3 concepts to analyze Taobao user incentive system

I have always wanted to write down and summarize my understanding of Taobao's user incentive system when I was researching the Double Eleven event, but Double Twelve is almost here and I haven't had the heart to finish it yet. I can't do it without a sense of urgency.

The article is very long and wordy, so I would like to suggest that friends who read this article should quickly check how many Tmall points they have and redeem them as soon as possible. Because it’s the end of the year, it’s almost time to clear points on Tmall.

As a shopping platform, Taobao is similar to Wanda Mall, a big landlord. It is its responsibility to create an imaginative material atmosphere that makes users linger. It is its responsibility to bring traffic to each store, and the store's transaction volume is a reflection of its value. This incentive system is a tool to help him accumulate traffic and increase user spending.

It is probably easier to think of Tmall and Taobao as a whole. The three most important concepts in the Tmall and Taobao user incentive system are: Taobao value, Taobao gold coins, and Tmall points.

1. Naughty Value

We can think of Taoqi points as a tool for user stratification, dividing users into different levels according to their shopping amount, shopping frequency, active contribution and other behavioral values ​​on Taobao and Tmall, and then giving corresponding incentive rights based on their levels. The included benefits include: daily Taobao coins, Tmall points redemption rights, 88vip purchase discounts, and some quick return services.

Perhaps in order to allow for more flexible risk control in evaluating various user behaviors, the naughty value is composed of three parts: shopping points, reward points, and basic points.

After Double Eleven, the sign-in version of the Gold Coin Manor has been revised. It seems that the sign-in rewards given for different naughty values ​​are the same. Since I am not sure, I still follow Taobao’s official sign-in reward instructions.

The basic score now only includes a reputation score. The 400-point naughty value that new users get after registration is actually the basic score. It is punitive in nature, and Taobao will deduct points based on the user's violation. Shopping points and reward points are encouraging in nature and are increased based on subsequent behavior. I estimate that the weight of the basic score should be higher among these three scores.

The upper limit of the basic score among these three scores is a fixed 400 points. It goes without saying that shopping points are deeply linked to the user's spending amount. The reward points include: interaction reward points, shopping reward points, and family reward points. Among them, the family reward points have nothing to do with shopping behavior, but this score definitely has an upper limit, and the points given should not be many. The interactive reward points are related to evaluation, sharing, community posting, and asking and answering questions. Except for sharing and community posting, which have no direct relationship with shopping, evaluation and answering questions require purchasing behavior before being eligible. Overall, the increase in shopping points and reward points mainly depends on shopping behavior.

Through such stratification, Taobao can identify many special users and formulate a more reasonable user welfare mechanism to promote user retention and improve sales conversion.

For example, users who want to earn Taobao gold coins by completing tasks but are unwilling to spend money on shopping on Taobao will definitely not get high Taobao gold points, which means that users will not be able to earn many Taobao gold coins in the Gold Coin Manor. Due to the low quality of traffic, there will not be many tasks such as store sign-ins and collections that can be completed. In short, it is a fantasy to dream of getting big bargains by completing tasks on Taobao.

There are also some users who complain online that their Taobao value is less than 400 points. They should be the users with suspicious behavior identified by Taobao. Taobao basically does not give any rights to such users. Not only do they not get Taobao gold coins for signing in, but even the price of 88vip is ￥888. This operation is also very extravagant. Is this price the cost price of 88vip service calculated internally by Taobao?

The time range of behavior corresponding to the Taobao value rights is classified within the past 12 months. This method can avoid the problem of low-frequency high-consumption users. For example, the card scalpers who used to roam near the checkout counters of shopping malls had to help Taobao boost its performance every year. Think about it, it’s not easy to be a scalper. With such a high threshold, anyone really doesn’t have the capital to be a scalper.

2. Taobao coins & Tmall points

Everyone knows that Tmall was derived from the "Taobao Mall" in the early years of Taobao, but it was later operated independently. From the user groups that now benefit from Taobao coins and Tmall points, we can clearly see their subordinate relationship in the early years. Taobao Gold Coin is used as a means of global incentive, taking into account users of Taobao and Tmall. In most cases, Tmall points only benefit users who shop in Tmall stores (but there are exceptions during promotional periods).

The similarities between Taobao coins and Tmall points are that they can both be used as money. Of course, there is a prerequisite, which is that you have to spend money to use them, and they can be used to deduct part of the payment amount when shopping. Their exchange rates are the same, 1 Taobao coin/Tmall point = 0.01 RMB. What differs are their sources, usage patterns, scope, and objectives.

