4 Elements of Social Fission in Product Distribution

In my opinion, distribution, in short, is "dispersion + sales", which means occupying the market and selling products by dispersing terminals as much as possible, thereby achieving the goal of profitability. We need more people and more terminals. Indeed, this is the principle or essence of distribution.

However, with the rise of online marketing, online distribution has gradually begun to be demonized, especially after being associated with the "social fission" model. As a result, many people think of fission, the relationship between superiors and subordinates, rebates and commissions, and even "pyramid schemes" when talking about distribution.

Today we are going to talk about the demonized distribution social fission.

Why is it said to be demonized? Because many people now think that "distribution is pyramid selling", social fission may have initially been just a means of expanding distribution to more terminals, but because of the existence of the "recruiting people" model and practice, it has been ruined by more and more people.

1. The essence of “distribution social fission”

The concept of "distribution social fission" is very popular, but almost everyone has participated in it to some extent, and many people enjoy it.

You may have received such a message from your relatives. You click to participate in the group purchase, which can help your friends buy a certain product at a low price. At the same time, you are forced to download the same shopping tool. Even if you are very resistant in your heart, you complete this operation for the sake of your relatives' face. Of course, in this process, you may also enjoy the benefit of buying a certain product at the same low price as your friends.

You may have received such a message from a colleague, and through his/her link, you downloaded and registered a specific APP, and entered the colleague's specific invitation code during the registration process. After completing this action, your colleague will be very grateful to you because you have contributed dozens of dollars in commission bonus to him/her, and you may also receive a cash red envelope of more than ten dollars. It is a win-win situation and everyone is happy.

You may have received such messages from friends. You don't need to pay any cash cost, download or register. Just share it and you can get free reading books on a certain platform. At the same time, out of a sense of showing off knowledge and a public-spirited desire to help others, you naturally join the army of active sharing and share it with your 2,000 friends in your circle of friends one by one.

Looking at the many social fission methods of distribution nowadays, whether it is group buying fission, assistance fission, invitation fission, or sharing fission, they all basically belong to these four categories.

In fact, the promotion methods of many products now basically incorporate the "distribution" and "social fission" models to some extent. E-commerce, education, finance, medical care, news, fitness, etc., the methods are similar, the only difference is the degree of involvement.

"Distribution social fission" is externally manifested as a new customer acquisition cycle of "the upstream customer attracts the downstream customer to obtain commissions, and the downstream customer continues to upgrade the upstream customer and then attracts the downstream customer". It is essentially a user growth strategy , and many companies, especially startups, have shown great interest in it.

However, this model has both advantages and disadvantages.

2. Why are you so keen on “distribution social fission”?

1. Expensive traffic

With the development of the Internet to this day, its apparent traffic dividend period has indeed passed. Why do I say it is obvious? Because there are some niche ones hidden beneath the surface, such as private domain traffic, which are still in the traffic development stage.

The high cost of traffic means that while companies or products are eager for traffic, the financial costs they pay for it are also painful, including bidding, information flow, advertising, channel promotion, etc. Since the existing users of traffic distributors have been "exploited" several times by advertisements, even if advertising is increased, it has basically no driving effect on attracting new users and is just a waste of cost.

On the other hand, how many companies can continuously carry out advertising bombardment to ensure the continuous introduction of traffic and the continuous accumulation of users in the traffic pool? Even large companies need to consider this, let alone startup companies that are already constrained by funds?

In this context, the distribution social fission model allows users to form a closed loop of self-growth, which undoubtedly alleviates the urgent needs of entrepreneurial companies for user growth and financial pressure, and truly spends money where it counts, with immediate results.

2. Reach users at low cost

Compared with the previous rough advertising method of acquiring users, "distribution social fission" is easier to reach users quickly and at low cost.

Why do I say so? Let's take a look at this example.

A certain online appointment booking platform is an Internet project under a medical institution in Anhui. The institution has many years of experience in medical equipment and supply chain, has cooperated with nearly 400 public hospitals, and has a good reputation. The main service objects of its Internet project are people who need nursing services, including pregnant women, children, the elderly, etc.

