2 key points to analyze the secrets of Heytea's growth

Competition in the new beverage market is fierce, but Nayuki and Heytea have always been able to remain as the top brands and achieve good growth results. So what did HEYTEA do right? What can we learn from this? This article will reveal a series of answers for you.

In the past 10 years of consumption upgrading, new-style beverages have become a new wave. New-style beverages[1] refer to beverages that are based on traditional beverages, with upgrades and innovations in raw material selection, production processes, store operations and corporate functions. They have even become a lifestyle for young people today.

Heytea is a model of new-style beverages. It took only a few years to quickly build its brand and became a household name for tea drinks. Some even call it the "Starbucks of the tea industry."

However, as the capital wave recedes, many drinks that originated from internet celebrities have been killed one after another and disappeared from the market. Will Heytea follow in the footsteps of its predecessors, or will it break through the siege, continue to be popular, and become a legendary top brand?

In addition to its impressive variety of drinks, another thing that makes Heytea more well-known, and also the most puzzling, is why there are always so many people queuing in Heytea stores and why is business always so popular? After all, this is an era where if you recharge your phone bill and it doesn’t arrive in your account within one minute, you’ll start to wonder if you’ve recharged the wrong number. So why should I have to wait two hours for a cup of milk tea?

First, let’s take a brief look at the development of Heytea:

• In 2012, HEYTEA’s first store was opened in an alley in Jiangmen, Guangdong. From 2013 to 2015, HEYTEA entered other city-level markets in Guangdong Province.

• In 2016, HEYTEA entered its first out-of-province market, Guangxi.
• In 2017, it entered first- and second-tier cities, starting with Shanghai, then the Jiangsu, Zhejiang and Shanghai markets, and then entered Beijing.
• In 2018, HEYTEA’s first overseas store opened in Singapore.

In just a few years, Heytea has moved out of the alleys and has nearly 200 stores in 26 cities across the country, with a coverage rate of 90% in first-tier/new first-tier cities. Also starting from 2016, while the number of stores continued to increase, HEYTEA concept stores also debuted in major cities, launching LAB stores, black gold stores, pink theme stores, and Daydream DP stores, making people's perception of HEYTEA different from traditional street corner beverage shops.

1. What did Heytea do to become a legend?

From a small street shop with only 20 square meters to a leading new beverage brand today, during our in-depth research at Growth Flying Elephant (an Internet marketing company), we found that Heytea has implemented a very good marketing model: the POM model[2].

• P：Prior personal perception is mainly the consumer’s self-judgment based on the product itself.
• O：Others’ evaluation, based on external understanding of the product.
• M: Marketers are the marketing staff of the enterprise.

P：Prior personal perception

It is determined by many factors. Heytea emphasizes the following two points in the application of personal perception:

1.Product

Innovative products: Heytea first led the trend of new beverages in terms of products, improved and innovated flavors, eliminated the bitter taste of traditional tea, and pioneered popular products such as cheese tea, making a cup of traditional drinks full of fashionable urban atmosphere and occupying the cognition of consumers;

Conscientious ingredients: Secondly, Heytea's rich ingredients keep the freshness of the ingredients in taste, and create different sparks through cross-border mix and match;

Enrich product categories: launch cakes, ice cream, and even the mind-shattering mapo tofu buns;

Provide healthier raw material alternatives: for example, use low-calorie stevia to replace traditional sucrose, and use low-fat cream and yogurt to replace cream and fresh milk to make milk caps.

In addition to focusing on the inner qualities, Heytea has also put a lot of effort into product packaging, logo design, finished product appearance and even store decoration, making it feel very classy and close to the consumption habits and preferences of adults. Heytea's stylish brand image and delicious taste have made it stand out in the field of new beverages, laying a solid foundation for it to become a leading brand.

2.Price:

Anyone who has bought Heytea knows that the price of Heytea is not low and is very stable. Even if you become a member, it does not often have half-price discounts like Luckin Coffee. However, Heytea does not seem to want to join the low-price war to attract more users. The reason lies in Heytea's positioning. Its target group is people with a certain purchasing power, and through its products and prices, it distinguishes it from low-end beverages and maintains its product image.

