How to use Luckin Coffee coupons!

Luckin Coffee ’s coupon marketing can only help it quickly accumulate a large number of users and develop consumption habits by establishing a complete supervisory and reciprocal relationship with its users, encouraging them to invest and commit, and making the relationship profitable for both parties.

Recently, I suddenly wanted to have a cup of Luckin Coffee. After opening the APP, it actually recommended that I "get the coupon first and then buy." What, do I look like someone who is short of money or is greedy for cheap things?

People like me are "three-no consumers" who have no absolute loyalty to brands, no special preference for coffee flavors, and are not sensitive to prices. Today, I'll have an American latte when I pass by FamilyMart, and tomorrow I might go in and sit down at Starbucks when I pass by it. I decide which coffee to drink based on my mood, and I don't care if FamilyMart is offering a half-price discount or Starbucks is offering a buy-one-get-one-free deal.

Luckin Coffee doesn’t need to rely on low prices to attract my consumption. What is its intention? Doesn’t it really want to make more money?

And have you noticed that Luckin Coffee often issues various coupons: 18% off, 38% off, 50% off, 58% off, 60% off, 38% off... It will also encourage you to share with your friends to get coupons together, giving you the opportunity to get free drinks. How long can this losing business last?

To understand the business rationale, I will try to explain it from the perspective of some common activity types and activity goals.

1. Activity Type

Activity types are mainly divided into three categories: regular activities, original activities and node activities.

1. Regular events mainly include various holiday events and festival events known to users, such as the World Cup, NBA Finals, and the Oscars.
2. Original activities are mainly exclusive activities created by some brands that have accumulated a certain user base and have a wide range of brand recognition, combined with the characteristics of the product itself, such as Tmall's Double Eleven and JD's 618.
3. Node activities are major operational activities conducted mainly based on the user characteristics of the product life cycle, such as [Red Packets for Newcomers] conducted in the new customer acquisition stage to awaken demand and interact with information, [Daily Check-in] conducted in the activation stage to cultivate usage habits and purchase upgrades, [Instant Discount for First Order] conducted in the conversion stage to enhance purchase upgrades and provide refined services, and [Gifts for Sharing] conducted in the communication stage to build user reputation.

Obviously, Luckin's coupon distribution is a node activity with multi-faceted goals that span multiple user operation nodes.

2. Activity Objectives

The main objectives of the activity are to increase stickiness, accelerate user conversion, enhance consumer decision-making, increase user repurchase and expand activity dissemination. These five points are in a progressive relationship.

1. The key to improving user stickiness (or how to get users to develop a habit of using the product) is to get users to spend time on the product, invest time, or have certain expectations of the product value. A common method is to sign in to various tasks every day.
2. The key to accelerating user conversion (or how to make users willing to pay) is to highlight the practical value of the product in a certain aspect. Common means are red envelopes/coupons and new user privileges.
3. Enhance consumer decision-making. The key to achieving this goal (or how to urge users to place orders as soon as possible) is to stimulate user consumption through price shocks and preferential strategies. The commonly used means are limited-time flash sales and special discounts.
4. The key to increasing user repurchase (or how to get users to buy more and more) is to provide users with information screening or novel and interesting content. Common means are content/product selection and specific subsidies.
5. The key to expanding the dissemination of activities and achieving this goal (or how to get users to actively share product information) is to give the product more content entertainment value and social value. Commonly used methods are forwarding/invitation rewards and testing mini-games.

Finally, let’s take a look at Luckin’s node activity gameplay:

• Special offers: After logging into the APP or mini program, users will passively receive a recommendation page for receiving a 50% discount coupon. After receiving the coupon, users can choose to share it with friends or place an order immediately;
• Special offer: In WeChat, users can actively click on the link shared by friends to receive random discount coupons, limited to 3 coupons per account per day;
• New user privileges: New users can get 1 free drink coupon and 2 50% off coupons when they log in to the APP or mini program for the first time;
• Invite and get rewards: If the invited friend is a new user, then the user who actively shares can get a 24 yuan drink coupon.

By matching Luckin's activity methods with common activity types and goals, we can see that Luckin's coupon distribution is a node activity carried out in the conversion stage. Its main goal is to enhance consumer decisions, supplemented by expanding dissemination and accelerating user conversion.

At this point, we can basically explain why Luckin Coffee is not in a hurry to make money from us and chooses to incur strategic losses. The reason is to enhance consumption decisions on a large scale, cultivate more users to develop consumption habits, first accumulate a larger user base, and then further increase repeat purchases to achieve profitability.

Also, for the sake of fairness on the platform, we cannot only provide special discounts to many consumers who have not yet become dependent on Luckin Coffee and have not formed consumption habits, thereby harvesting loyal fans and "three-no consumers".

Some people may ask:

Luckin Coffee uses "special offers" to enhance consumer decisions. How long will it take to accumulate 250 million users?

