A detailed explanation of the marketing and promotion methods of Internet finance from 5 cycles!

This article will reveal the underlying logic of relevant operational strategy design from the perspective of user life cycle management.

1. Prerequisites for user lifecycle analysis

The most taboo thing about operational strategies based on the user life cycle is to divide the cycle into segments right away and then discuss the operational strategies for each stage.

Before conducting relevant strategic analysis and thinking, we must clarify the following issues:

• In the design of operational strategies for the user life cycle, are there core goals throughout the entire cycle? With such a fundamental goal, we have the basic criteria to judge the success or failure of each operation.
• There are so many means of user operation and incentives, what are their inherent properties? Which user needs are met? If you don't want to understand this, any operation strategy is just self-entertainment.
• Any user growth strategy needs to be based on platform data. So, when designing an operational strategy based on the user life cycle, how do we determine which indicators should be assessed at each node?
• What key operational indicators can be obtained by decomposing the target formula? After clarifying these indicators, how should we design the operation strategy?

1. Two core goals of user life cycle analysis

The two core goals of user life cycle analysis are to increase user engagement and to increase conversion rates at each node in the life cycle.

In the process of continuous improvement of user engagement and continuous conversion of each node, users also complete the enhancement of their value within the platform and a complete process of their life cycle (introduction period, growth period, maturity period, dormancy period, and loss period).

2. Four levers for user motivation

When operators are motivating users, there are four basic levers: benefits, honor, emotion, and security. These incentives increase the material and psychological costs for users to leave the platform, thereby ensuring a stable retention rate .

• Various interest rate coupons, vouchers, red envelopes, etc. are all aimed at satisfying users' demands for benefits.
• The construction of the user rating system and the granting of VIP privileges are aimed at satisfying users' demands for a sense of honor.
• Emotional copywriting prompts/push notifications/text messages, continuous optimization of user experience , etc., meet users’ emotional needs and recognition needs.
• Shareholder background introduction, acquaintance recommendation, and timely reminder and display of capital inflow and outflow meet the user's security needs.

3. Data analysis system based on user life cycle

Data analysis system based on user life cycle

Key indicators corresponding to each stage of the user life cycle:

4. Decompose the key points of user life cycle operation strategy through formula decomposition

1) User Lifetime Value (LTV) Decomposition

Customer Lifetime Value (LTV) = (a customer's monthly investment frequency, average order value, gross profit margin) * (1/monthly churn rate)

=Number of investments during the user's life cycle , average order value, gross profit margin

Based on the above formula analysis, the points where operations need to focus are:

• Increase the number of user purchases. For Internet finance users, only those who have made more than 5 to 6 investments on the platform can be considered loyal users of the platform. At the same time, in order to improve LTV, we also need to use a variety of operational methods to stimulate users to increase the number of investments.
• Increase average order value. It mainly targets fixed-term financial products, and provides supporting methods such as tiered coupons, discount coupons, and cash back to stimulate users to increase transaction amounts.
• Improve gross profit margin. From a relatively simple and crude perspective, we can consider gross profit margin = user lifetime value (LTV) - [single user acquisition cost (CAC) + single user operating cost (COC)]. From this perspective, what we need to do is to find higher-quality customer acquisition channels as much as possible, reduce customer acquisition costs, and adopt diversified operating methods to avoid simply using profit incentives to design operational activities while ensuring the quantity/quality of customer acquisition and improving user activity and retention rates.
• Reduce churn rate. At every stage of the user life cycle, from novice users, growing users, to mature users, we analyze the causes of churn and provide corresponding operational strategies in a targeted manner. This is explained in detail below.

2) Value Judgment

Can the user lifetime value (LTV) be greater than [single user acquisition cost (CAC) + single user operating cost (COC)]?

• Only when LTV>CAC+COC can the platform continue to exist. A large number of platforms have broken their capital chains because they did not settle this account and frantically provided user subsidies , which eventually led to their inability to continue.
• A company can develop most healthily when LTV/CAC=3. The most suitable situation is when platform LTV/(CAC+COC)=3. If it is less than 3, it means the conversion efficiency is low, and if it is greater than 3, it means that the market expansion is still too conservative.