Now the concept of mass consumption is changing, with more emphasis on brand association and brand awareness. Consumers are increasingly not relying on price to make purchases, but are instead pursuing the absolute value of products, either pursuing cost-effectiveness or the absolute best quality products.

O：others

The most important factor in Heytea’s success is that it makes good use of other people’s reviews and turns consumers into its sellers. Today’s consumers no longer make purchase decisions simply by watching an advertisement on TV. When we want to buy something, we will search for product information and reviews from Weibo, Xiaohongshu, Dianping, and even WeChat Moments. The omnipotence of celebrities recommending products in advertisements is not even as convincing as a “Not bad!” from a friend nearby.

In this regard, Heytea has fully utilized new media tools such as WeChat, Weibo, Douyin, and Xiaohongshu to penetrate into consumers in all directions, making these "personal evaluations" with real personalities more subjective and credible. This marketing method that reaches the masses can also obtain product improvement information faster and more accurately, forming a virtuous closed loop.

Speaking of this, we have to mention the queues at Heytea. The queues at Heytea are indeed more talked about than the delicious taste of Heytea. Queuing is a double-edged sword. If there is no one queuing at a store, people will think that the store is not doing well and the food is not good. But if there are too many people queuing, it will be considered as hunger marketing, which is fishy and will also affect the customer experience.

In fact, proper queuing will bring appropriate resistance to customers in buying products, which is conducive to improving customers' satisfaction after purchasing products. For those who don’t queue, seeing a store with a lot of people queuing is the best proof of its reputation. Therefore, it is not surprising that Heytea would create queues even if there was no one queuing.

So, will always queuing really not affect the user experience and lead to user loss? In fact, it won’t, because the key point of a product’s failure or most customer loss is not because of the queue, but because the things they buy after queuing do not meet their expectations. In the final analysis, it is the product and service themselves.

When it comes to controlling the pace of the queue, Heytea can be said to have done a very good job.

M is for marketers

Heytea’s marketing boosting techniques are so gentle and restrained that consumers are almost unnoticeable.

All people see are a bunch of milk tea reviews saying that Heytea is the best. The content and format are all people-friendly, and users spontaneously take photos and post them on their Moments. However, without the strong support of Heytea behind the scenes, Heytea can only maintain its popularity through constant bombardment on various self-media channels.

Secondly, Heytea does not engage in franchising and firmly controls the brand quality from the source.

In addition, by cooperating with other brands to launch joint products, even consumers who have never drunk HEYTEA can feel the presence of HEYTEA in other fields.

2. Heytea’s next move: Online mini-programs to operate private domain traffic

The times are changing rapidly, and many marketing models will become ineffective. It is difficult to have a one-size-fits-all promotion model, and it will be difficult to maintain continuous growth. Since its establishment, Heytea has successfully operated the POM model to allow users to position themselves through products, achieve themselves, and make themselves feel great. Consumption is no longer just a simple behavior, but a symbol of status.

At this point, Heytea completely stands in the user's perspective, meets the user's needs, creates social value for him, and allows his own value to be recognized by more people!

However, the new tea beverage sector is characterized by low technical barriers, low entry barriers, increasingly serious product homogeneity, and high operational replicability. It is difficult to maintain the popularity of the product by just relying on this trick. As Nie Yunchen himself said, users will not be loyal to brands, especially in the consumer goods field.

Looking at the development of HEYTEA, there is one issue that has laid a hidden danger to HEYTEA's growth that cannot be underestimated - that is queuing. In order to address this problem, the Heytea team also made a series of improvements. From changing the store sales model to launching today’s mini program “HEYTEA GO”.

In May 2018, Heytea officially launched its own mini program "Heytea GO" to eliminate their queuing phenomenon. Soon the number of users on the mini program exceeded one million, the repurchase rate tripled, and the online order rate exceeded 35%. Its mini program page is designed to be very simple and does not require any special instructions. Customers can use it by themselves, and there is no need for any additional consultation from ordering to picking up the food.

