Decentralized finance (DeFi) projects need to generate headlines and create a buzz to market their product and get users acquainted with it.
So far, DeFi projects have achieved this with promises of 80% “risk-free” APY, launched NFT collections, and paid hundreds of thousands of dollars to influencers.
While there’s no doubt that these strategies work, they only work for projects with deep pockets. Not every DeFi project can invest millions to create hype and acquire a large user base in a short time.
But the good news is that there are better strategies that can bring sustainable growth for DeFi projects with a valuable offering.
In this article, we delve into what DeFi marketing is and lay out five DeFi marketing strategies to acquire and retain customers in the long run.
What is DeFi Marketing?
DeFi marketing encompasses the initiatives employed to spark interest in DeFi products and services, attract users, and ensure their continued engagement and loyalty.
It’s different from traditional marketing strategies that centralized finance (CeFi)
For starters, traditional financial services appeal to users who value convenience and ease of use above concepts like decentralization.
However, DeFi projects currently cater to a more tech-savvy audience that recognizes the shortcomings of centralization and is interested in financial sovereignty, privacy, and blockchain technology.
Another difference is that CeFi marketing involves building trust in the company or institution behind the product.
Contrarily, DeFi marketing places a strong emphasis on building an actively engaged community that uses the product consistently and plays a pivotal role in driving future development through decentralized governance.
So, DeFi projects can’t rely only on traditional advertising methods and need to employ marketing strategies that foster an active community and keep them consistently engaged.
5 DeFi Marketing Strategies to Acquire and Retain Users
While customer acquisition is one of the primary goals of a marketing strategy, it shouldn’t be the sole focus.
A well-rounded strategy must also prioritize building customer loyalty and improving customer retention rates.
This is because it costs 16x more to bring a new customer to the same level of profitability as an old one. That means repeatedly acquiring new customers won’t be sustainable for your crypto project in the long term. And you need to offset these costs by encouraging users to engage with your app regularly.
So, we’ve listed some of the most effective DeFi marketing strategies that help improve engagement and retention in the long term.
An airdrop refers to the distribution of crypto tokens to potential or existing users in a bid to incentivize them to use the platform. However, most DeFi projects get airdrops wrong as they treat it as a transaction where they’ll earn long-term users in exchange for giving away free tokens.
Uniswap is an example of one such project that made this mistake. It leveraged airdrops in 2020 and rewarded 400 UNI tokens to every wallet that interacted with the platform on or before a specific date.
While the airdrop caused a temporary spike in users and activity, only 1% of airdrop receivers went on to become long-time users.
The results, while dismal, aren’t a reflection of the effectiveness of airdrops. Besides, it was one of the first attempts at using airdrops as a user engagement strategy.
The UNI airdrop didn’t work because Uniswap placed more emphasis on giving away free value rather than highlighting the platform’s value to its users. So, most token holders who received the airdrop remained inactive, sold the token or forgot about it, and didn’t participate in governance.
In other words, Uniswap’s airdrop only provided a momentary push. It failed to engage users or increase customer lifetime value. And the protocol had to resort to other strategies to retain users.
To break this pattern and effectively retain customers with airdrops, Web3 projects must use airdrops in conjunction with other strategies like quests and loyalty programs. For example, you can airdrop tokens to specific users who have completed daily quests to incentivize participation and retain users.
Raleon helps significantly with this. With Raleon’s audience builder and segmentation tool, you can create stage-wise airdrops. All you need to do is create user personas and use the segmentation tool to create filters to reward users.
In addition to this, you can analyze your airdrop marketing campaign with Raleon and optimize it to achieve better results.
Raleon combines on-chain and off-chain analytics which helps you identify user behaviors and preferences and gives you a holistic picture of the user journey.
Quests are interactive experiences that reward users for completing a set of tasks.
They work by leveraging every user’s innate desire to complete challenges and feel a sense of accomplishment and provide the following benefits:
- Increased user engagement: Completing quests earns users badges, achievements, or other rewards. These incentives encourage active participation and reinforce desired behaviors like conducting transactions, thus maintaining continued user activity.
- Improved visibility: Quests drive organic traffic to your platform and enable users to gain a firsthand experience of your product. This results in more visibility through improved search rankings and helps attract more users and liquidity.