2.1 Source

Tmall points come purely from your shopping behavior in Tmall stores. You can only get points by spending money, so the threshold for obtaining them is relatively high. It can be seen that its role is more of a tool to increase GMV.

The sources of Taobao coins are rich and varied, including: shopping rebates + order confirmation rebates + earnings from completing tasks. These tasks include: check-in tasks, collection tasks, browsing activity page tasks, etc.

From this perspective, the thresholds for obtaining Taobao coins range from low to high, and the source runs through the entire process of traffic import-transaction-confirmation of receipt-repeat purchase. It is a tool with a wide range of applications. For example, helping Taobao increase user activity, increase store/product traffic, increase payment conversions, increase repurchase rates, etc. can all become a handle.

As I write this, I can't help but think of Pinduoduo, which is a tycoon that gives out money every day. I'm curious about how much money it gives to users every time they sign in. The result was quite shocking. The sign-in reward was only RMB 0.02. They tricked me into forwarding messages every day for such a small amount of money... If we calculate it based on the minimum 5 Taobao gold coins given for sign-in on Taobao, that would be RMB 0.05. It’s still Ma’s love that is low-key and not ostentatious. He knows that users usually have a hard time shopping online, so he always sends them some bone soup from time to time to replenish their energy.

I calculated that if a user completes all Taobao gold coin tasks in one day, he can get at least 50 Taobao gold coins, which is RMB 0.5. If the user collects Taobao gold coins all year round, he can get 18250 Taobao gold coins = RMB 182.5. How much money would it cost to spend all the Taobao coins without being ruthlessly cleared out by Taobao? We assume that all the goods purchased by users can be deducted with Taobao coins, and the deduction amount is 2%. The total price of the goods to be purchased needs to reach RMB 9125, and the actual payment amount by the user is RMB 8942.5. Honestly speaking, if every user who gets Taobao coins can spend so much, the boss of any shopping platform would wake up laughing in his sleep.

2.2 Usage

Taobao coins and Tmall points cannot be redeemed for cash. For users, they are mostly used as shopping discounts. Even if they are won in a lottery, they are generally shopping coupons, but the face value may be different. Gold coins and points are reset once a year to control the circulation of gold coins and points in the market so that there are not too many of them, which would cause Taobao's marketing costs to be too high.

There is also a special use for Tmall points, which is that they can be used as an operation tool when Taobao holds large-scale Taobao events such as 618 and Double 11. During the event, Tmall points can be exchanged for shopping allowances at a very favorable exchange rate, and are available in both Taobao and Tmall stores (compared to the usual 1 Tmall point = 0.01 RMB, the exchange rate for Double Eleven some time ago was 1 Tmall point = 10 yuan allowance, 5 points = 70 yuan allowance, although there is a limit on the amount used. From this perspective, the cost of holding an event is really high, and without large-scale sales, this cost cannot be covered at all).

The use of Taobao coins for deduction is very simple. As long as the seller's products support Taobao coins for deduction and you also have Taobao coins, the system will automatically calculate the amount that can be deducted for you when you pay. It even helps you to check the box, which makes it a very user-friendly and smooth user experience.

The usage of Tmall points deduction is much more complicated. Users need to go to a special place to redeem them for coupons before they can be used for shopping deductions (can only be used for shopping in Tmall stores). And unlike Taobao Gold Coins where you can use as many as you have, you need to have 500 points to reach the minimum threshold for redeeming discount coupons [In fact, there is also a 200-point lottery, and the prize is always a 2 yuan discount coupon. 500 points can be exchanged for 5 yuan, 1000 points can be exchanged for 10 yuan, and 3000 points can be exchanged for 30 yuan (exclusive for 88vip members only). Multiple exchanged shopping coupons cannot be used in combination, and the coupons are only valid for 7 days.

2.3 Why are the usage methods different?

The above usage methods are very confusing. Why are the two things that can be used as money and have the same exchange relationship with the RMB, but the usage methods are completely different? From the perspective of consistency, it is a bit strange that two similar products of the same company are so different. This means that many users’ Tmall points are wasted because they are ignored and not redeemed.

This strange feeling reminded me of seeing someone collecting Taobao coins online before. Ten thousand Taobao coins were worth thirty yuan. I thought it was unbelievable at the time and didn’t think much about it. Now thinking back, these people spending money to buy Taobao coins should not be as simple as deducting money when buying things.