After receiving this project, many operators may think of running a wave of advertisements on some professional medical websites, nursing websites, and medical WeChat public accounts, and then attract users through activities, and then achieve user retention and growth through some value-added services on the site.

Indeed, this is a relatively common practice.

However, it is reported that the platform adopts a user growth model similar to "distribution social fission". First, relying on the resources of 400 existing cooperating hospitals, the platform introduced this medical care online appointment platform (nurse side) to hospital nurses. Each hospital initially selected 30 nurses, totaling 12,000 nurses. These nurses actually acted as decentralized distribution points. When there was a demand for medical services, the nurses introduced users to download the online appointment platform APP and complete time, service, purchase and other actions on it. After receiving the order, the nurses can also go out to provide services in their free time. For each completed order, the nurse can receive a corresponding commission. In addition, for those users who have completed their orders, the platform also encourages new users to register and use the app through invitation rewards.

From this example, we can see that because it is recommended by nurses, medical users have a high level of trust; users place orders directly, which makes it convenient to meet medical needs; nurses can use their spare time to provide services, freeing up nursing labor.

As for the platform itself, it reduced a large amount of initial advertising, distributed the advertising costs well to the rewards for nurses, and gained a large number of targeted users.

3. Get cash flow quickly

Nowadays, the abundance of cash flow largely determines how far a company or a product can go.

And "distribution social fission" can help companies quickly obtain cash flow.

Through distribution social fission, registration - invitation - re-registration - re-invitation, the user growth system of the entire platform or product will show a snowball growth under normal circumstances. Since it is a snowball, the profits or cash flows generated by the users invited later or the products sold and services provided can often cover the capital investment of the previous rebate rewards, so that the cash flow can operate normally.

Although this may seem like raising a "capital pool", it must be said that the practice of robbing Peter to pay Paul can help corporate products quickly obtain cash flow. As for whether the project will perform healthily in the later stages, it depends on the final implementation capabilities of the operation.

Speaking of this, whether from the nature of distribution social fission or the original reason why corporate products choose this operating model, this method of attracting and maintaining new users seems reasonable.

However, in reality, more and more products are engaging in Ponzi schemes under the guise of "distribution social fission", or even engaging in pyramid schemes that are strictly prohibited by the state.

3. Which products are suitable for distribution fission?

With the background of traffic demand and a series of reasons attracting startups to choose distribution + social fission, it seems that this model is indeed irresistible. So, which products are suitable for distribution?

In my opinion, the following points are the key to the product.

1. Supply Chain Authenticity

The level of supply chain capabilities and its authenticity are the key to determining the success of the distribution + social fission model and how far the company's products can go.

Whether it is physical products or virtual services being sold, whether the supply chain can be closed is crucial for the company itself. At the same time, it is also the lifeline for distinguishing the authenticity of platform products.

Let me give you a simple example.

A certain store is currently considered a leader in the entire S2B2C industry. Its main slogan of "save money by purchasing by yourself, make money by sharing" has indeed brought it a huge traffic advantage. By educating consumers to buy items at a discount and providing a series of supporting services, including product production, storage, delivery, logistics, collection, after-sales and other supply chain closed loops, consumers do not need to pay too much attention to other details and only need to focus on promoting the subordinates. At the same time, the promotional copywriting and the selection of promotional items are all completed by the Beidian system. Under the premise of such supply chain services, individual distributors often focus on "attracting downstream customers".

In addition, any consumer who becomes a distribution individual has completed a physical purchase at Beidian, making the formation of a whole set of distribution individuals appear very natural and real.

On the other hand, let’s look at a news and information product called Kandian. Its operating model also largely follows the distribution + social fission model. Users can get cash rewards by reading information, but the bulk of the money still comes from inviting users. The first-level invitation returns 80 yuan, and the second-level invitation returns 30 yuan. However, the condition for becoming eligible for distribution and receiving rebates is to top up cash to become a member, but members do not receive any services equivalent to membership fees. In other words, this so-called "distribution + social fission" supply chain is missing and has no authenticity.

A platform that lacks authenticity is inevitably what is often called a Ponzi scheme. It may be okay to make a small profit, but if you go too deep, you will be "scammed".