Consumers who used to spend hours queuing can now order online by simply scanning the code. The mini program will push service notification messages to consumers, informing them of the specific pick-up time.

For those who need takeout, there is no need to go through a third-party platform or pay expensive errands and purchasing costs. They can directly place an online order on HEYTEA’s own mini program and have the food delivered to their home.

I myself once ordered a Heytea order where the errand fee was almost as much as the cost of the drink, so I very much prefer Heytea's own delivery service.

This not only greatly improves the user experience, but also increases the order volume, optimizes the store's personnel and product structure, and greatly reduces waste. Although the mini program did not completely "kill" the queues, it increased sales and discovered another big surprise brought by the mini program: building its own private domain traffic.

Before launching the mini program, Heytea only had offline data, and when a user bought a drink, there would not be many transaction traces left.

Since the launch of the mini program, online and offline channels have been connected. Heytea can package users' purchasing behaviors into digital assets, obtain user portraits, refine consumers' consumption granularity, optimize consumer experience, and deepen consumption links with consumers, thereby enabling more accurate analysis, marketing, and operations.

Mini Program is not only a tool or a technology, but also a company's marketing strategy and decision-making basis. It needs to connect the entire process of the company, from store checkout to supply chain, to instant communication between employees, and finally connect customer feedback and business operations to build a complete architecture.

This complete architecture not only serves users, but also brings huge data assets. The two-way effect builds its own private traffic pool. Here, Heytea has realized all offline gameplay online, and then uses Internet marketing methods through the online membership system.

However, Heytea still needs to improve in the design of its membership system. I once did a simple calculation on Heytea’s membership card to see if it is worth buying. The answer is as follows:

Let me first introduce my situation as a pseudo member: Due to the geographical location of the factory village, I cannot drink the tea whenever I want, but if I go out and there is a Heytea store nearby, I will definitely buy it.

It seems that I drink about 2 cups a month, 24 cups a year, and an average of 30 yuan per cup, which is about 720 yuan a year.

This purchase will allow my membership level to move from Platinum to Gold, so I can enjoy the benefits of both levels within a year.

Let’s calculate the value of the two rights:

• [Platinum] The membership benefits of this one-year card are 3 free cups (worth 90 yuan), 10% off coupons (ignorable), and 5 yuan off for purchases over 150 yuan (2 coupons worth 10 yuan). The value of this platinum membership for one year is 100 yuan.
• [Gold] The membership benefits include 4 free cups (worth 120 yuan), 2 10% discount coupons (ignorable), 10 yuan off for purchases over 150 yuan (2 coupons worth 20 yuan), priority (no actual monetary value). The value of this platinum membership for one year is 140 yuan.

To sum up: the value of the rights and interests at my consumption level is 240, and the selling price of this membership is 179. For me, if there is a real discount and I can buy it, the temptation is not very great. If the purchase frequency is lower than my frequency (once a month), there is only a platinum benefit of 100 yuan, which is not cost-effective; if the consumption frequency is higher than my frequency, there are more discounts.

From this we can see that Heytea’s membership system has a high threshold and it is difficult to advance. Perhaps only scalpers can truly enjoy the benefits of the membership system. Relying on the highest membership level, placing orders in advance, and reselling to people who don’t want to queue but want to drink Heytea, his monthly income is over ten thousand yuan.

In order to achieve the expected effect of the membership system, users must feel that they are getting a good deal. According to our research at Growth Flying Elephant, Heytea still has room for improvement in its membership pricing and reciprocity design.

So far, Heytea has successfully used the POM model in the early stage to win a lot of word-of-mouth. In the later stage, it also built its own private domain traffic through mini programs and accumulated huge data assets. Heytea’s marketing strategy is novel and easy to be accepted by the public. In fact, all marketing essentially comes down to building trust with users through products, so that long-term business can be achieved. We are still very optimistic about the future of Heytea. After all, I am also a Heytea fan.

Author: Growth Flying Elephant

Source: Growth Flying Elephant