Metro Beauty's three new private domain strategies

Let’s first look at a set of Metropolis Beauty ’s financial report data for the first half of the year:

- Metro Beauty achieved revenue of 1.827 billion in the first half of this year, a year-on-year increase of 37.1%;

- The GMV of Metro Beauty’s mini program in the first half of this year exceeded that of the whole of last year, and the average monthly GMV in the first half of this year was 5-6 times that of the second half of last year;

- With approximately 5,000 stores and over 10,000 shopping guides nationwide, comparable same-store sales of directly-operated stores and franchise stores increased by 23.8% and 10.7% respectively;

- The total number of omni-channel members is nearly 60 million, and the number of corporate WeChat friends is about 1 million at the end of October;

-The penetration rate of mini programs in brand-owned stores reached 100%, and the penetration rate in franchise stores was 62%. In the first half of the year, the stores participated in a total of 814 live broadcasts.

The GMV of Urban Beauty’s mini program in the first half of this year exceeded that of the whole of last year. What major changes have taken place behind this? What do the penetration rate of mini programs and the number of live broadcasts mean? What strategy is behind the different growth rates between direct-operated stores and franchisees?

Coincidentally, Jianshi found the head of Urban Beauty’s private domain retail department two days ago. He mentioned that Urban Beauty has redefined its private domain strategy since the second half of last year, and adjusted and optimized its organizational structure and operating strategy ( “123” strategy ).

The new organizational structure and operating strategy mainly target the channel conflicts, profit-sharing and membership asset issues between brands and franchisees, as well as the difficulty of motivating shopping guides to actively operate private domains and use private domain tools.

Specifically, the direct sales and franchise systems began to promote the private domain in stages, rather than doing it all at once as before; for the store shopping guide group, the marketing center's smart retail department conducts multiple training sessions every month to enable the shopping guides to achieve new upgrades in both cognitive level and basic skills.

At the same time, the headquarters is also responsible for the unified production of marketing content, synchronizing the marketing calendar for shopping guides one week in advance, and continuously simplifying the operating procedures of shopping guide operations, thereby reducing the operational burden of terminal shopping guides and allowing their income to actually increase.

The headquarters also found that offline stores are still the most important user touchpoints in the private domain closed loop. Therefore, while conducting user operations around stores, it is also constantly expanding offline channels and upgrading store experience. In order to cater to users' increasingly fragmented consumption time, Urban Beauty will use more abundant global touchpoints to take over private domain members converted from all public domain platforms and achieve omni-channel performance growth.

Regarding trial and error, he also mentioned that at the beginning he focused too much on the system and tool levels, was too obsessed with the business closed loop, and ignored the role of operations. It was only in the past three months that I realized that “70% is operation and 30% is tools”. When a brand is just starting out, operation may even account for 80% or 90%.

Image source: Urban Beauty

What are the eye-catching statistics of Urban Beauty?

Cosmo Beauty: First, the GMV of mini programs in the first half of this year exceeded that of the whole of last year, and the average monthly GMV in the first half of this year was 5-6 times that of the second half of last year;

Second, the overall omni-channel membership is close to 60 million, and the number of corporate WeChat friends is about 1 million at the end of October;

The third is the penetration rate of mini programs among shopping guide groups. 100% of the shopping guides in directly-operated stores have placed orders on mini programs, and 62% of franchisees have opened mini programs for private domains. There are approximately 5,000 stores and over 10,000 shopping guides across the country.

Fourth, in the first half of the year, the private domain revenue of direct-sale stores accounted for the highest value of 7% of the overall GMV. Most of the private domains of underwear categories in the market only started in the second half of last year, and the private domain revenue of the best brands did not exceed 10% for the time being;

The epidemic has eased in the second half of last year. Why is the average monthly GMV in the first half of this year 5-6 times that of the second half of last year?

Cosmo Beauty: First, in May and June last year, we redefined our private domain positioning strategically, which means that brand awareness and reasonable sales conversion coexist;

Second, based on the new private domain strategy, the team was adjusted in the organizational structure. The smart retail team was incorporated into the marketing center and reported directly to the top leader, with stronger organizational and coordination capabilities.

The third is to optimize operational strategies. When the epidemic first hit, we promoted the private domain of both direct sales and franchise systems. Direct sales were easy to promote, but franchisees were involved in issues such as profit sharing and member assets, which led them to question the value of private domains. After the epidemic was truly alleviated, their business focus returned to offline again. Therefore, after the organizational adjustment, we re-examined the business logic and sorted out a new operating strategy.