In addition to e-commerce, similar services such as knowledge payment, 2B enterprise services, and finance have advantages in supply chain authenticity.

2. Continue to offer profit and rebate

People will not get up early without benefits.

Since you want to quickly attract a group of distribution users through distribution + social fission, you naturally cannot be stingy in giving profits and rebates. Because only high rebates and generous commissions can attract people and make them crazy.

For example, for an insurance policy worth 3,000 yuan, the commission of an insurance company can generally be between 25% and 35%.

A certain reading information platform offers up to 88 yuan in cash for registration, and recharges 188 yuan to become a member. If you invite members of the same level, you will receive a high commission of 30 yuan.

On a certain social e-commerce platform, if Xiao B sells a towel for 79 yuan, he will receive a commission of 40 yuan.

The ratio of the first-level commission alone is as high as 25%, 35%, 50% or even higher, and the second-level commission has not been added yet. This alone is attractive enough for the distributor Small B.

Of course, if a company earns more from user rebates, it also means that the cost of its products is also high.

Therefore, when judging whether a product is suitable for distribution, please think carefully about your own financial strength. Don't be deeply trapped in debt without making any money.

3. Moderate distribution threshold

Generally speaking, there are two distribution thresholds: one is the threshold of the product itself, and the other is the process threshold.

The product threshold is relatively simple to understand, which is how much the user needs to pay for the product itself to become a distributor or a small B. It can be said that the thresholds for the distribution + social fission products that are currently doing well in the market are relatively low.

You must have seen products that only require registration but do not require any money, but you can earn commissions through invitations, such as a certain headline; you must have seen products that only require spending a few dozen dollars to buy a product to become a member and realize the function of "saving money by purchasing by yourself and making money by sharing", such as a certain episode and a certain store; you must have seen platform products that require spending a few hundred dollars to register as a member, and members can then invite other members to earn high commissions, such as a certain Kandian and a certain Pingtianxia, ​​etc.

Regardless of whether these listed platforms are compliant or not, it can be basically seen that their product thresholds are not very high.

Have you ever seen anyone distributing houses worth millions on WeChat Moments?

Of course, maybe in the future.

Secondly, there is the process threshold.

It can be said that the process threshold is complementary to the continuous profit rebate to a large extent. Even if you give a high rebate, the complicated process and the troublesome invitation will lead to unsatisfactory results. After all, whether it is the small B who promotes or the object of distribution fission, they will estimate the rewards obtained and the behavioral costs they pay.

Let’s take the store mentioned earlier as an example. The unified formulation of materials, professional selection of products, and one-click sharing function are all designed to greatly reduce the behavioral costs of distribution users. Promotion and distribution actions can be completed with just a click of review, pasting, and forwarding.

For example, when a certain Internet financial platform was setting up a distribution + social fission activity at the beginning, it chose that users must download the APP and then register to be counted as an effective distribution user. However, after a period of time, it was found that the process of downloading and then registering was too difficult for many users. Although the platform itself may have been based on user retention considerations, the user growth effect was average. Later, we simply set up a registration entrance directly on the landing page and guided the user to download after completing the registration. In this way, the platform obtains more registered user information, and distributor B works harder because of the increase in the amount of commission rebates.

The threshold is like a tree trunk full of fruits; it should be simple and within reach.

4. Accurate small B

The distribution point is generally called small B, which may be an individual, a group or an enterprise.

Finding accurate small Bs and stimulating and maintaining this group of people well is crucial to the effectiveness of distribution + social fission, especially seed-type small B users, who are hard to come by and serve as a leverage for the development of related work in the later stage.

So, how to find the precise little B?

Normally, there are several ways to acquire precise small Bs: 1. The product has a batch of small B resources at the beginning of its launch, which is usually related to the resources accumulated by the company's founding team in the past; 2. Seek cooperation with KOLs, find some private domain traffic owners with personal influence to cooperate with, and influence fan users by maintaining these groups; 3. Use the operation mechanism to self-screen suitable small B users during product operation ; 4. Select small B users through service extension (I have mentioned this in the previous article). Finally, the entire distribution team can be expanded by having Small B invite Small B again.

