The Golden Formula for Private Domain E-Commerce

In traditional e-commerce, there is a formula known as the golden formula: Sales = Traffic * Conversion Rate * Average Order Value. From this we can see that the most important thing is traffic, because only with traffic can transactions be generated. When it comes to the traffic indicator, we may need to think more about where the new traffic comes from (incremental)? Therefore, traditional e-commerce relies on massive advertising to obtain revenue, so merchants have to rely on centralized e-commerce and pay continuously and repeatedly for traffic.

However, as the traffic dividend disappeared, I suddenly realized that the strategy of spending money on advertising to acquire customers no longer worked! Not only is the number of customers showing a downward trend, but the cost of acquiring a single customer has reached a staggering several hundred yuan!

In addition, in traditional e-commerce, there is a platform between traffic and merchants, users cannot be reached directly, and it is also shared, with weak stickiness and inaccuracy. Once merchants leave the platform or the platform rules change, they will lose contact with the traffic.

But it is completely different in private domain marketing. Private domain traffic means: channels that can directly reach users at any time and frequency without paying, such as self-media, user groups, WeChat accounts, etc., which are the circles that KOC (key opinion consumers) can reach.

Although traffic diversion is also very important in private domain traffic operations, how many users a company can divert from the public domain traffic pool to its own private domain traffic pool is the key for businesses to do well in the private domain! But it may not be the most important. Compared with traffic generation, I personally think that the core is how to do a good job in private domain sedimentation!

Because the logic of private domain e-commerce should be: by operating existing users and leveraging the relationship between users and his/her friends, to repeatedly reach, influence and convert more new users. Its essence is to manage "people" and tap into the long-term value of users. Then bring about conversion by operating "people".

This is also the fundamental reason why we say that the focus of operations should shift from traffic operations to stock operations! Because private domain traffic directly focuses the growth soil on social relationships. This is the biggest difference from traditional centralized e-commerce.

In private domain e-commerce, there is also a core formula: private domain value = traffic pool × fan-attracting ability × fan monetization rate

There are three key factors in this formula: traffic pool, ability to attract fans, and fan monetization rate.

First: Traffic Pool

When an enterprise engages in private domain e-commerce, the first step is always to build private domain infrastructure. These include official accounts, mini-programs, corporate WeChat accounts, personal accounts, etc., which together constitute the merchant's private traffic pool. Then we need to find ways to attract users from the public traffic pool. This is the most typical approach to private domain e-commerce marketing by building a combination of public domain and private domain.

However, because traffic is becoming more and more expensive, and the private domain itself is deeply rooted in the social soil, the best way for companies is not to continuously advertise on public domain traffic, but to choose to provide heavy services to super users, and then use these super users to repeatedly influence and reach more new users.

This is also why I said that in private domain e-commerce, traffic is not the most important reason! Because instead of constantly spending money on advertising in the public domain to attract traffic, it is better to use the influence of super users and KOCs to generate more new users. Especially for some industries like retail, it would be more effective to train shopping guides into KOCs and then use the influence of their circle of friends to continuously reach and split the audience!

Second: Ability to attract fans

This factor actually involves two issues: fan reach and product recommendation ability.

Although private domain traffic is free of charge, it can reach users directly at any time and frequency. But in reality, a user can be in your traffic pool as well as in other traffic pools. In the fragmented era, how you ensure that your content effectively reaches users is a prerequisite for whether you can achieve success.

Behind this, there may be influencing factors such as the closeness of the relationship, the quality of the service, the response rate of customer service, and personalized content information, etc.

This will test the operators' ability in content operation. Of course, in addition to this, the degree of machine automation may also be involved. For example, poster making tools, personalized information presentation tools, machine customer service capabilities, etc. So from a certain perspective, the ability to attract fans is actually a test of technical level. Nowadays, whether it is social e-commerce, private domain e-commerce or community teams, they are inseparable from technical support.

Third: Fan Monetization Rate

This needs to be viewed from two perspectives. The first is from the results perspective. The so-called fan monetization rate actually refers to key indicators including conversion rate, repurchase rate, referral rate, sales expansion, etc. From a process perspective, it includes factors such as fan-addition rate, response rate, and sharing rate.

The above is the golden formula in private domain e-commerce! Only by doing well in the three aspects of traffic pool, fan-attracting ability and fan monetization rate, can your private domain value be continuously magnified! However, if we still simply use the traditional e-commerce formula thinking to guide and operate private domain traffic. Then the result will inevitably be failure!

For example, if you compare your private traffic pool to a bucket, if you just keep pouring water into it, you completely ignore the objective fact that there is actually a hole at the bottom of the bucket! So even how you operate! The value of your private domain will not be ideal.

When doing private domain e-commerce, traffic is certainly important, but compared to it, what is more important is your private domain sedimentation ability!

In traditional e-commerce, the AARRR model is used to perform user operations, which increases sales by expanding advertising and attracting more new users! In private domain e-commerce, the user growth model of the entire private domain traffic cannot be simply summarized by the user growth model of acquisition, activation, retention, revenue, and dissemination. After all, private domain traffic focuses its growth on social relationships, so doing a good job of private domain sedimentation is the core of realizing the maximum value of the private domain!

If we divide the entire private domain operation work into a work process, it can be roughly divided into five parts: private domain infrastructure construction, public domain diversion, private domain sedimentation, repeat purchases and additional purchases, and old-to-new fission!

Among them, the construction of private domain infrastructure is the first thing that an enterprise must do when deploying private domain. In the subsequent operation process, the most important thing is actually the content accumulated in the private domain. Only when this step is done well, can you expect repeat purchases, additional purchases, old customers bringing in new customers, and so on. As for public domain diversion, in my opinion, it is more like a megaphone, or a kind of booster fuel, a catalyst to maximize the value of your private domain!

Author: Pai Ye Operation

Source: Pai Ye Operation