Baiguoyuan-Private Domain Methodology!

What constitutes an “ideal” private domain?

How much "value" can the private domain provide, and how to measure the value?

With these questions, we found Baiguoyuan, a company with more than 16,000 corporate WeChat communities, nearly 5,000 stores, and an average private traffic pool of nearly 1,000 people in each store’s community.

Take the new private domain move of Baiguoyuan from the beginning of this year to the present, i.e., the migration from the personal WeChat operation system to the enterprise WeChat operation system, as an example. They have done two things:

1. diversion. Through store guidance, manual friend addition and other methods, as of August, they have more than 4.1 million enterprise WeChat community users;
2. operations. After the traffic entered the group, after a period of operation, the monthly consumption increased by 7 times: the original monthly consumption was 50 yuan, and after joining the group, the monthly consumption increased to 350 yuan.

Image source: Baiguoyuan

After reviewing more than 4.1 million private domain traffic in various dimensions, Baiguoyuan has explored a "mature" methodology and is still evolving.

Today's article is a comprehensive analysis of Baiguoyuan's private domain:

Tactically, from management deployment to operational details, key nodes from 0 to 100, from what kind of people are needed in the private domain to what capabilities are needed, cost accounting and benefits...

Strategically, what is the value of an enterprise building a private domain for mid- and senior-level managers? If building a private domain is just for the purpose of making a little money, it will never become the strategic core of a large enterprise that can survive without worries.

In other words, what impact will an ideal private domain have on a company's products, brands, channels, public relations, supply chain, etc.?

In order to get to the bottom of Baiguoyuan, we invited Yao Yang, the technical R&D director of Baiguo Technology and the general manager of Youxian Internet (Note: Youxian Internet is a subsidiary of Baiguoyuan), and had a nearly 4-hour conversation with him. The final transcript was nearly 60,000 words, and it took nearly a week to condense it into this article.

We start from two perspectives to help you get to Baiguoyuan's methodology more clearly and quickly:

1. Our summary of Baiguoyuan’s reusable private domain methodology
2. Our conversation with Mr. Yao Yang from Baiguoyuan is about his personal insights on the private domain industry and private domain digitalization.

From enterprises to industries, from strategy to tactics, from data lows to growth, a comprehensive analysis is completed.

1. Baiguoyuan’s Reusable Private Domain Methodology

1. Create a real consumption scenario

What is the consumption scenario?

The development of the retail industry always revolves around "people, goods, and places", and the "places" are often considered to be places for transactions, but they are still far from the real consumption scenes.

For example, if you have nothing to do and go shopping in the supermarket, if you don’t have a clear demand, even if the supermarket has prepared tens of thousands of SKUs, it may not be of any use.

A scene is just a scene. If there is no demand in the scene, there will be no consumption.

The scenario that hides the decision-making motivation is the real consumption scenario. If the consumption scenario is not "real", acquiring customers is just a matter of luck.

On the surface, users are wandering around in consumption scenarios, but in fact they are looking for/waiting for a scenario that can truly allow them to consume. They need to be guided, or in other words: give consumers a reasonable reason to spend money.

How does Baiguoyuan create real scenes? Here are 2 examples:

① Store scene

As to why Baiguoyuan can do well in the private domain, in the eyes of bystanders, it is enough to rely on the huge touch points of nearly 5,000 offline community stores. This is indeed an advantage that other fruit brands cannot match. However, Baiguoyuan has nearly 5,000 offline stores and more than 4.1 million community users.

This means that each store will at least direct nearly 1,000 users to the community it operates. As a store, their traffic source is of course offline. The first real consumption scenario and decision-making scenario involved here is: how to get users to the store (scenario)?

Let’s do a small survey first: If a new store opens on the route you take on your daily commute to get off work, how many times do you have to pass by before you discover it? How many times do you pass by and you become interested? How many times will you pass by and go in alone? It is difficult to come up with an answer based on three reasons: mobile phone addiction, social phobia (in unfamiliar areas), and habitual online purchasing.

There are already stores, but to break the deadlock, Baiguoyuan’s approach is - during the renovation of the new store, a small table will be placed outside the door to give away fruits, brand peripherals (such as Baiguoyuan fruit knives), or even a bottle of mineral water. Since you don’t pay attention to me, I will deliver it to your door myself, and you only need to choose whether to accept it or not. The condition for obtaining these products is: joining the group.

When the store opens, the store manager will remind the group of the opening date in advance and launch activities to attract everyone's attention. During the opening period, he will continue to post information in the group to create reasons for users to buy.