3) Return on Investment (ROI) Breakdown

Return on investment (ROI) = conversion rate * average revenue per user ( AR PU) / (CAC + COC)

Based on the above formula analysis, the points where operations need to focus are:

Tracking return on investment (ROI) throughout the entire process

Don’t simply look at the conversion rate from download to transaction or from registration to transaction. Instead, consider the conversion rate as a large indicator of results. Break it down according to the user’s key operation process (combined with the data analysis system based on the user life cycle mentioned above). If the conversion rate of a link is low, focus on improving the conversion rate of this link:

• Download conversion rate from channel display to download
• Registration conversion rate from download to registration
• Real-name conversion rate and card binding conversion rate from registration to card binding
• Investment conversion rate from card binding to investment transaction

Reduce customer acquisition costs and operating costs

In addition to the explanation in the "gross profit margin" section above, another very important point in reducing these two parts of costs is to continuously ensure and improve user retention rate. Let's take a simple example:

• Assume that the cost of a user’s life cycle = one-time user acquisition cost (CAC) investment + ongoing user operation cost (COC) * user retention time
• Assume that the cost during the user's life cycle is 100 yuan, of which the CAC is fixed at 30 yuan and the COC for one month is 70 yuan.
• Among the new users introduced, user A churned out after 1 month, and user B churned out after 3 months.
• For Person A, the cost of a user in one month is 100 yuan = (one-time user acquisition cost of 30 yuan + one-month operating cost of 70 yuan) * 1 month. For Person B, the cost of a user in one month is 100 yuan = (one-time user acquisition cost of 30 yuan + three-month operating cost of X yuan) * 1 month, where X = (70/3) yuan.
• Based on this, we can get: A's operating cost / B's operating cost = 3/(70/3) = 3, that is, the operating cost of a user with a retention period of 1 month is 3 times that of a user with a retention period of 3 months.

Note:

1) ROI = sales amount / investment amount

Sales amount = UV conversion rate ARPU

Investment amount = UV*[CAC + COC]

2) According to traditional business experience data, the cost of acquiring a new user is 5 times the cost of maintaining an old user.

The user life cycle is usually divided into five stages: introduction, growth, maturity, dormancy, and churn.

By refining the characteristics of each period, these five time periods can be divided into three operating intervals:

• Customer acquisition zone - introduction period, the main operation method is to attract new customers ;
• Appreciation zone - growth stage + maturity stage, the main operation stage is activation;
• Retention zone - dormant period + churn period, the main operating means is retention.

It is important to note that once a user enters the app, they may not necessarily complete a full cycle, but may leave at any stage.

During the operation process, it is necessary to always pay attention to ROI to ensure the necessity and effectiveness of operational activities. After the operation is completed, it is necessary to review it in a timely manner to check the gap between the final result and the expected target, the final ratio of input and output, and the changes in data before and after the operation. Improve the sustainability of operational quality through review.

User life cycle diagram

2. Introduction period

1) Operational goal: customer acquisition

During the introduction phase, the main goal of the operation is to guide users to download the application and complete registration.

2) Operational strategy: accurate positioning and channel exploration

Through SEM , SEO , CPS, ASO , exchange , points wall and some offline channels, find and discover target users , introduce users into the system and induce usage, so as to achieve the goals of this stage. The quality and matching degree of the channels that ultimately bring in users will determine the users’ effective conversion rate and retention rate.

Four quadrants of channel quality analysis

• Case 1: Spending money - Lufax

Applicable to: those with sufficient budget and wide channel coverage.

Core means: creating momentum.

Improve traffic conversion through precise delivery; improve brand communication through full traffic delivery. In terms of promotion strategy , from operating its own Weibo and WeChat platforms, to social marketing strategies (cooperating with Luoji Siwei on community marketing , Ice Bucket Challenge, etc.), super promoter program, Spring Festival red envelopes, Toutiao mobile marketing advertising, offline advertising , etc., we are introducing financial management users in all aspects.