Take the example of finding precise small B users. I mentioned above that a medical platform’s online nurse booking platform quickly found small Bs and concentrated resources to expand its distribution business.

Here, let's look at another counterexample.

A certain cloud commerce platform is an online platform that provides related corporate services. It is positioned as a 2B service and helps companies sell services. Through supply chain building and cooperation with suppliers, it has invited a large number of corporate services to settle in, including legal personnel, intellectual property, industrial and commercial finance and taxation, marketing promotion, brand design, software services, etc. Users can obtain membership by spending 398 yuan to purchase one of the products, and then they can make money through sharing and inviting commissions. The first-level invitation will return 100, and the second-level invitation will return 20. Theoretically speaking, it is still acceptable in terms of supply chain, rebate rewards, and threshold, but it is at a loss when it comes to expanding the targeted small B segment.

What they do with small B is: have promoters share the platform’s money-saving self-purchases and money-making mechanisms in the wool group, and then screen out people who really have business service needs. However, in actual operation, the small B groups attracted by this method are often attracted by the invitation mechanism rather than the corporate service needs, and have basically no performance-boosting effect on the suppliers on the platform. Gradually, it deviated from the original intention of 2B service and became a 2C platform for making money.

So what is the more reasonable approach?

First of all, the contact personnel who provide relevant services to suppliers are good seed small B users, whether in finance or promotion, etc. They all have their own professional circles; secondly, wool groups are not advisable, on the contrary, some professional communication communities, financial accounting communication groups, SEO communication groups, channel communication groups, brand design communication groups, etc. can be well utilized; furthermore, communication forums and WeChat public accounts of related corporate services are more suitable cooperation partners; finally, offline chamber of commerce cooperation, etc.

It can be said that acquiring accurate small Bs is crucial to the survival of the product and even the entire platform.

4. Thoughts on the fission of distribution social media

Based on the above, we have to consider the following three points when choosing the distribution social fission model.

1. Does the product meet the requirements?

Whether a product meets the requirements determines whether it is easy to sell or promote. The criteria for judging whether a product is good to sell and promote are different for each company. As long as you can quickly reach users, allow users to complete small B actions with simple operations, and see "profits" more quickly through sharing and distribution, it's ok if these three points are met.

2. On the edge of the law

In fact, the distribution social fission model has always been on the edge of the law, because there are no clear restrictions and regulations on distribution activities in the existing legal system, and the platform product's borderline approach makes it difficult for the law to directly characterize it as "pyramid selling". It is often judged whether it has touched the bottom line of pyramid selling based on whether it is a third-level distribution.

Through some market cases and the opinions of some legal friends around me, generally speaking, distribution is inevitable through the path of users inviting users. However, in order to obtain the invitation permission, if subsequent users need to purchase some physical items or real services and then obtain the permission to invite others to obtain commissions, it is a violation but not illegal, and may be subject to administrative fines; but if subsequent users can obtain permissions by simply recharging money but do not provide any equivalent real services, it involves a "pure recruitment" model, which is not only a violation but also illegal.

3. Building the supply chain

The creation of products or services on the supply chain side is often based on the above viewpoints.

Relying on the "pure recruiting" model to earn head fees, form a large amount of capital, and rob Peter to pay Paul is a model that is doomed to not go far, unless your product is identified as a "runaway" from the beginning.

But since it is a platform that actually makes products, builds platforms, and earns profits, it should do a good job in providing related product services on the supply chain side, acquire seed small Bs through appropriate methods and try its best to serve post-consumer behavior. This is the normal business ecology of an enterprise.

V. Conclusion

Let me summarize at the end:

1. "Distribution social fission" is essentially a user growth strategy and is desirable.

2. Companies are keen on "distribution social fission" because of their business background and reasonable demands to quickly reach users.

3. The four elements of the “distribution social fission” product: supply chain authenticity, continuous profit sharing and rebates, moderate distribution threshold, and precise small B.

4. Three points of consideration about distribution social fission, especially in the legal area, need to be carefully considered.

(over)

Author: Bi Xiaosheng, an Internet operations practitioner, focuses on observation, thinking, research and summary in the field of Internet operations.

Source: Pen Xiaosheng