This is the same principle as we are building a "reservoir" in advance. Data from Baiguoyuan shows that the sales growth of stores that have "stored water" in private domains in advance is significantly faster than that of stores without private domains, and can even shorten the investment return cycle.

② Live broadcast scene

First of all, we need to explain that we believe that users can be divided into three parts: one part is those who really want to consume, the other part is those who have no demand, there is a wall between the two, and the users sitting on the wall are the third part - people who can buy or not. If we can get this group of people down from the wall (transform them into consumer users), there will be incremental growth.

The role of Baiguoyuan Live Broadcast is to "pull people down from the wall." Live streaming, as one of the various forms of online e-commerce, is the action that can best trigger impulse purchases - it constantly generates decision-making scenarios and creates a sense of atmosphere. This is also the significance of stores and their shopping guides. The aesthetic atmosphere of store decoration and display and the persuasion of shopping guides can help users speed up decision-making.

In the live broadcast room, the host's words guide decision-making and the room creates an atmosphere that can pull the people on the wall down. More importantly, the live broadcast is "real-time". First, there is a sense of urgency in real time, which urges users to make decisions; second, there is real-time interaction. In addition to the host, there are fans in the room. Their speeches, positions and opinions are often helping companies to pull the people on the wall down. The atmosphere itself also creates a herd effect. (For details, please refer to the queue in front of Heytea) In Baiguoyuan, live streaming is a necessary marketing action for every store.

So, what conditions are needed to meet the "real consumption scenario"?

1. Deliver to your door
2. Create reasons to buy
3. Continuously generate decision scenarios
4. Create a sense of atmosphere

Image source: Baiguoyuan, some in-store scene layouts

Baiguoyuan’s private domain is full of “real consumption scenarios”, such as the chain/flash sale sessions in group chats: store managers usually take the initiative to initiate new product discount chain purchase activities in the group (limited quantities), and those who participate in the chain create a sense of atmosphere in real time to stimulate user demand.

For example, when there is a durian promotion, the store manager will post the weight, price, and picture of each durian in the group and let everyone queue up. As a Baiguoyuan user, I get more and more anxious when I see the queue getting longer and longer and the durian getting less and less. Even though I originally had no need to buy, I always join in at the last minute, and then I feel secretly happy when I see the latecomers crying and begging for more orders in the group.

When the chain comes again the next day, those who wanted to buy something but didn’t buy it yesterday will place an order without hesitation.

Baiguoyuan has built a user membership management system based on the WeChat ecosystem. Store clerks use coupons, one-yuan purchases, points exchange and other benefits to guide users to register as members and join the community, successfully integrating them into the three-kilometer living circle. At the same time, group buying activities are its magic weapon for fission. Each Baiguoyuan store has 2-3 communities, and one community has 400-500 people. Through tens of thousands of groups, it covers millions of members, which builds the foundation of community users.

Some students may wonder: Why are users unwilling to add WeChat? Why does WeChat go silent after adding someone? Why is the group inactive? Why is the conversion rate not high? Is it because users don’t like typing? Is it that users don’t look at their phones? Or is the user too busy?

The emergence of "real consumption scenarios" is simply because consumers have become lazier. You should have had similar experiences. Whenever there is more to think about, you may give up if it is not necessary; whenever the path is a little longer, it may cause a miss.

This is why bloggers are always able to reap the benefits of fans: they feed their experiences directly to users and may even help them make decisions. All consumers need to do is pay.

To create “reality”, it would be best to add some urgency to the atmosphere, for example, a brand invites a group of people to queue up.

The marketing classic "Positioning" mentions that "with more and more brands, there must be a clear positioning to capture the minds of users." However, the current situation is that not only do we need a clear positioning, but as sellers, we also need to push the "positioning" in front of users (this is also the greatest value of private domains), allowing users to shorten the decision-making time and scope, allowing them to truly stand at the center of decision-making, rather than wandering silently in "fake" consumption scenarios.

So this is not just about the private domain. When dealing with all marketing scenarios, please ask yourself: Is this consumption scenario true or false?

Of course, whether it is store communities or live broadcasts, Baiguoyuan empowers store managers to manage them. Maintenance of customer relationships, business follow-up, contract fulfillment, etc. are all maintained by store managers. After all, the people who understand users best are often the users themselves or the people around them.

The question arises again. I know what a real consumption scenario is, and I also know how to create a real consumption scenario, but the question is, in the decision-making scenario, how can we make users have reasons to make decisions?

2. Ultimate demand insight

The creation of real consumption scenarios is equivalent to a process of drainage, that is, the process of users entering the private domain. However, we still have a long way to go before we can be favored by customers: after solving the traffic problem, how to reach them?