Lufax-Super Promoter Program

• Case 2: How to save money (Figure 3) - Ping An One Wallet 1024 Programmer's Day

Applicable to: low budget and small channel coverage.

Core means: taking advantage of the situation.

When budget is insufficient, creativity can make up for it. Seizing festivals and following hot spots are conventional strategies. Take Ping An One Wallet’s 1024 Programmer Financial Management Festival as an example. The way to play this activity is: users can complete a series of questions for programmers through the login page, and then they can purchase exclusive financial products with an annualized rate of return of up to 10.24%.

Ping An One Wallet-1024 Programmer Financial Management Festival

In the planned plan, the event promotion channels include online and offline parts:

• Online - Post advertisements in major programmer communities in China to build momentum and attract traffic for the event
• Offline - set up booths and roll-up banners in major software parks and science parks in Shanghai, install APP on site and give away small gifts

Through a combination of online and offline promotion, programmers are accurately introduced to the collection page of this event to achieve the customer acquisition goal. In the subsequent actual operation process, due to various reasons, the promotion test could not be fully launched, but it still achieved good traffic-generating effects.

3) Transition to the growth stage – providing rewards to induce usage

After the user enters the application, they are usually induced to take the next step by giving them trial money/coupons/phone bills when they register.

Case: 360 Your Wealth’s exclusive gift package for new investors

Under the guidance of operational KPIs, basically all major platforms have their own set of methods for converting new users. Here we take 360 ​​Your Wealth as an example. Youcaifu provides the following gift packages for novice users (non-investment users):

360 Your Wealth-Exclusive Gift Package for New Investors

3. Growth stage

1) Operational goal: appreciation

During the growth stage, the main goal of operations is to promote user transactions and at the same time cultivate habits and dependence on the platform.

2) Operational strategy: improving activity and promoting transactions

Improve user activity, increase the proportion of time users spend on the product, and encourage users to become deep users. By giving out coupons upon logging in (exchanged for accumulated points)/gifting coupons upon card binding/gifting phone bills, we encourage users to make in-depth use of the service. At the same time, we stimulate users to use their real names and bind their cards, thereby increasing the base of transaction conversion rates.

Case: Ping An One Wallet Sign in to Receive Points

• Users can log in to Yi Wallet every day and receive points by signing in
• There is a chance to open a treasure chest once a week
• The points collected can be used to purchase or redeem goods online

Judging from the effectiveness of the event, it has boosted the activity of new users and brought new trading users to the platform's mall.

Ping An One Wallet - Sign in to get points

Continue to stimulate user demand, and at the same time provide corresponding products and services in a targeted manner to help users complete the transformation from users to customers.

From the perspective of operation mode, the commonly used ones are probably the following:

WeBank-Invest to Increase Luck

4. Maturity

1) Operational goal: repurchase + dissemination

In the mature stage, the main goal of operations is to increase customer repurchase rate (the same product or other new products) and induce users to spread the platform's products and services.

2) Operational strategy - cross marketing, encouraging dissemination

According to the "magic number" theory of user growth , when a new user uses a certain function within a certain period of time and at a certain frequency, the probability of the user remaining on the platform will be maximized, and the user will become a loyal user.

For example, if a user follows 30 friends on Twitter within 30 days, the retention rate and activity will increase significantly. This is also the reason why platforms such as Weibo and Xiaohongshu will recommend a screen of people that the user may be interested in after the user completes registration.

Specifically in the field of online transactions, experience shows that if a user completes more than 10 to 12 transactions on an e-commerce platform and more than 5 to 6 transactions on an Internet financial platform, the user's retention rate and loyalty to the platform will be significantly improved (there are great differences between each platform, and the appropriate magic number must be extracted from the data of the platform).

The main way to guide users to complete these transactions is "product classification and diversion + operational means to promote". Based on the existing product categories of the platform, various operational means are used to encourage users to complete multiple reinvestments, circulate between multiple products, and ultimately configure multiple types of products.

The following is an explanation based on the product form of Ping An One Wallet:

Note:

• The expected profit margin value here is for reference only, and each platform should set it based on its own situation.
• Since the users of profit-based products are basically brought from popular products or traffic-based products, it is rare to bring traffic from profit-based products to the other two.

