Understanding Your Web3 User: Turn The Illusion Of Product Market Fit Into Real Usage Insights

In the last two years we have seen crypto and Web3 users migrate from dApp to dApp, moving their assets to the next incentivized pool, bombard the frontend with transactions in anticipation of an airdrop, or utilize the next referral link to provide them with free tokens, NFTs or discounts. Projects are struggling with these extractive users while still incentivizing usage of their product with no idea or future returns. This behavior can lead to the illusion that a product has found market fit, without actually understanding the real and sticky user.

To understand their real crypto and web3 users successfully, companies must employ a comprehensive research approach. In this article, we will explore different research methods that can improve Market Research, User Testing and Marketing/Product Intelligence across various user segments. In addition, we will take a look at integrating behavioral data from on-chain analytics with these more traditional research methods. We will discuss how these types of research help understand the needs of current users, the potential users who are already active in Web3 and the potential users who could be onboarded into Web3 (hopefully through your app, website or service). Research is a continuous and never-ending process, where the proposed methods follow each other in a cycle to gain a deeper understanding.

Current Users and Community

Understanding your existing user base is often the best starting point. These users have direct experience with your products and brand, making their insights invaluable.

Market Research: Implement surveys, focus groups, or feedback forms to gather qualitative insights from your current user base. Ask them about their experiences, preferences, and suggestions for enhancements. This qualitative data can provide context to quantitative metrics from the website or on-chain. Often this type of market research is performed before developing a new product or new features, followed by user testing.

User Testing: Understand how current users interact with your products and interface. Through structured usability testing their preferences and pain points could become more clear. These user tests could be conducted asynchronously if set up through a testing tool with a wireframe or through live interviews with users. Users could be incentivized to participate in these tests with tokens, NFTs, points, or roles, ensuring higher respondent numbers and higher engagement.

Marketing/Product Intelligence: While web2 and traditional companies need to actively collect and store data on their own performance, a part of this process is already handled by the blockchain for web3 companies. KPIs like volume, TVL, DAU/MAU can be extracted by on-chain analytics, while users can be categorized by the types of transactions they do (in relation to your product, but also with other dApps). This data is especially powerful when coupled with off-chain data. Try to identify correlations between user behavior on the blockchain and their engagement with your products. Website analytical tools could show through heat maps or by analyzing the user journey which parts of the website are being visited most and interacted with, while also exposing bottlenecks.

Potential Users Already Active in Web3

Identifying and converting potential users who are already part of the Web3 ecosystem can be a good step for further growth, especially if they are familiar with similar products.

Market Research: On-chain analytics can be incorporated to find potential users who are already active with competitors. Analyze their preferences and loyalties among competitors, especially over time when market conditions change or around product changes. The research could be used as a user acquisition tool too since wallets can be identified and potentially messaged for example through DeBank or other messaging protocols. Surveys can be sent to potential users who are active in the Web3 space but haven’t adopted your product yet. Inquire about their pain points, expectations from Web3 products, and what might incentivize them to switch. Understanding their objections can help you refine your value proposition. These users can be invited through Telegram, Twitter or asked in personal messages. In addition, projects would benefit from a shared panel of testers or tapping into various Discord communities. A benefit of tapping into larger communities is that users with a variety of experiences and knowledge can be surveyed, while a personal circle will be biased through your selection.

User Testing: Similar to the market research, users will have to be invited through private channels or external communities. The structure of these tests will be akin to the user tests with the current users. It is recommended to keep the test structure the same, so current and potential users can be compared. An additional benefit to offering incentives to testers, is that potential users might be converted to users of the current or new product.

Marketing/Product Intelligence: How do you measure metrics from the users you don’t have? In this type of research you should focus on drop-outs early in the funnel. Potential users who end up on the website or dApp, whether organic or through advertising, eventually decide not to use the product. Find out where they drop-out in the funnel and see where you can take away bottlenecks in the flow. In some cases these users still leave contact information or connect a wallet which can still provide you with data to analyze. Feedback on social media on the brand and product should be monitored too, especially when competitors are named as more favored. Is it a function you’re missing or something you have to communicate more clearly?

Potential Non-Crypto and Web2 Users

The potential non-crypto and Web2 users are the hardest to reach and analyze, while they are the biggest group to target and will need to be convinced for Web3 and crypto to find adoption.

Market Research: The challenge for this group is to find out what concerns and misconceptions they have about the Web3 space. Tailor your marketing efforts to address these barriers and showcase the benefits of Web3 adoption. Find tools to make onboarding easier for these users with Web2 logins, easy wallet generation and educational content. Other projects who took onboarding non-crypto and Web2 users seriously could be analyzed for further inspiration.

User Testing: The non-crypto users are the hardest group to reach but a panel could be asked to complete these tests. Hire traditional consumer panels or ask friends, family and network. LinkedIn might be a good place to recruit. It is important to find a mix between tech and non-tech people. During these tests, pay attention to their struggles and questions as they interact with your platform. User testing can reveal where educational resources or features could be made more user-friendly.

Marketing/Product Intelligence: Find potential marketing channels for non-crypto and Web2 users who could be turned into users. Address their concerns, misconceptions, and barriers to entry through tailored marketing efforts. Setup good link tracking and create specialized landing pages and onboarding flows for these users. Find the points in the funnel where these users drop out. Monitor their engagement patterns and understand what motivates them to explore Web3.

Tooling

Various tools will make your life easier to execute these types of research. Below are a select few to get you started. To get a comprehensive understanding of web3 growth tools, Safary.club offers an excellent overview.

Market research

• Survey tooling can help you share and manage questionnaires: SurveyMonkey, Surveyplanet and TypeForm.
• On-chain tooling can be queried to analyze ecosystems and competitors: Dune, Flipside, Nansen and DefiLlama

User Testing

• User testing can be done in specialized tooling like Maze, UXTweak or the questionnaire programs can be used for a more static flow.
• Wireframe design: Figma and Miro

Marketing/Product Intelligence

• The standard for website analytics is Google analytics in Web2, but luckily Web3 variants exist like: Cookie3, Raleon, Safary or Multibase
• For more custom-made metrics dApp Dune or Flipside dashboards can be used.

Conclusion

To avoid the illusion of product-market fit, a comprehensive research approach is crucial. Whether you are learning more about your current users or potential users, the research is never done. Once research is complete and insights are extracted, products can be improved, which leads to new metrics to track and user data to gather. Luckily, if done correctly, the resources allocated will be paid back in the form of new and satisfied users. Setting up the research, analyzing the data, and extracting insights can be a daunting task, which is why I’ll gladly help you out. Reach out to me on Twitter if you want to discuss upgrading your research.