When I typed "What to do next after getting traffic?" into Baidu, the enthusiastic netizens' answer froze my smile: "The next step is to find a way to promote transactions!"

3. Traffic, users → ? →Transactions and traffic

How to make a deal? 1v1 private chat? I believe many students have done this. What are the results? 1v1 private chat is acceptable if you have a good relationship with the user. However, if the relationship is average, it is considered 1v1 harassment to the user.

Don’t worry, let’s first take a look at what Baiguoyuan has done. This is the official statement:

① Observe consumer consumption habits, make humanized improvements in product packaging, portion size and other details, and launch sales forms such as fruit tasting, small portion fruit, and combination fruit to meet different consumer needs;

② Associate and connect relevant data to build customer portraits to support marketing decisions and provide consumers with more personalized and considerate services.

Literally speaking, what Baiguoyuan does is analyze user portraits to complete the transformation from a "product"-centered approach to a "customer experience"-centered approach.

However, if Baiguoyuan only did this "surface work", then the information they would get should be: User A likes to buy a certain variety of apples with a higher price, but never buys lemons. It can be judged that he is not sensitive to price, and product information of new varieties of apples should be pushed to him first, rather than promotional information.

Suppose one day this user suddenly buys some affordable pears, then this portrait will be laid off.

In the digital age, why is there no second "Baiguoyuan" to solve this kind of problem that can be solved by paying a few thousand dollars a year to buy a SaaS?

Therefore, this is not a simple "portrait". What Baiguoyuan solves is: Why does this user like this apple? In other words - what "needs" do users have for purchasing?

Is it because it has a crispier texture, or is it because I don’t like to peel the skin so the skin is thin, or is it because I simply like the “sweetness” and don’t like the “sourness” of lemon? These particularly specific user preferences for taste, experience, flavor, etc. are difficult to be recognized by conventional big data.

Baiguoyuan is gradually using artificial intelligence to structure data for each type of fruit. For example, what is the "level" of sweetness and crispness, is it 7 points, 8 points, or 9 points? What is the functional relationship between sales volume and selling price? Compared with the data of other varieties, how high is the user's preference for sweetness and crispness?

Back to the issue of users and apples, assuming that the data of the pear purchased by the user is similar to that of this apple, both are "sweet, refreshing and juicy". Through precise user data analysis: next time you recommend wax apple to him/her, the probability of buying it will be quite high, because wax apple is sweet, refreshing and juicy.

The data dimensions are wider and deeper, and the granularity is finer, which means that the user insights obtained are more detailed and closer to the user's consumption needs. Every 1% increase in marketing effectiveness generated by this will result in direct revenue growth - you now know the reasons why users "don't" and why they "can" do it.

Image source: Baiguoyuan

When attribute labels and behavior labels have become routine operations, understanding user needs is a breakthrough.

Is this a kind of internal circulation?

not necessarily. Baiguoyuan's "use of artificial intelligence to establish structured data" is not suitable for most companies. After all, their premise requires a large capital investment to build their own IT system and purchase technical services from outside. Even Wang Jianlin has to set a small goal first.

What we should focus on is the refinement of operations.

Let’s take an example of a simple demand insight process using the operational scenario language in the conversion process:

Talking Skill ①: When we know that the user likes to eat durian: "Do you want to buy durian?"

Talking Skill ②: When we know that users like to eat durian and love to chat: "It's so hot today, do you want to buy durian?"

Talking point ③: When we know that users like to eat durian, love to chat and are afraid of heat: "It's so hot today, let's chill the durian and eat it like ice cream!"

Sales pitch ④: When we know that the user likes to eat durian, loves to chat, and is afraid of heat, and bought a certain Musang King last time: "It's so hot today, chill the durian and eat it like ice cream! The Musang King you bought last time is back in stock~"

Sales pitch ⑤: When we know that the user likes to eat durian, loves to chat and is afraid of heat, and that she bought a certain Musang King last time, the reason she likes it is that Musang King is "sweet": "It's so hot today, chilling durian and eating it is like eating ice cream! The Musang King you bought last time has arrived again, I have tasted it, and this one is sweeter."

Sales pitch ⑥: When we know that the user likes to eat durian, loves to chat and is afraid of heat, and that she bought a certain Musang King last time because it is "sweet", and that she always buys it on Fridays: From Monday to Friday, she only posts on Moments, and on Friday night, she says to her, "It's so hot today, let's chill the durian and eat it like ice cream! The Musang King you bought last time has arrived again, and I've tasted it. This time it's sweeter. I saved it for you tonight~"

The level of refinement in sales talk has reached ④, which is actually the current situation of most companies, and it can be accomplished with the help of WeChat.