There are two relatively simple and intuitive methods for product traffic diversion and cross-selling. Here we take the Alipay APP as an example:

• Feature display (B→R): Display equity funds on the Yu’ebao interface to attract users through the product’s historical return level
• Coupons (L1→L2): In the transaction result page of offline scan code payment, it diverts traffic to Huabei and Yu'ebao

Alipay-Display equity funds on the Yu'ebao interface

Alipay - Offline QR code scanning payment transaction result page diversion

Let's take a complete example and see how to use the above strategy in the user's full process operation:

• Step 1. User Nini downloaded the YiWallet APP and registered on the recommendation of her friend, and received 6 tiered vouchers.
• Step 2. On the homepage of the financial mall, Nini found that the Renxing Financial Management ( a popular product ) that was available at 10 a.m. every day had a high rate of return, so she bought 10,000 yuan and used a voucher (a discount of 50 yuan for purchases over 100 million yuan)
• Step 3. On the transaction result page, Nini saw the information displayed in the lower middle part of the page. She usually never stays on this page, so she quickly closes the current page without paying attention to much information.

• Step 4. After completing the payment, Nini is accustomed to checking the status of the newly completed transaction in the "My Finance" interface. In the product list, she saw the display of "随兴存" in the advertising area again. This time, she noticed the sentence "How Xiao Ming invested for 46 days and got a return of 7.6%", which she found very interesting. So she clicked on the link and saw the following picture and text:

• Step 5. Nini felt very tempted, so she clicked on the link and deposited 10,000 yuan into Suixingcun.
• Step 6. After the Renxing product expires, Nini receives a push message: the Renxing 88 you hold has expired, and the principal and interest totaling 10729.32 will be transferred to the balance of Yi Wallet the day after tomorrow (April 19, 2017). Ping An Huiying, a current account product with an annualized yield of 4.5%, has been recently launched. You can deposit and withdraw money at any time. Why not check it out now?
• Step 7. Nini saw that this new product had a very good rate of return and strong liquidity, so she deposited the principal and interest that had just matured into Ping An Huiying (flow product)...

The above example is a bit simplistic, but for the operation of Internet finance, under the guidance of operational goals, it is necessary for everyone to identify the key operation nodes of users, and combine them with the guidance of operational strategies to encourage users to complete the expected operations. This process is also the process of enhancing the value of users on this platform.

User value enhancement process

There are many ways that Internet finance platforms encourage users to spread information, but in the final analysis, there are only two major categories, based on whether the sharer conducts a transaction. The first category: a three-level distribution system; the second category: a commission based on a fixed percentage of investment.

• The first category is the three-level distribution system.

The basic logic is that users who invite new users can not only receive rewards, but also continue to receive a share of the bonuses if they invite other new users to the platform.

Jiedaibao -three-level distribution system

Take Jiedaibao around June last year as an example:

• After user A (first level) successfully invites user B (second level), A will receive a 20 yuan reward
• After user B successfully invites user C (third level), A can get a 10 yuan reward and B can get a 20 yuan reward

Why is there three levels of distribution instead of more levels? The main consideration is to avoid suspicion of pyramid schemes. Therefore, major Internet finance platforms will control the distribution level.

It can also be seen here that, in addition to the 20 yuan cash reward that the user receives when joining Jiedaibao, simply acquiring a new real-name authenticated user requires a customer acquisition cost of 50 yuan. If various subsidies such as subsequent tiered vouchers are added, the acquisition cost of a single user is at least more than 500 yuan. In addition, WeChat later implemented stricter control and crackdown on behaviors that induce users to share, and most Internet finance platforms will control nodes within the secondary range from A to B.

• The second category: commission based on a fixed percentage of investment.

The basic purpose of this model is to promote the dual purpose of new user acquisition and transaction scale through rebates. When the invited user makes an investment, the inviter can receive a reward in the form of cash or investment income.

