User Acquisition and Retention In DeFi World
Reward Marketing and Loyalty Program
Decentralized finance (DeFi) is reshaping the traditional financial system with an expansive array of products and services. In this dynamic environment, attracting and retaining users is as pivotal as it is in traditional finance.
Acquisition through Chain Launches and Reward Initiatives
Acquiring new users poses a fundamental challenge for DeFi projects amid the bustling environment of the Web3 world. Utilizing rewards or incentives becomes an essential strategy, particularly when launching on new chains or introducing product lines. However, it's crucial to assess acquisition costs within the marketing plan to avoid undue financial burdens.
Drawing from my experience at Furucombo, where we initiated several EVM chains, including Polygon and other prominent L2 networks, alongside our original Ethereum mainnet deployment, notable insights emerged. In 2021, our reward campaign for the inaugural new chain yielded a remarkable 210% surge in monthly active users, with 74% being newcomers. In 2022, during a market downturn, our second new chain campaign delivered an astonishing 400% increase in monthly active users, with 91% being new additions. An astute optimization of our marketing strategy led to a notable 97% reduction in the cost per acquisition.
Furucombo Polygon and multichain launch campaigns.
Retention via a Strategic Loyalty Program
Retention of users is paramount for sustained success, and in DeFi, where market volatility and challenges like wash trading impact retention rates, a well-crafted loyalty program becomes indispensable. While traditional retention rates are crucial, assessing success through user lifetime value (LTV) proves to be more meaningful.
Furucombo's loyalty program, featuring a point system and loyalty NFTs, stands as a testament to effective user retention. With a high redemption rate of approximately 20% and a remarkable retention rate of up to 69%, loyal members exhibit an LTV 22 times greater than that of general users, contributing significantly to 28% of the total revenue.
Furucombo loyalty program.
Striking the Right Balance
This discussion emphasizes the vital need to strike a balance between acquiring and retaining users in the DeFi realm. While rewards and incentives play a role in attracting new users, a judicious balance is essential to avoid overburdening the project. Equally vital is the retention of loyal users, given their substantially higher LTV and propensity to generate increased revenue over time.
In navigating the competitive Web3 landscape, DeFi projects must implement meticulously designed acquisition and retention strategies to forge a robust and sustainable user base. The insights gleaned from this strategic approach can serve as a guide for projects aspiring to thrive in the evolving DeFi ecosystem.