Understanding user behavior is critical for the growth of any product or service. In Web3 projects, tracking and managing the user lifecycle creates unique opportunities to engage users and promote product-market fit. This article examines the Web3 user lifecycle how to analyze it, and best practices.

What Is the Web3 User Lifecycle?

The Web3 user lifecycle describes the journey that users experience while interacting with decentralized applications (dApps). Unlike traditional web platforms, where user interactions are typically linear and predictable, the Web3 environment is more complex and dynamic. Users engage with your product at varying activity levels and platforms as they move through different stages of the lifecycle. By categorizing users into these stages, you can effectively track, target, and engage them.

5 Stages of the Web3 User Lifecycle

1/ Discovery 

The discovery phase is when potential users learn about your dApp or onchain project. This can happen through various channels such as social media, crypto forums, influencer marketing, or community events. Community-driven marketing and incentives such as NFT and token rewards in DeFi projects are particularly effective at this stage.

Key Strategies for Discovery:

• Community-Driven Marketing: Leverage your existing users to share their experiences and drive organic growth.

• Content Marketing: Create high-quality, educational content to highlight the benefits of your dApp.

• Incentives: Offer rewards, bonuses, or referral programs to encourage word-of-mouth promotion.

2/ Onboarding

After discovering a dApp, users enter the onboarding phase, which is critical for shaping their first impressions and setting the tone for their overall experience. A seamless onboarding process is important, as demonstrated by platforms such as Uniswap, which simplify cryptocurrency trading with user-friendly interfaces.

Best Practices for Onboarding:

• User-Friendly Interfaces: Ensure the platform design is intuitive and reduces the complexity of Web3 processes.

• Guide Tutorials: Provide interactive guides or step-by-step instructions to help users navigate your dApp.

• Support Channels: Offer robust support systems such as FAQs, chatbots, or live assistance to resolve user queries quickly.

3/ Engagement 

Engagement is about how actively users interact with your dApp after onboarding. Sustained engagement is critical for retention and is achieved through innovative features such as Axie Infinity’s play-to-earn model.

Techniques to Enhance Engagement:

• Gamification: Add game-like elements to make user interactions more enjoyable and rewarding.

• Regular Updates: Continuously release new features and improvements based on user feedback.

• Community Events: Host live Q&A sessions, webinars, or other interactive activities to build a stronger user connection.

4/ Retention 

Retention ensures users return to your platform over time, indicating a powerful product. Platforms such as Ethereum Name Service (ENS) retain users through discounts on renewals and responsive customer service.

Strategies for Retention:

• Personalization: Use data to tailor user experiences based on their preferences and behaviors.

• Loyalty Programs: Reward long-term users with exclusive perks or tokens.

• Feedback Loops: Regularly collect and act on user feedback to enhance their experience and satisfaction.

5/ Advocacy 

Advocacy occurs when satisfied users actively promote your platform within their networks. Advocates are invaluable for acquiring new users and building trust in your brand.

Encouraging Advocacy:

• Recognition Programs: Celebrate and reward loyal users who actively promote your dApp.

• Referral Bonuses: Incentivize users to bring new members into the community.

• Community Building: Create forums or social media groups where advocates can connect, share experiences, and foster a sense of belonging.

Web3 Lifecycle Analysis

Tracking user growth is common practice for product teams, but analyzing growth without understanding its drivers can be misleading. Lifecycle analysis breaks down users into segments, providing actionable insights. Typical user groups include:

• Visitors: First-time users of your platform.

• Active Users: Users who continue to engage with your product over time.

• Resurrected Users: Previously inactive users who return to your platform.

Lifecycle analysis reveals user behavior patterns, offering a clearer picture of what drives growth or decline in the active user base.

How Do I Know What Stage a Lead Is In?

Understanding what stage a lead is in can be achieved through two primary methods:

User Behavior Analytics 

Behavior analytics is important in defining Web3 user lifecycle stages. By tracking user actions such as viewing product pages or engaging with content, you can identify their stage in the lifecycle. For example, a lead clicking on an email offer may indicate they have moved from the "discovery" stage to the "onboarding" stage. Analytics tools such as Formo and CRM platforms provide valuable insights into user behavior to help you track user progression.

The Sales Funnel 

The sales funnel model aligns with the user lifecycle, where leads at the top of the funnel are still in the "discovery" stage, those in the middle are “engagement”, and those at the bottom are “retention” leads. Each funnel stage requires specific types of content and promotions to nurture leads toward conversion.

Engaging Customers at Every Stage of the Lifecycle

A common mistake Web3 teams make is focusing primarily on the top of the funnel, neglecting leads after they convert into users. The lifecycle doesn’t end with a purchase — effective engagement should continue post-sale. Web3 teams must continue engaging users after the sale to boost customer retention and lifetime value.

Example: If it costs $50 to acquire a lead, and they make a $100 purchase, the initial LTV of this customer is $50 (purchase value minus acquisition cost). However, if that customer makes another purchase of $100 two months later, their annual LTV increases to $150 ($100 purchase x 2 minus $50 acquisition cost) - a 200% increase compared to the initial LTV.

Retention Strategies for Later Stages

Retention is one of the most cost-effective ways to grow revenue. According to the Harvard Business Review, retaining existing users can cost up to 25 times less than acquiring new ones. Moreover, existing users tend to spend more, with purchase prices 67% higher on average.

Here are some strategies to keep customers engaged and encourage repeat purchases:

• User-Only Promotions: Offer exclusive promotions to existing customers. Loyalty programs and referral programs can incentivize repeat purchases.

• Exemplary Customer Service: Providing exceptional customer service is key to retaining loyal users. Timely, responsive support strengthens user relationships.

• Retargeting Campaigns: Retargeting allows you to stay in front of users with personalized ads, reminding them to make another purchase.

• Re-engagement Email Campaigns: Personalized re-engagement emails help keep your brand top-of-mind and show that you value the user’s project.

A well-structured Web3 user lifecycle is important for any Dapp project looking to improve user retention and maximize lifetime value (LTV). Each stage of the Web3 user journey presents unique opportunities to build deeper engagement and stronger user relationships. By understanding and adopting strategies tailored to these stages, from awareness to advocacy, Web3 builders can foster loyalty and drive growth in Web3.

Follow us on LinkedIn and Twitter, and join our community to learn how Formo turbocharges growth for leading teams across web3!