The following quotes the "Private Domain Operation Plan" of a 100-Billion-Dollar Retail Enterprise: These 3 Knowledge Points Are Worth Copying! 》The reference picture of the corporate micro-portrait.

Here we have to mention a sentence from Steve Jobs - "We stand at the intersection of humanity and technology." Humanity represents demand, technology represents capability, and the premise for the establishment of any market requires a match between demand and capability.

At present, the barriers between data, technology (capabilities) and talents are not that big.

Tools can be purchased and talents can be found. There is no real monopoly.

However, in the private domain scenario, the power of the demand side should be greater. Simply put, when everyone is the same, differentiation actually comes from business and demand.

So, why did Baiguoyuan come out?

Baiguoyuan has done a great job in refining operations to the extreme and directly facing users' needs at zero distance.

So, putting aside the marketing jargon or exaggerated analysis, let’s answer these two questions first:

① As operators, how much demand do we see?

② As operators, how much "demand" can we meet?

We have always advocated making a review plan. Why? As a worker, we also optimize needs and business, continuously refine the operation process, and finally achieve the goal of "hitting the hearts of users with one strike."

Promise me: after solving the traffic problem, we must also solve the operation problem.

Once you have traffic, you must play with it, otherwise it will just be a burden to the system.

4. Distributed corporate culture

It is obviously not enough to attribute Baiguoyuan’s success to real consumption scenarios and extreme consumer insights. No company can survive without "culture", unless I don’t want to write it now.

After an immersive exploration of Baiguoyuan, we came to a conclusion: a vibrant corporate culture must be distributed.

Baidu explains: "Distributed means that the system is composed of several independent functional nodes and relies on network connections." It can be simply understood as a tree diagram model, with a trunk + several branches, and the trunk and branches support each other.

This big tree with more than 4.1 million private domain users has few branches - management and profit, two big branches.

In the past, we have always focused on the subtleties of operations. However, after peeling back these subtleties, we discovered that what suffocates operators is the top management’s lack of understanding of “operation” and their inability to see the truth behind those subtleties.

For example, the boss may not realize that the current online trend is moving towards the private domain. The private domain share that needs to be increased may still be consumed in the public domain, or may be consumed on other channels, such as developing apps, etc. However, for consumers, mini-programs with social attributes are more direct.

But the more we come into contact with companies, we find that the bigger problem is that the bosses see the trend clearly, but the holes in management are so big that even Nuwa can’t fill them. Management capabilities such as organizational structure, management closed loop, value mining, etc. are not clear, which leads to the private domain ultimately unable to be truly implemented.

We have come across a typical case: the company's marketing department is responsible for the private domain KPI, but the number of corporate WeChat users is posted in another department. The marketing department thought, isn't this equivalent to making wedding dresses for others?

How can we empower each other when interests and actions are inconsistent?

It's almost like checks and balances.

Therefore, Baiguoyuan adopted the platform + partner model as an example: letting the store manager become the investment subject and be responsible for store operations, stimulating the enthusiasm of the store manager to the greatest extent. This is a franchise model unique to Baiguoyuan, which avoids the drawbacks of direct operation and traditional franchise models.

If you look into it in detail, you will find that Baiguoyuan is a combination of "hardness and softness".

"Gang" in mass posting tasks, employees must be asked to perform mass posting tasks (i.e. company policy tasks), and statistics will be collected and strictly controlled to drive employees to implement company strategies (this point will be elaborated below);

"Rou" is encouraging store managers to exert their management initiative. For example, today, Baiguoyuan internally organized a sharing session on how to do live streaming with mini programs and why to do it, etc. It also shared good cases within the company and encouraged everyone to try, and then "collect cases → share" again to form a virtuous circle.

For example, Baiguoyuan Live also went through many trials and errors in the early stages. For example, it tried to have the headquarters broadcast the live and control the rhythm of the live broadcast, but the effect was not obvious. It also tried to create the IP of a certain company's senior executives, but the effect was average, because the senior executives are not celebrities, and for users they are not "the one", and this person is dispensable.

Finally, it was discovered that when a store manager was live streaming and playing a small guitar, his data was several times higher than that of the company's senior management. This is a pleasant surprise!

The company began to encourage stores to broadcast live themselves. Firstly, store clerks are unique to users in the store area. Secondly, they give people a sense of familiarity and trust, and online orders can be fulfilled quickly, which doubles the sense of trust.