What problems will the franchisee system encounter when promoting corporate WeChat or mini programs? How was it resolved later?

Cosmo Beauty: There are three key issues: First, there is the conflict between online and offline channels, which is now resolved by offering the same products and prices as in stores to a small extent;

The second is the profit-sharing issue, that is, the ownership and profit distribution of the mini program's transaction performance. Now Youzan's mini program can unify the profit distribution and allow franchisees to receive payment directly, solving the problem from the perspective of business logic and system security.

The third is the issue of member assets. Youzan’s system can deposit members in the franchisee’s mini program and put them ahead of thousands of people.

What does the new operating strategy specifically include?

Urban Beauty: The new operating strategy is called the "123" strategy internally by us.

“1” refers to integrating live broadcast, mini-programs, enterprise WeChat, membership and other teams into a new retail department, that is, coordinating the entire private domain ecosystem;

"2" refers to the two major systems of direct sales and franchising. The private domain model will first be implemented in the direct sales system, and after the SOP and methodology are sorted out, it will be promoted in the franchisee system. In Q4 last year and Q1 this year, the company focused on direct sales, but only in Q2 this year did it start to focus on the franchise system;

"3" refers to the joint efforts of Urban Revivo, Tencent Smart Retail, and mini-program supplier Youzan to create a new private domain business model. In the second half of last year, the private domain methodology of most brands had not yet taken shape, so we need to rely on external advanced experience to empower ourselves.

Image source: Urban Beauty

What are the key data for the new operating strategy?

Urban Beauty: 2021 is the year to consolidate the foundation of private domain. Although there is GMV indicator in our KPI, the company pays more attention to process indicators. First, how many shopping guides are willing to actively forward our video accounts and graphic content; second, the number of shopping guides doing live broadcasts, the number of sessions, the length of live broadcasts, and the length of time users are online. The amount of goods sold in each live broadcast is not a key indicator; third, the growth of new members, the sedimentation of public domain users in private domains, and the activation of dormant or lost users. Specific data include the number of friends on the company’s WeChat account, etc.

Judging from key indicators, your operational strategy needs to focus on shopping guides. How to do it specifically?

Urban Beauty: The core of private domain is for shopping guides to establish warm semi-acquaintance or even acquaintance relationships with users; the core of new retail is still service, and for shopping guides, the new requirements are more about tools and skills. Therefore, the core concept we propose internally is to empower shopping guide service members.

The first step is to provide extensive training to store managers and shopping guides in terms of ideas, tools, and skills. This year, the focus is on training in store live streaming and community operations.

There are three types of training: 1. Daily training, which targets the general managers and supervisors of each region. They spend a lot of time with shopping guides, and the transformation of shopping guides' ideas and concepts and the development of basic skills need to be carried out through them; 2. The headquarters team conducts on-site training through remote meetings or directly in the region, the latter being more effective; 3. Organizing regional or headquarters training based on core themes.

The main task in Q4 last year was to refresh the shopping guides' cognition. It is difficult for them to understand public and private domain issues. The key is to start from the shopping guides' pain points and let them understand that the reason behind the decline in store traffic is that customers' shopping habits have switched from window shopping to live streaming on Tmall, Douyin and Kuaishou. Then let them imitate and learn from benchmark cases, and finally use the bonuses and spiritual honors in the PK competition to help shopping guides strengthen their basic skills.

Starting from Q1 this year, there will be centralized training led by the headquarters every week, and offline training every month. However, it is not carried out in all areas at the same time, and not every shopping guide needs to participate at the same time. Some are mainly store managers, some provide special training for stores that do well in live streaming, and some provide literacy or refresher classes for shopping guides with average performance.

The second step is to create marketing content, set the marketing rhythm, and simplify promotional actions. Simplify all operational actions that store guides need to perform, and try not to add more steps if they can be forwarded with one click. Because Urban Beauty is still positioned for mass consumption, most of its stores tend to be in the lower-end markets, and the daily work of shopping guides is already quite busy.

This requires the headquarters to organize and coordinate, including designing the marketing promotion calendars and related graphics and text content for each quarter, month, and day in advance. The operations manager must be clear about the marketing plan for each month, and the shopping guide only needs to know the marketing calendar for seven days a week, such as launching new products on Monday, live broadcasts on Tuesday, and membership day on Wednesday.

Image source: Urban Beauty

In your series of trainings, what roles do private domain tools such as mini programs, live streaming, and corporate WeChat play respectively?