YiWallet-Renxing Financial Management Rules Page

Yi Wallet - Renxing Financial Product Interface

Take the previous Yi Wallet Renxing Finance as an example:

• The product terms of Renxing Financial Management are 48 days, 96 days, 190 days and 290 days, and the benchmark yields are 5.7%, 6.2%, 6.9% and 7.3% respectively.
• After users purchase a certain period of Renxing products, they can share them with friends through WeChat friends/ WeChat Moments /Weibo/QQ Space, etc., and participate in the revenue acceleration
• If sharer A invites friend B to complete the registration, A's income can be increased by 0.1%. B can then invite C. The maximum rate of return on a link is 0.3%, which means inviting 3 friends to participate (the problem of pyramid schemes was not considered at the time, and it was adjusted later, see the rules page above)
• According to this model, sharer A can invite different friends to participate in the revenue acceleration, and can increase the yield of a single transaction product to 100% based on the basic yield.
• In order to prevent the wool party from taking advantage of the situation, new rules were urgently launched, limiting the maximum amount of principal that can be accelerated to 100,000 yuan, and the amount exceeding 100,000 yuan cannot participate in the acceleration of income.

5. Dormant period

1) Operational goal: improving retention

During the dormant period, what we need to do is to retain users and increase their enthusiasm for the product through various interest incentives, improving platform services and product configurations, etc.

2) Operational strategy: decline warning, awakening users

User decline warning analysis

Analysis Notes:

• According to the standards provided by Yingcan Consulting, if an investor fails to invest within 30 days after receiving the last payment, it will be recorded as an investor loss. The ratio of the number of investors lost in a month to the total number of investors on the platform is the platform's churn rate for that month.
• Within 30 days after the most recent payment, if there are unredeemed/unexpired assets in the user's account, determine whether any key operations occur within the following M days. The M days here can be defined by each platform based on the historical data of the platform; key operations include (excluding positive trading operations such as purchase and setting up regular transfers): login, viewing product information, entering my asset list page, redemption operations, setting up regular transfers, unbinding bank cards, etc. Each platform can also select several key operating indicators for inspection according to its own situation.
• If a user logs in (or performs other key operations) 30+M days after the last payment, the user is defined as a pre-churn user.
• If the user does not log in (or perform other key operations or positive transaction operations) within (30+M) days after the last payment, the user is considered a dormant user.

Based on the above standards, the expected lost users can be analyzed and early warnings can be issued. For this group of users, certain operational measures need to be taken to prevent them from actually entering a dormant period. A typical example is: telecom operators will send text messages to users whose packages have expired, informing them of new packages, etc.

When users enter a dormant period, you can also wake them up through PUSH/SMS reminders of coupons (for new products), birthday coupons, etc., reminding them of good products and reawakening their desire to use.

Case: Sina Micro Wealth - Interest rate hike SMS wakes up users

Sina Micro Wealth-Interest rate hike SMS wakes up users

6. Churn period

1) Operational goal: Recalling users

For users who have already lost, they need to be repositioned to better recall them.

2) Operational strategy: repositioning and stimulating through various means

When users leave , we need to analyze the reasons behind it: Can the platform products meet user needs? Or have user needs changed? Or is the overall market environment not good? For users who have already lost, we can understand them through questionnaires and experience analysis.

Loss is undoubtedly normal, but the summary and analysis after the loss can give us a more objective and comprehensive perspective on users, reposition users, find the fit between product design and operation strategy and target users, and thus gain stronger survival ability in rounds of trials and tribulations.

Classification and cause analysis of lost users

As I mentioned in previous articles, users can churn at any point in their life cycle. We need to analyze the specific reasons for loss of users at different growth stages in order to formulate reasonable operation strategies to stimulate user retention and activity.