For example, Baiguoyuan’s community management is also managed by its stores. Moreover, the groups where users actually interact with the brand are mainly stores, which also adopt a distributed operation structure.

It is difficult not to make franchisees become a community of interests and enjoy corresponding profit returns while working hard.

You can find that although the community, live streaming, promotion and purchasing methods of each Baiguoyuan store are generally similar, they also have their own characteristics. In the case of headquarters and their own interests, each of them is wonderful.

It is also suggested here that if you want to operate the private domain well, you need to clarify at the beginning who the actual private domain operator is and the interest structure between the actual private domain operator and the headquarters. Whether it is KPI or incentives, only after the interests are linked and the incentives are exchanged, the positions can be truly consistent. Only then can the private domain truly flow smoothly.

An insider of Baiguoyuan said that the problem of "purchasing IT from outside VS building IT in-house" cannot be avoided.

Outsourced IT means purchased software, and 90% of the software that the second party wants to make money by providing is general needs, not customized needs, otherwise it will not be profitable (on this point we can prove that it is a terrible loss). Think about it the other way around - general needs mean that, like all companies, you can't customize tools that perfectly suit you and you can't have "barriers."

There is another situation. When purchasing IT in the beginning, the online and offline responsible departments are different, and the purchasing systems are different. In the end, it is found that they cannot be connected. For example, system A cannot use Excel, and system B can only use Excel. So what language do they use to communicate? All in vain.

Baiguoyuan has an IT team of nearly 600 people, and if there is enough budget, it can certainly have both. Previously, Baiguoyuan also faced the "feat" of migrating social users to corporate WeChat. Fortunately, the process was fast and the results were quick. With the help of refined operations and digitalization, it completed the transfer of more than 4 million users in just 6 months, and the monthly consumption of new customers increased by 7 times.

But what about small businesses that cannot “outsource + build on their own”? Teacher Yao Yang suggested:

① The two most basic pieces of equipment in the private domain are indispensable: WeChat for Business (WeChat for Business is the specific software manifestation of the private domain) and mini-programs (delivery capabilities);

② It is best to implement member digitization from the beginning of private domain construction, connect user IDs and various systems, so that subsequent operational refinement can be carried out as scheduled. That is, the front-end, middle-end, back-end and third-party capabilities (enterprise WeChat and other technical tools) should also be considered from the beginning, rather than getting off and refueling halfway.

Image source: Baiguoyuan Baiguoyuan private domain system architecture diagram

The 7,000-word reusable private domain methodology ends here, and can be summarized in one paragraph and one picture:

In private domain operations, it is necessary to sort out and clarify the relationship (management configuration) and interest structure between the actual private domain operators and the headquarters. At the same time, with IT as the foundation, lay a solid foundation for private domain digitalization to ensure consistent subsequent steps.

Externally, it is necessary to create an internal "pool" environment at the beginning of "engagement" with users. Real consumption scenarios are the first step in traffic, while refined operations serve high-quality private domain users.

This part is a map that clears away confusion in private domain operations. The following Part 2 is the growth process of Baiguoyuan’s private domain and the key to doing private domain. This part will be more detailed and include details such as which nodes generate growth.

2. Dialogue with Yao Yang on private domain growth and private domain digitalization

1. The growth process of Baiguoyuan Private Domain

Zero One Fission: What are some of the most critical and impressive decisions made by Baiguoyuan in the process of developing its private domain business?

Baiguo Technology-Yao Yang: First, build your own IT team. Back then, in 2015 and 2016, building our own IT was a huge investment for the retail industry and required a lot of courage. However, this laid a solid foundation for us to develop our own digital system in the future. If we had mainly purchased IT at that time, we would not have been able to achieve such a solid foundation as we have today.

Second, all in mini programs. The mini program brings together demand, transactions, and shelves. Social media represents demand, and shelves represent trading capabilities. What does it originally mean?

Originally, I expressed my needs in the chat software, and then when I wanted to do the corresponding things, such as taking a taxi or buying something, I had to jump into the corresponding App. The mini program satisfies the connection between consumers and brands, shortens the path, and builds trust based on social logic. The mini program can also be used in group chats and private chats, which is its greatest value.

Currently, Baiguoyuan has developed an App and WeChat mini-program. The WeChat mini-program was launched a little later. Although we started trying it in 2017, we really went all in on the mini-program in 2019. In the beginning, we were still very obsessed with our own app, so the transformation was relatively slow.

Third, all in WeChat for Business. In fact, it only took us five or six months to try it out, and then we made a firm decision to shift our entire marketing focus to WeChat for Business.

In the past two years, Baiguoyuan has started to use private domain as its core marketing position, so some of its configurations in private domain will become more and more comprehensive.