- Community building: Quests often have social components like leaderboards and chats which allow users to interact with each other and maintain a healthy sense of competition. These components promote engagement and a sense of belonging within the crypto community and improve retention.
To promote and attract users to your quest, there are two strategies to consider. You can create quests using tools like Layer3 or create personalized quests easily with Raleon.
Taking the first approach helps you tap into the Layer3’s community and acquire new users already active in DeFi and familiar with quests.
For example, here’s a tweet from Layer3 promoting the Wombat exchange’s newest quest.
The quest wasn’t complex and required only two steps to earn points, so more than 3,000 people completed it to earn rewards.
However, it was generic, which means the quest most likely attracted a broad audience instead of specific users who understood Wombat’s value proposition.
To effectively engage your target audience, it is crucial to personalize quests and offer valuable rewards that resonate with them.
Raleon’s Embedded Quests help with this. You can integrate them within your DeFi project and create engaging stories that are personalized for every user on your platform.
That means no two users get the same quest and every experience is unique. This granular level of personalization helps drive user engagement, conversion, and retention.
In addition, you can also know which quests people are starting and getting stuck on, and completing with Quest Analytics so you can optimize them.
A recent study by Simplicity DX showed that customer acquisition costs increased by 60% in the last few years. Additionally, brands lost $29 for every customer acquired, a 222% rise from an average loss of $9 in 2013.
This shift can be attributed to stricter privacy regulations and iOS 14.5’s privacy updates. Since these regulations and updates are only set to become more stringent in the future, relying solely on ads for conversions isn’t going to cut it.
You need to incentivize users and invest in building long-term relationships to retain them and stay in the race.
Loyalty programs help you achieve this. They work similarly to quests and use the desire for accomplishment as a trigger to motivate your existing customers to keep engaging with your app.
The difference is that loyalty programs, unlike quests, are typically ongoing and last for a longer time to allow users to accumulate points and rewards over time.
While tier points depend on how long users stake in the protocol, the staking rewards depend on the amount of ETH staked. To move up tiers faster, users can forego their staking rewards and earn more points.
In addition to this, Ether.fi rewards early adopters with NFTs and bumps them up to higher tiers depending on the points they’ve accumulated. It also allows members to attend exclusive events and conferences, and participate in governance.
Establishing expertise, authority, and trust is vital for driving engagement with your DeFi project. Although there are various paid and organic strategies, partnering with other protocols offers a straightforward approach to achieving these goals.
When you collaborate with reputable protocols, you leverage their credibility and instantly gain trust from their followers, making it easier to attract and engage new users. This strategic partnership not only enhances your project’s reputation but also expands your reach within the DeFi ecosystem.
Clipper, a decentralized exchange, successfully collaborated with Galley, an NFT marketplace, to acquire new users. Using Raleon’s personalized in-app messages, they seamlessly prompted users on their respective platforms to explore the other platform.
For instance, Clipper users trading memecoins received tailored pop-ups encouraging them to check out Galley, while Galley users purchasing NFTs were prompted to explore Clipper. This strategic partnership not only enhanced user engagement but also contributed to improved customer acquisition for both projects.
Partnerships play a pivotal role in establishing your brand as a thought leader. By collaborating with reputable brands and implementing innovative strategies, you can gain authority in the DeFi space.
The DeFi landscape is lined with rugpulls, pump and dump schemes, and other scams. Naturally, your potential users are going to be wary of using your platform. So, you need to build trust with users to get them on your platform.
The best way to do this is to share your thoughts and opinions about what’s happening in the industry on social media, pitch your product to newsletters and podcasts, and engage regularly with your users.
He regularly shares content on social media platforms about updates to his protocol, retweets valuable content related to Frax Finance from other users, and engages with them on threads to build a connection with them.
In addition, he appears on different podcasts and YouTube videos to share updates and what he’s building with the community. This bolsters his credibility and positions him as a thought leader in the DeFi space.
Create Sustainable Growth with DeFi Marketing
The meteoric rise of DeFi presents a vast array of opportunities for innovative projects.
However, effectively marketing these projects requires a unique approach that not only attracts but also retains users to foster sustainable growth.
In addition to this, you also need to be able to understand your audience, personalize your campaigns, and get insights from them to optimize them.
Raleon helps with these aspects. You can create customer personas, understand attribution, and track metrics to tweak your campaigns. To get started with data-backed web3 growth, sign up for Raleon now.