

In traditional operations, operators had to repeatedly inform users daily on Discord or Telegram communities about what needed to be done, ensuring important announcements weren't buried in chat messages. With TaskOn Community, this is no longer necessary. TaskOn supports setting the repetition frequency for each task: Once/Daily/Weekly/Monthly. Task statuses are updated periodically without manual intervention.

Revenue

Revenue can come from various sources, including paid applications, in-app feature payments, transaction fees, advertising revenue, and traffic monetization.

Regardless of the source, revenue directly or indirectly comes from users. Therefore, increasing user activity and retention, as previously mentioned, is essential for generating revenue. A large user base is necessary for significant revenue growth.

The final step in the AARRR model, Referral, is also a powerful tool for further increasing the user base.

Referral: Branding and Referral Programs

If your project is outstanding, providing a seamless user experience and maintaining a strong brand image, users will naturally recommend it to their friends and family. This is ideal, but it often requires substantial time and resources. You need enough resources to optimize your product and a long period to build your brand.

Referral programs can expedite the process from usage to recommendation. When time and resources are limited, consider using an incentive mechanism to speed up this transition.

Incentivized Referrals: Offer attractive rewards such as NFTs, points, or whitelist spots for successful referrals to motivate users.

• Dual Incentives: Reward both the referrer and the referred, enhancing the experience and participation of the referred user and increasing conversion rates.

• Simplicity: Design a clear and straightforward invitation process, making it easy for users to understand and participate, thus lowering the participation barrier and increasing user engagement.

• Social Sharing: Provide easy and quick social sharing options, allowing users to effortlessly share the project with friends and family, thereby increasing the project's exposure and impact.

How to Evaluate the Effectiveness of a Referral Program?

An essential metric to understand is the K-Factor. The K-Factor describes the viral growth rate of a product through a referral program or "implicit" viral spread, such as word-of-mouth.

The formula for calculating the K-Factor is as follows:

i * c = k

i = Number of invites each user sends to their friends.

c = Conversion rate of invited friends becoming new users.

Here's an example:

Imagine your project launches a referral program with an initial base of 200 loyal users participating. On average, each user invites 10 friends ( i = 10 ), and the conversion rate is 20% ( c = 0.2 ). Thus, ( k = 2 ). After one round of referrals, your user base grows to 400 users, then 800, and after nine rounds, the user count surpasses 100,000.

Of course, real-world situations are not as smooth, and user attrition at each stage must be considered. However, the K-Factor helps evaluate the current effectiveness of the referral program:

When  K > 1 , the user base grows like a snowball.

When  K < 1 , the user base stops growing at a certain size.

By analyzing the K-Factor, you can adjust and optimize the program's rewards, amounts, and processes to maintain ( K > 1 ).

To achieve real user growth, the project team needs to build a comprehensive user acquisition and retention system. This involves attracting users, educating them, enhancing their experience, and building trust. Ensuring that every step effectively converts potential users and retains them in the ecosystem is crucial. By combining innovative technologies and user-centric operational strategies, we can create a system that attracts new users and maintains high retention rates, aiding sustainable project growth and expansion.

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