Zero One Fission: Why did you decide to go all in on WeChat for Business?

Baiguo Technology-Yao Yang: We started using WeChat for Business at the end of 2020. In March and April, we were attracting new users, but we hadn’t seen any results at that time.

Because our goal at the time was to attract new customers in a small area in Nanjing, in April and May, we saw that relevant users had begun to appear. The difference between new customers who joined the group and those who did not was very obvious, and the amount of consumption increased significantly.

We only sacrificed a single-digit gross profit margin and increased the ROI of a single store's GMV by 10 times, and this was before we fully transferred to WeChat for Business.

The first data analysis showed that the monthly spending amount between new customers who joined the group and those who did not was 7 times different. This built confidence for our internal executives and franchisees. Based on this confidence, we finally decided that WeChat for Enterprise would be the main marketing platform this year. Therefore, many of our activities this year will also take the private domain into consideration.

Currently, 60-70% of stores agree with this (private domain of enterprise WeChat), but only 10-20% of stores can make use of it. So what are we doing now? It is to copy the gameplay of excellent stores in the group and give it to other stores. This is the direction we are focusing on now.

Zero-One Fission: "Play well, play well", what is the level of well in your case?

Baiguo Technology-Yao Yang: Single-store sales directly tripled. There is also a process indicator, group activity, which is the chat situation in the group. We have a positive correlation logic about group activity:

① The higher the group activity, the higher the GMV will be;

② Group penetration rate, which is calculated by taking the number of users who have shopped in this store before the establishment of the group as the denominator (that is, the number of active users of the store), and the number of users who join the group as the numerator. The higher the group penetration rate, the higher the GMV increase.

How can enterprises calculate the private domain account? Combined with the business model and the cost of placing orders, what thoughts and suggestions would you give?

Zero One Fission: You mentioned the trade-off between App and Mini Programs, but I think you should still use App as your main battlefield at the moment, right?

Baiguo Technology-Yao Yang: Currently, the monthly GMV generated by the Baiguoyuan Mini Program and the GMV of the App account for about 20% in total, with the App and the Mini Program each accounting for half.

Our original App strategy resulted in differences between the functions of the mini program and the App, and the App's functions are more comprehensive. We will now gradually align the functions of mini programs, and mini programs may even be the priority for launching new features in the future.

Zero One Fission: When you were doing various tests on WeChat for Business, what were the main variables you discovered that allowed you to quickly go all in on WeChat for Business?

Baiguo Technology-Yao Yang: It is mainly due to the increase in average order value of new customers. In fact, when we analyze, we not only analyze new customers, but also analyze all customer segments. The core of the analysis is to look at the consumption performance of users of different levels and different consumption amounts in the entire private domain, in groups and outside groups.

The specific manifestation is, for example, the average order value. We counted the core indicators such as purchase frequency per period, purchase frequency per customer, and total consumption (of course, these were calculated with gross profit), and they all showed an upward trend. After continuing to test for another two or three months, our confidence became stronger, because a small amount of data is not necessarily correct. Therefore, it actually took five months from the beginning of measurement to stabilization.

2. The key to private domain digitalization

Zero One Fission: Enterprise WeChat cannot be separated from the digitalization of the private domain. Based on this, what capabilities should be possessed to build a good private domain digitalization? After building these capabilities, what value do members' digital capabilities play in the entire private domain?

Baiguo Technology-Yao Yang: First of all, regardless of whether it is a private domain or not, as long as an enterprise’s business logic is based on repeat purchases and LTV profits, rather than on the business logic of making money from a single sale, it must digitize its membership.

For example, take cars. Such brands certainly hope that you are loyal to the brand, but to put it bluntly, they can basically make money by just selling you one car. This is the logic of single product, and the logic of single product does not necessarily require consideration of repeat purchases.

For example, in the case of fruit, since opening a store is very costly, we certainly hope to extend the life cycle of a customer, have them consume in the company for a long time, and provide value. In this case, members will need to provide long-term services.

The business model determines whether a company needs to digitize its membership. The core of membership digitalization is based on the company's attractiveness to members. It is reflected in the difference in product power and service power, and finally turns into members' loyalty and trust.

It doesn’t mean that everyone should play with private domains or member digitalization. As long as the business and format have these prerequisites, they should do it.

Next, let’s talk about what capabilities are needed in the private domain.

First, you must have the delivery capability. The so-called delivery capability refers to transactions and interactions (services). Assuming that you are a seller of goods, you need a carrier that can carry out transactions in the private domain, such as a mini program. If you are providing services, you should at least have an appointment function in your private domain.