So I searched for relevant information on Baidu and found out that these Taobao coins and Tmall points do not disappear after being deducted from buyers. In fact, their subsequent fate is also very interesting. When Taobao coins fall into the hands of sellers, they become the currency for them to purchase promotional traffic, while Tmall points become a commodity purchased by Tmall from sellers. The sellers also have to issue invoices to Tmall for this transaction.

If we combine the ways in which Taobao coins and Tmall points circulate between buyers and sellers, it is actually quite interesting.

Taobao Coin Circulation Direction

Taobao coins flow into the hands of sellers from the payment deduction link of buyers (Taobao will deduct 30% of the Taobao coins deducted by users, probably as service fees). Sellers can use these Taobao coins to purchase traffic in certain advertising spaces to help promote their own stores.

Tmall points transfer direction

Buyers earn Tmall points after shopping from Tmall sellers. When buyers accumulate a certain amount, they can go to Tmall to redeem them for discount coupons, and then go to any Tmall seller to make purchases and use the discounts. Sellers who receive discount coupons can get rewards from Tmall.

As can be seen from the above picture, Taobao has set up two completely different sets of gameplay for Taobao coins and Tmall points. Why do they do this and make the process so long?

It seems that the cost of both of these things is borne by Taobao, but a careful analysis shows that Taobao Gold Coins are officially issued by Taobao, and the total issuance amount is determined by Taobao, which may be related to the marketing budget amount of that year.

Tmall points are essentially a bonus that Taobao gives to sellers for achieving sales. They are issued by various Tmall stores after Taobao has formulated rules such as the redemption ratio. They are generated through purchases and are supported by Tmall's actual sales. Logically speaking, this money should be returned to merchants in proportion to Tmall’s annual sales. But Tmall played a trick. It required sellers to use point discount coupons to redeem the reward. This behavior felt a bit like that of a junk company that uses invoices to offset performance wages.

Looking at the redemption nodes of Tmall points, you can roughly understand why Tmall points have such a complicated usage process on the user side. As long as the buyer does not use the points discount coupon to shop, the fee will not be incurred by Tmall. The points cost is actually borne by the seller. Tmall is actually deliberately creating a higher threshold, raising the additional conditions for sellers to redeem this reward and reducing its own expenditure costs. Buyers are just an important link in this circulation process and are also set a very high usage threshold, so that the seller rewards that are finally redeemed are far less than the Tmall points actually issued. Where did those missing points go? Under such rules, they disappeared after 12 months if Tmall points were not redeemed by users; they disappeared when users had too few points to meet the redemption standards; and they disappeared after being redeemed for discount coupons but missing the 7-day validity period.

In addition, Tmall only allows one discount coupon to be used for each order (the face value of the discount coupon ranges from ￥2-￥30). The face value is small and difficult to accumulate. The input-output ratio for sellers to find someone to swipe points for discount coupons does not seem to be so cost-effective, and Tmall may accidentally discover abnormal transactions.

On the seller's side, some extreme situations may occur. For example, the seller sells a lot of goods and gives out a lot of points. It seems that he can get a lot of rebates from Tmall. However, people who come to buy things do not use the points coupons when paying. This means that the rewards on the seller's books cannot be redeemed, and the cost will always be borne by the seller. What a blank check.

Of course, to be honest, this seems to be similar to the performance bonus incentive method used by general sales companies. If we think of Tmall as a franchised brand and sellers as franchisees, the technical service fee is like the franchise fee that franchisees pay to Tmall, and the commission is the value-added service usage fee paid to Tmall (divided according to the transaction amount) to stimulate Tmall to find more and better-quality traffic for sellers; and the point rebate is a reward method to stimulate sellers to sell goods more actively. This profit-sharing method is probably the final compromise result of many rounds of bargaining between Tmall and sellers. This plan also deeply ties together the interests of Tmall and sellers, but some large sellers with good business may not care about such small interests at all.

The usage of Taobao coins on the seller side is even more interesting. Sellers can use Taobao coins to purchase traffic from certain channels to increase exposure for their stores or products. Through this design, Taobao Gold Coins have become something that is in demand by both buyers and sellers, and it feels a bit like the currency circulating within Taobao.

