4 steps to teach you how to build a user points system

In the era of mobile phones, point systems can be seen everywhere. From small supermarkets to large national-level apps, all have built their own point systems. So, as a merchant or service provider, how to build a points system? I would like to discuss it from the following four aspects.

• Summarizing the design goals of the points system from three apps including 12306
• Key points when designing a points system for different types of apps
• How to design a points system in practice (taking the financial product sales platform as an example)
• How to budget for the points system

1. Summarize the design goals of the points system from three apps including 12306

12306 can be said to be in a "monopoly" position. Whether you buy tickets from its own app or from third-party channels, the service is ultimately provided by the China Railway Corporation. Because it is a rigid demand, even if the user experience provided by the app is not good enough, it will not affect its product sales. So, what are the considerations behind the 12306 points system?

According to the points rules shown on the official website of 12306, they are divided into three sections after sorting. Points acquisition, points consumption, and membership level are all relatively common components. What is relatively special is the points consumption. The points consumption of other apps are generally exchanged for gifts, or a part of the consumption is deducted to encourage consumption. It is rare for 12306 to use points to fully redeem goods. At the same time, there are assignee rules in the points exchange, which to a large extent gives more flexible use options for the consumption of points and greatly improves the user experience.

As mentioned before, even without this points system, it will not reduce the user experience of the most basic functions. The addition of the points system can be said to be a "pleasant surprise" for users. From this perspective, the goal of the points system is to increase user favorability through welfare returns, thereby improving the company's reputation.

Ele.me is a food delivery platform. The user usage of the Ele.me APP has the following characteristics:

• The user base is large, but user loyalty is low. If a subsidy war occurs, users will choose another platform without hesitation.
• Users use it frequently, but it is not a rigid demand. With community group buying and various small supermarkets entering the community, users will have more choices;
• For tool apps, user behavior is relatively simple and they only place orders when opening the app.

The points system of food delivery platforms has been criticized before. Due to commissions and other reasons, the price users see on the APP is not the actual price marked by the merchant. In addition, due to various red envelopes, discounts, and delivery fees, the amount paid by users is not equal to the actual amount received by the merchant. Even because each user purchases different amounts and has different discounts, they may pay different prices for the same product. This creates information asymmetry, which the platform can "manipulate". Users find that the points system does not bring them substantial benefits. Instead, they are taken advantage of by big data, and the membership system has a negative impact. Therefore, when building a points system, we must pay attention to providing members with differentiated and high-quality services, otherwise the points system will backfire.

After sorting out the points system of Ele.me, we found that it is actually very simple. The core is centered around the ordering behavior. After placing an order, foodie beans are returned, which can be exchanged for red envelopes, and the red envelopes can be used for consumption. By creating an atmosphere of "the more you buy, the more you save", users are encouraged to voluntarily place orders, complete tasks and earn points. Looking at the points system from this perspective, the goal is to build incentives around the core behaviors that users are expected to perform, forming a closed loop within the points system.

As a chain supermarket, FamilyMart has a high coverage rate and a large customer flow. However, the market for small supermarkets also faces fierce competition and strong substitutability. Therefore, FamilyMart provides a variety of services to assist consumption, and points are one of them. Through point discounts, users can give priority to supermarkets where they have membership or points when purchasing standardized products (such as drinking water and snacks). From this perspective, the goal of the points system is to increase user retention and improve user loyalty.

2. Key points when designing a points system for different types of apps

So, as a service provider, what are the key points we should consider when designing a points system? There are several basic questions that we need to think about.

• Is there any APP/mini program developed for it?
• What types of services are provided? Is it a physical product, a virtual product, or a manual service?
• What problems do I have with the product/service I provide in the initial state?
• What is the target customer group for the products/services provided? What is the main action expected from the user?
• What is the main goal of designing a points system?
• How to better integrate it with the membership level system?

To give a small example, if I am a company that provides housekeeping services, I used to provide services through WeChat, make appointments, and send housekeeping staff to provide door-to-door services. The advantage is that apart from labor costs, other expenses are relatively low. The downside is that customers are unstable. My target customers are landlords who rent out houses. The main goal of my points system is to achieve customer retention and long-term consumption. For landlords, since they rent out houses for a long time, they will clean the house after the lease expires to ensure that the house is clean so that it can be rented out to the next tenant. So no matter who pays the cleaning fee, this business exists. My points are specially provided to landlords. The points can be used to offset part of the next fee, so landlords are naturally willing to engage in long-term cooperation.

3. How to design a points system in practice (taking the financial product sales platform as an example)

First answer the above questions, the answers are as follows:

• There are well-developed mini-programs, which means that user behavior can be recorded and data can be analyzed;
• Services provided include sales of financial products, investor education, market information, etc.;
• In the initial stage, there are problems in providing products: (1) the relationship with users is a relatively simple financial relationship, and users lack brand loyalty and recognition; (2) user experience is limited, and understanding of the purchased financial products is superficial.
• The main actions expected from users are to learn about the products offered and increase their knowledge of investing;
• The main purpose of designing a points system is to increase user retention, improve user experience, and encourage users to purchase.

Combining these realities and design goals, we consider the following scoring system.

4. How to budget for the points system

The development and operation and maintenance costs of the program/APP are not included in the calculation, which varies greatly depending on demand and the developer's quotation.

For the points system designed above, in terms of operation, cost control mainly involves the redemption management of points and the management of lottery prizes.

1. Points redemption management

Suppose my scoring is as follows: the maximum number of points I can earn each week is 50. So when I design the prize redemption, I have to consider the ratio of points: RMB. Generally speaking, most users will only stick with it for a week or even a few days, so I have to incentivize users in this short period of time. All less than 50 points can be redeemed for the lowest level prize. At this time, combined with the usual cost of gaining attention, which is 0.5 yuan per follower, I can set it to give 50 points to redeem a 0.5 yuan red envelope.

In fact, the difficulty of accumulating subsequent points gradually increases, and it is difficult for users to persist for a long time. Therefore, the ratio of high-level prize points to RMB can be appropriately reduced. For example, the highest level can exchange 500 points for an 88 yuan red envelope, which will form a strong incentive for users. Because user habits and operational results can only be analyzed through data after the points system is launched, the number of points redeemed for prizes can be limited in time and quantity to control costs initially.

2. Management of lucky draw prizes

The lottery prizes designed in the points system can be set as points, virtual prizes, and physical prizes. For example, if we set the points: RMB ratio to 100:1, then the theoretical value of 100 points is 1 yuan. However, we only spend money on the points after the user redeems/draws for them. They have no actual value if they are not redeemed. This is why we set passive consumption, which means automatic clearing after expiration, as a constraint on costs. Therefore, when calculating the cost, we do not need to calculate the amount corresponding to the points awarded in the lottery.

But one thing to note is that points consumption >= expected points acquisition .

Point consumption means spending x points to draw a lottery;

The expectation of obtaining points refers to the expectation of obtaining points in a single lottery. For example, the probability of winning 10 points is 50%, the probability of winning 30 points is 40%, and the probability of winning 100 points is 8%. At this time, the expectation of obtaining points is 10*50%+30*40%+100*8%=25 points.

The reason for satisfying this inequality is to prevent the points from expanding within the system. If the number of points obtained is far greater than the points consumed, then during subsequent redemption, the points: RMB ratio will seriously deviate from our settings.

V. Summary

There are many ways to play the points system, but the essence remains the same: customers must receive positive feedback. No matter which new sections are added, users must be able to get a more positive experience than before.

Author: Sima Ziyuan

Source: Sima Ziyuan