Second, members’ refined capabilities. We must have the ability to refine and informatize our membership. Operational capability is also a kind of system capability. How is operational capability manifested? For example, you can use different dimensions to differentiate your users, whether it is the dimension of the membership life cycle, how many times a new customer has consumed, what services they have enjoyed, and so on.

For example, the membership attributes of Kidswant are very strong, and their membership LTV is fixed. Because when children grow up, they will leave Kids King and no longer need the infant products and services provided by Kids King. In other words, Kids King needs to try its best to tap the user's value potential while each user is still in his or her life cycle, which is divided according to the user's growth path.

For example, if an enterprise has a product dimension, then there is a member preference dimension between products and members, and such refined thinking must be possessed in operations.

Finally, there is the ability to group and reach out, which is specifically reflected in the logic of tags. Regardless of whether it is implemented with tags or not, it can also use directories, which is similar to the concept of operating system folders. But it must be able to group members, and after the grouping, it can reach out according to different members, and then after the trigger, it must analyze according to different members. This is the capability that the system must have.

Zero One Fission: What are the key nodes and experiences in Baiguoyuan’s private domain digitalization process?

Baiguo Technology-Yao Yang: The first thing is to become a member.

First, introduce members as soon as possible. Take Baiguoyuan as an example. Baiguoyuan is a fruit store, but fortunately we started promoting recharge very early on, and the recharge promotion itself gave users an impression that Baiguoyuan is different from ordinary fruit stores.

Compared with a husband-and-wife fruit shop, before, if a husband-and-wife shop asked you to recharge your membership, it would feel very abrupt. Because there is no such precedent in this industry. Maybe fitness and hairdressing require membership, but why do you need membership to buy fruit?

Therefore, if we were a company without the concept of membership at the beginning, especially for a low-order, daily retail industry like fruit, suddenly becoming a membership company would actually be quite abrupt. Although brand guidance can be done step by step to build users' awareness of the brand membership design, it will take a relatively long time to do so.

Second, it is best for the brand to upgrade itself into a new and younger brand. Especially in terms of store decoration, display, online brand copywriting, etc., it is actually very "reasonable" for young brands to become members. This is a very strange point, but it does meet user expectations.

For example, when people go to Heytea, Heytea requires users to place orders through the mini program. You would think this is normal because it is a new brand and all forms including payment are new, so it requires users and users agree. So naturally, I registered for a digital membership when placing an order online.

In summary, if you want to digitize your private domain, the first step is to "rationalize membership." The first thing is to make users' expectations of you as digital members reasonable, and provide users with the membership services and rights they need, otherwise they will have resistance.

The second is IT. When Baiguoyuan was working on the digitalization of its membership, it actually experienced a problem that traditional enterprises were facing in terms of digitalization, which was the IT system. Traditional enterprises used ERP systems that did not have high concurrency (usually purchased from outside), and they often encountered two problems:

For example, membership rights are not connected or integrated online and offline. If a user has recharged a account in a store but cannot use it online, this is unreasonable, so the member information must be connected; for example, if the product inventory is not connected, if the goods purchased by the user are shipped from the store, then the store's inventory must be connected with the e-commerce inventory. If it is not connected, overselling may occur and the store may no longer have the product, but orders can still be placed online, which will cause disgust.

However, the integration of membership and inventory means that there will be request pressure on ERP. If ERP does not have high concurrency, it may not even dare to promote it every week, because ERP may crash once it is promoted. Therefore, membership is challenging for the IT system, especially in terms of membership and ERP inventory.

Only after the bottlenecks of such systems have been resolved and member rights and interests have been integrated online and offline, can it be said that member digitization has been initially completed.

But there is another point to make it really taste good, which is digital operation. This is the PDCA (plan/do/check/act) process of the entire enterprise, which means that you have to constantly set some questions, make some assumptions, and then make your guidance more precise.

Take Pagoda’s “Four Times Membership” as an example.

This is an experience discovered in the gaming industry. The gaming industry will provide very detailed guidance when you operate a function a few times, but there will be no guidance after that. Similarly, when you complete tasks for the first few times, there will be a very obvious incentive logic. Regardless of the sound effects, pictures, or accumulated rewards, some habit cultivation will be done in the early stages that is different from that of existing stable users.

The same goes for consumption. Consumption habits are actually the process of cultivating users' understanding of the company. Moreover, users' understanding of a brand cannot be established in one or two times.

"Membership Four Times" is a turning point that Baiguoyuan found out from analyzing historical data. How was it analyzed?