(Note: Data shows that my country's coffee consumption population is showing a trend of getting younger, with consumers aged 20-35 contributing nearly 80% of coffee consumption. In 2016, the number of people born in the 1980s and 1990s exceeded 400 million, and the number of the middle class, mainly young people, exceeded 100 million, and will exceed 250 million by 2030.)

According to the rules found in industry statistics: in order to make a new user become a loyal fan, he must be encouraged to make at least 5 purchases.

Assume that a new user drinks 3 to 6 cups of coffee per week, which is 0.4 to 0.9 cups per day (Note: domestic consumers drink coffee 3-6 cups per week, accounting for 42% of the total surveyed population).

Therefore, it takes 5.6 to 12.5 days for a new user to complete 5 purchases. If the initial number of users is 1,000, and the net growth rate is 5% per day, it will take about (5.6~12.5)+log(250000,1.05)=260.3~267.2 days to achieve the goal of 250 million loyal fans.

3. How to accumulate target users faster?

So, are there other ways to enhance user consumption decisions and achieve the goal of accumulating users in a shorter time?

I think we can look for ways to shorten the project cycle by targeting user drinking frequency and increasing the average daily net growth rate, and then follow the six principles of influence to screen out or improve ways to enhance consumer decision-making.

1. Common ways to increase user drinking frequency

• There are rewards for completing tasks continuously. Users can get rewards as long as they complete a simple task continuously within the specified time. If there is a break on a certain day, they have to start from scratch. For example, if you sign in for 7 consecutive days on JD.com Daojia, you can redeem 7 eggs at the store.
• The product is tied to the user's high-frequency behavior. Social services that are frequently used by the general public are added to the product. Users can get certain rewards every time they use the social service through the product. For example, Cloud QuickPass is tied to the public transportation business, and users can get red envelopes when taking the bus.
• Commit to participating in self-discipline punishment and ask users to make a commitment to accept punishment if they fail to complete the task. If users complete the task as scheduled, they can return the promised collateral or receive other additional rewards, such as paying 1 yuan to JD.com to participate in the early check-in plan and share the cash together.

2. Common ways to increase the daily average net growth rate

• Invite friends to receive red envelopes. Users who recommend friends to register as new members can get cash back from the platform. For example, Hema invites friends to place orders and each of them will get a 20 yuan shopping voucher. Meituan recommends friends to place orders and gets a random cash red envelope.
• Binding relationships to get commissions: users recommend friends to place orders, and then the user can get commissions from the order amount. Even if the friend places orders privately in the future, the user can still get commissions. For example, Jingdong Xifenxiang establishes a master-slave relationship between the recommender and the friend. Every time the friend places an order, the recommender will get a commission.
• There are rewards for providing assistance, and non-platform users can also get the same rewards for helping their friends, encouraging the users to register quickly to receive the prizes. For example, if Pinduoduo helps friends withdraw cash, not only can friends get cash, but you can also get cash, and you can withdraw it when the amount is sufficient.

3. Gameplay improvements

Based on the six principles of influence, reciprocity, commitment and consistency, social identity, liking, authority and scarcity, I personally believe that "commitment to participate in self-discipline punishment" and "binding relationships to get commissions" are more effective for Luckin Coffee, but the gameplay process must be improved if they are to be grafted over.

1) Commit to participate in self-discipline punishment

Designed to exchange 1 yuan for 5 20% off coupons, 5 yuan for 50% off coupons, 10 yuan for 5 28% off coupons... The larger the amount, the greater the discount. According to regulations, only one coupon can be used at a time and cannot be transferred. Users who use up all five coupons within the validity period can receive a cash refund of 1 yuan, 5 yuan, or 10 yuan, and at the same time get the opportunity to upgrade preferential privileges, or get a first-level, second-level... coffee taster virtual badge.

2) Establishing a mutually beneficial relationship to share privileges:

When a user invites a friend to successfully register for Luckin Coffee, the master-slave relationship between the two parties is established. The invitee (friend) can enjoy some of the privileges of the inviter (user) for free, such as 10% off on master drinks/cakes. At the same time, if the invitee consumes 5 drinks per week, the inviter can get 1 drink for free; the more friends invited, the more free drinks you get, but only 1 cup per day. The inviter can also redeem the free drinks for vouchers at a ratio of 2:1, or for physical coffee taster medals at a ratio of 20:1.

Summarize

There are many ways to enhance user consumption decisions, but the gameplay should not be designed without considering the six principles of influence.

Only by establishing a sound supervisory and reciprocal relationship for users, encouraging them to invest and commit, and making the relationship profitable for both parties, can we quickly accumulate a large number of users and enable them to develop consumption habits.

Author: Second Uncle Reheating Old Food

Source: Second uncle who is rehashing old stuff