• Novice users: For users who are willing to download the APP or even register, they already have a certain willingness to trade. There are basically two possibilities for loss at this time:
• The quality of the channel is low, and the users attracted are not the platform's target users. Channels such as the points wall often bring in such users.
• Problems with the product's own design and product performance require the product manager and developers to work together to optimize
• Growing users: At this point, users have a basic understanding of the product and are preparing to invest (binding a card) or have completed their first investment. The reasons for loss are generally:
• The platform does not have suitable products, or cannot grab the hot-selling products
• The platform's card binding, investment, inquiry and other process experience design is not smooth. Especially the problem of experience. Small and medium-sized platforms are limited by their own strength, and the payment channels of third-party payment companies involved are often unstable. The card binding success rate, payment success rate, fund transfer prompts, etc. are often not in place. Such problems need to be solved at the level of the entire company.
• Mature users: Users at this stage have a certain degree of acceptance and dependence on the platform and products. The cost of users leaving is actually relatively high. The reason for choosing to leave at this time is mainly due to external reasons of the platform or reasons within the platform itself.
• From the external perspective, changes in the investment environment, lower market returns, or personal family reasons of users may all lead to user loss.
• From an internal perspective, if the platform fails to continuously launch new products or lacks consistent operational incentives, users may gradually lose interest due to fatigue and switch to a new platform.

Lost user structure diagram

To summarize, from the structure of lost users, there are three categories:

• New users
• Growing users
• Mature users

Here, we focus on the loss of some growing users and all mature users who have already conducted transactions on the platform, and design corresponding recall incentive measures.

For customers in the churn period, although there are many ways to recall them, the ones that are relatively effective are generally based on simple interest incentives.

Case: Wind Financial Management - not tempting users with specific products, but simply giving out red envelopes

Wande Financial Management-128 yuan financial red envelope

7. Summary

When users are in different periods, user value will change accordingly. Therefore, corresponding operational goals and strategies need to be designed for different periods.

There are various means of operation. Most of the examples given in this article are based on "interest incentive" cases, which are costly and have obvious effects, including giving experience money, coupons, phone bills, sharing and income, etc. In addition, operational methods also include push, content operation , community operation and other methods, which are equally important in operations.

The above are just general solutions for the life cycle management of Internet finance users. If you are not working on a large platform like BAT J, Ping An, or 360, and you are not an experienced operator, the following questions are worth thinking about:

• Do you have this feeling: when you read operational strategy articles such as "Eight Models of User Growth", you feel that they are too lofty and out of touch with reality; when you read case articles such as "Gaining 10,000 Followers in 2 Days", you feel that they are too trivial and specific, and there is no possibility of reuse?

This may be because you watch too much and use your hands and brain too little. At this time, you need to forget all the articles, pick up your phone and use your own product repeatedly until you feel like vomiting; make a few investments in major competitors, and experience the advantages and disadvantages of their products and operations throughout the entire process; go to forums, QQ groups and WeChat groups that users often visit, as well as communities where freeloaders gather to see what your target users and enemies are thinking.

• Being an operator is like being a person. You need to create your own characteristics, clarify the tone of the product, and operate emotionally.

Small platforms should not try to pretend that they have a strong background. Instead, they can gain the trust of users by honestly admitting their shortcomings. For example, there are many counterfeit products on Taobao, and users are well aware of this, but it can still attract target users. For a period of time, there were more than 60 P2P platforms with "XX Institute" in their names. Will users really trust you more because of this name?

• What should you do if you are the operations manager of a small or medium-sized platform with a limited number of products, limited categories, and a limited operating budget? What problem can be solved by reading this article?

The platform I am on has gone through this stage from 0 to 1, and I have my own experience. What about you?

• How can we operate well when user data is limited and we are not very good at data analysis?

If you have a data analysis team, you can sort out the requirements yourself and then seek support from the BI team. If you don’t have a data analysis team, start learning from EXCEL. If you really want to do something well, skills will never be a bottleneck.

• Introduction period - Growth period - Maturity period - Dormancy period - Churn period, what is the approximate number of users of your product distributed at these nodes? What is the proportion? What is the magic number for your platform?

In fact, the magic number itself is not important. What is more important is that it can unify the understanding of all parties and allow operations, products, and development parties to work together under the same big goal.

Note:

1. The formula LTV/(CAC+COC)=3 is adapted from the LTV/CAC=3 in Chapter 42 of the official account . From Daoshu’s perspective, both the cost of acquiring a single user (CAC) and the cost of operating a single user (COC) should be considered in a unified cost structure.