Look at your own user churn, the relationship between user churn and user order frequency can form an x ​​and y axis coordinate, the x axis is the number of historical orders placed by users, and the y axis is the retention rate (the retention rate may be different for each company, such as monthly retention, daily retention, and weekly retention, which will vary depending on the business model of the company).

After the design is completed, you will find an inflection point. The inflection point is the number of times after which the churn rate will not be so high: assuming that the churn rate is 80% when the customer buys once, the user churn rate will be relatively low when the customer buys for the second time, at 60%. Then, there may suddenly be an inflection point after a certain time, and the churn rate will drop to 30%... and so on.

This is the number of times users need to recognize their brand. After the number of times, companies can do marketing around this number.

For example, Baiguoyuan has four times, so we divide these four times into four stages. Then we need to analyze what the consumption logic behind the user's four times generated?

We need to do matching operations through data analysis. After the turning point appears, we have to constantly try and use two hypothetical points (① How to divide users? ② How to market?)

Constantly match operational logic and constantly conduct experiments on your own members:

How to play new customers well, how to play old customers well, and how to play a better job for a certain product? After these systems are established, it will be a complete system of digital marketing for members.

Zero-1 Fission: Do you think there will be a difference between the digitalization of private domains and private domains?

Baiguo Technology-Yao Yang: I think private domain and private domain digitalization are related concepts.

Private domains, especially core channels represented by public accounts, communities, and private chats, are strong in private domains lies in "refinement", which means I don't need to face 10 million users with the same strategy.

If you treat all users with the same strategy, the marketing costs are high and the conversion is low. For example, users don’t like to eat durian, but your company insists on pushing durian for them. For those users who are wrongly marketing, this is completely a dissuasion to withdraw.

Refinement is something that digital marketing can do, and the premise of refinement must be digitalization. So I personally think that private domains, private domain digitalization, and precise marketing are actually related concepts. If you only do private domains, not digitalization, and not precise marketing, then there is no need.

Zero-1 Fission: Can you talk about the dimension of digital capabilities of private domains?

Baiguo Technology-Yao Yang: Private domain digitalization will change with the deepening of IT suppliers.

But up to now, a large number of third parties have relatively shallow functions. First, they only packaged the functions of the enterprise WeChat, and only opened up the traffic path of the entire product. What does it mean?

Although users can fall into your private domain, they still cannot refine it. They may have adjusted the mass sending interfaces of group and enterprise WeChat and then given them to the enterprise. However, there are many management processes that need to be followed up in the middle, as well as the mass sending formats, mass sending tags, etc., so how to do the private domain? How to achieve the core of the private domain (fine operation users)?

That is equivalent to only solving traffic, not solving operations, not solving reach. Not very effective. This is the first problem with a large number of three-party tools now.

Second, whenever members are digitalized, it will be more difficult for third parties, especially SaaS-based third parties. Because many medium and large enterprises are not willing to throw members on SaaS.

Moreover, the logic of refinement, segmentation and statistical indicators of each company's members are different, not just GMV and LTV, but: What is the logic of drilling down? "Drilling down" is a concept of data analysis, but based on the different management structures and management demands of the enterprise, the logic of the drilling down is different. This is what the enterprise really faces, not just the data problem.

The last point, and the important point, are also what we just mentioned: many companies are not only about tools, but also about operations, organization, and strategy. These problems have not been solved, and it is impossible to complete them with just one tool.

Zero One has a very advantage in this lies in its ability to help companies solve operational problems. You can go to a specific problem at a certain stage and solve the problem in a real way. Especially when it is very good at traffic-side operations, Zero One is certainly inseparable from tools, but in the operation stage, helping enterprises complete a full-cycle operation closed loop is the most implemented and guaranteed.

3. Conclusion

Baiguoyuan is the largest fruit chain enterprise in the country. At the same time, through private domain traffic, it has transformed into a digital new retail enterprise. Many of its practices have become models in the industry and even throughout the region. Baiguoyuan has become a "foresightful" enterprise. But through this conversation with Yao Yang and the comprehensive dismantling of Baiguoyuan, we found that we "misunderstood" it.

This story of "Traditional enterprise transformation into a field leader" is also a story of "ten years of hard work and one minute": discovering opportunities, entering, trying, failing, reviewing and growing. Baiguoyuan has experienced countless times, and has paid a lot of tuition for this. What they did is just reviewing and knocking back and starting over again.

Also breaking the "misunderstanding" - many people used to talk about Baiguoyuan's digitalization, but after a conversation, they found that the digital kernel is still a cliché operation, and data is just the underlying part of the operation.

Author: Zero-1 Fission

Source: Zero One Fission