The tools provided by Taobao all play different roles for sellers. For example, adding a store to your favorites is more like helping to attract new customers. Product promotion in the gold coin channel list and giving out gold coins for browsing short videos are more related to sales conversion rate. Store sign-ins and giving out gold coins in Taobao groups are more like tools to help stores retain users. Taobao is quite generous. Through the product of exchanging Taobao coins for traffic, it actually provides small sellers with a set of low-cost tools to build store traffic pools.

I looked at the rules, and the threshold for purchasing traffic with Taobao coins is really not high. Generally, the seller’s account is required to have at least 10,000 Taobao coins, otherwise the seller’s activity of giving away Taobao coins will be suspended. If a seller plans to spend 10,000 Taobao coins to buy traffic, then the actual cost is only 20,000 Taobao coins, 10,000 of which are used as a deposit and 10,000 are used to distribute benefits. In order to obtain these 20,000 Taobao gold coins, the merchant needs to sell goods with a price tag of at least RMB 2857.14 [assuming that the seller sets the Taobao gold coin discount to the highest standard of 10%, the total price of the goods = 20000/(10% 70% 100) = ￥2857.14, the actual amount the seller receives from the user should be ￥2571.43, and the cost of obtaining 20,000 Taobao gold coins is ￥285.71]. Assuming that the seller sets a bonus of 5 Taobao coins for each user who follows the merchant, then this RMB 285.71 can help the merchant attract 2,000 followers. In other words, the cost of one user following the merchant is RMB 0.14. This does not seem expensive. If I were in his shoes, I would be willing to give it a try even if the sales conversion rate of this traffic is not high.

The exchange of Taobao coins for traffic is generally very beneficial to the Taobao platform. New and small sellers will have full motivation to lower the actual selling price of their products to obtain Taobao coins. After comparing prices between platforms, buyers will find that they actually spend less on Taobao and are more willing to stay on Taobao. Part of Taobao’s own marketing costs have also been transferred to sellers.

If we look at other paid traffic tools provided by Taobao to sellers together, we can find that Taobao actually divides the limited diversion positions into different levels. By exchanging Taobao coins for traffic, as well as paid through trains and diamond exhibitions, Taobao has built high, medium and low-end packages for internal traffic sales. Different packages have different prices, and the amount of traffic provided and the purchase conversion rate will also be very different. No matter you are a large merchant or a small merchant, as long as you have needs, I can satisfy you. Honestly speaking, this idea of ​​exploring merchant needs, fine-tuning traffic operations, and packaging targeted products is worthy of appreciation.

Looking back at the Taobao news from 2008 to 2011, the most common news was that a large number of sellers went to the downstairs of Taobao headquarters and held banners to protest against the unfair distribution of Taobao traffic, which directed all the traffic to merchants who purchased the Through Train and Diamond Exhibition.

Rationally speaking, Taobao is a business and its goal is to make money. Traffic is Taobao's core asset and is also generated by Alibaba's own money. It is impossible not to charge for it.

The sellers are all savvy business people. Taobao spends money to buy traffic to make you all rich, but their pockets are getting empty? Jack Ma is not a philanthropist. No matter how stupid the sellers are, they know what is going on. The reason they are making trouble is simply that products like Direct Express and Diamond Ads are too expensive, and they divide the traffic too much, causing small merchants who cannot afford it to lose almost all channels for obtaining traffic.

To put it bluntly, Taobao's traffic product structure at the time lacked a lower-priced product for small merchants, and the tool of exchanging Taobao coins for traffic filled this demand.

Although the traffic entrances purchased with Taobao coins are concentrated in the secondary channel of Taobao coins, some entrances are quite deep and the user quality may not be very good, but a person who comes to earn Taobao coins and is stingy with money also shows that he has a need to shop, but he is just more stingy with his money. Taobao has precisely grasped the mentality of those who come here to earn Taobao gold coins and are greedy for small profits. It has positioned this channel as a high Taobao gold coin discount rate + low actual payment amount to pry open the psychological defenses of buyers. The psychology of loss aversion still plays a big role in people's decision-making.

Conclusion

Although we have been instilled with the idea of ​​equality since childhood, we have to admit that the pyramid structure is the reality, and it seems to be the most efficient management structure to date. The underlying rules that originally formed this society determine that the people and things that depend on it for their growth cannot escape the constraints of these rules. We should continue to explore the direction of making good use of this pyramid structure, learning to build a better internal structure to make the outside more solid, and maximizing the interests of all participants.

Author: Rainbow Mark

Source: Rainbow Mark