Urban Beauty: First, mini programs correspond to daily promotion scenarios. For example, the daily material output is mostly mini program products or marketing activities. They also play a role in transaction conversion in other private chats and group messages at the headquarters.

Second, considering that consumers’ attention span is relatively scattered, live streaming has become the most important marketing node of the store every week, and some stores have already started live streaming on fixed dates;

Third, corporate WeChat has gradually become a SCRM tool. On the one hand, it helps brands accumulate member data. On the other hand, it is also the most powerful official communication tool in the hands of shopping guides. We found that as long as the shopping guides were clearly explained the key points of adding friends, they were very happy to replace the original user communication tools.

Have you reviewed the specific portraits of your member users? Have you ever summarized users’ consumption behavior habits?

Urban Beauty: Our members are mainly women from the sinking market; the overall age span is large, users in first- and second-tier cities tend to be younger, and users in third-tier and lower cities are relatively older; from the perspective of value contribution, consumers who purchase more than three times a year account for more than 40% of the overall member GMV, and they are also the group that needs to be focused on.

Our biggest discovery is that there are consumers online at every point in time, and user touchpoints are extremely rich. This also means that private domains also need to use rich touchpoints across the entire domain to carry out user acceptance and interaction. The final conversion can be in stores, mini programs or Tmall, as long as users are willing to pay attention to our brand. Therefore, improving omni-channel performance is one of the core KPIs of the entire membership team.

How do you differentiate the benefits of different membership levels? How to maintain member relationships?

Urban Beauty: Membership levels are divided into gold card and ordinary card. Gold card members enjoy 12% discount and exclusive birthday coupons, ordinary card members enjoy 10% discount, and gold card and ordinary card members can earn double points on Wednesdays, which are member days. Currently, we have about 60 million members, and Qiwei’s 1 million member fans only account for a small part of it, so activation is more important than attracting new members.

In terms of maintaining membership relationships: first, enriching membership benefits; second, collaborating with brands such as Sephora to attract more potential members’ attention;

Third, the content of the marketing activities will be delivered to more old members and new consumers through text messages, official account pictures and texts, shopping guides and corporate WeChat accounts; Fourth, stores are still the most important marketing touchpoints for the brand. Users with good stickiness will visit stores twice a year, once in spring and summer and once in autumn and winter. Therefore, we will designate every Wednesday as a fixed membership day, and design corresponding membership activities in the mini program and stores, such as points redemption coupons, membership salons, gifts or cash back, etc.

Will the shopping guide’s income change after the sales method changes?

Urban Beauty: The proportion of online mini-program sales commission of shopping guides in their overall income is currently within the planned expectations, which has a certain positive incentive effect on shopping guides. In the future, assessment standards will not be divided into online and offline, but will be integrated into one set of assessment models. Currently, shopping guides do not have any private sales result-oriented KPIs, and are mainly based on encouragement.

Because store guides are familiar with some loopholes in the system and business processes, as long as many retail companies include online performance in their KPIs, the guides' actions will be distorted, and many offline performance-oriented online phenomena will follow. We don’t want to turn it into a cat-and-mouse game, and would like to focus more on brand promotion and content marketing.

In the process of promoting private domain, have you summarized some trial and error experiences? What difficulties are there at present?

Urban Beauty: First, the biggest lesson is to properly allocate team energy and resources at different stages of operations. At the beginning, we focused too much energy on the system and tool levels, were too obsessed with the business closed loop, and ignored the role of operations.

It took me nearly three months to realize that "70% operations and 30% tools". When starting out, operations may even account for eight or nine points. In the early days, shopping guides only needed some basic tools. The key was that shopping guides could recognize the value of private domains and start to perform related operational actions, thereby forcing the iteration of tools.

Second, team operation capabilities. That is, whether one can quickly try and error, refine methodology, quickly find the right direction, and have the ability to analyze and operate data. Talents in the private sector are hard to come by now, so internal training is still the main focus. It is difficult to recruit external talents, and the recruited talents may also be poached by higher salaries. It would be better to focus on young cadres, give them more opportunities for trial and error and give them more resources so that they can grow quickly.

Third, the challenge now is the high pressure of activation. It is difficult to carry out refined operations for 60 million members, and it is even more impossible to monitor the operations of a single customer at all touch points. This may require the coordination of almost all departments, and the company's organizational structure needs further adjustment and optimization.

Author: See the truth

Source: Jianshi