Operational Strategies for Internet Finance Users (I)

There are three articles in the series "Touching Operational Strategies - Redefining Internet Financial Users", which will analyze from the perspectives of Internet financial user attributes, user life cycle management, and user behavior management. This article is the first one.

Redefine: Products and Operations

• Internet products: tools used by people in context (scenes)
• Internet operation : People use tools according to set modes in situations (scenarios)

In ancient times, Lu Ban, China's first product manager , provided the product "saw" to solve the problems of low logging efficiency and excessive physical exertion of lumberjacks. This product greatly improved production efficiency and the product's life cycle lasted for more than 2,000 years.

In modern times, with the help of the Internet, many excellent products have been produced:

• Baidu: By providing a search engine , it solves the problem of users quickly finding the required information in scenarios where necessary information is lacking.
• Didi : By providing a taxi-hailing app, it solves the problem of users quickly getting from point A to point B in the absence of convenient transportation.

As an operator, the greatest success is to establish a one-to-one correspondence between user needs and your own products in a specific scenario:

• Baidu: When users have a search need, their inner thoughts are: "If you want to find information, search Baidu"
• Didi: When users have travel needs, their inner thoughts are: “I’m going out, I’ll take a Didi.”

Under this mentality, other search engines or typing software will have no chance of turning around.

From this we can see that users are the fulcrum for leveraging products and scenarios, and are also the starting point for product development and operations - this is the so-called original intention.

Four dimensions of the intrinsic characteristics of Internet financial users

• Manage the wealth of the rich so that their money can grow more and more;
• Provide financing for those who need money so that they can find the money they need.

If we take "having money - having no money" as the horizontal axis and "borrowing - lending" as the vertical axis, we can divide it into four quadrants, and the financial behaviors of different types of users can fall into the corresponding quadrants:

Lend money from the rich to the poor

A typical case is charity . Whether it is Bill Gates or Buffett, they lend their money or even donate it free of charge to poor areas such as Africa to solve their problems of food, clothing, medical care and other issues. In this process, what they seek is not financial returns, but the realization of life value or spiritual pursuit.

Since this model does not pursue capital appreciation, it is not within the scope of this article.

Lend money to the rich

Traditional financial institutions, such as private/public funds, trusts, and other asset management institutions, are all included in this category. Taking trust as an example, the minimum purchase amount is usually 1 million. Only when the asset scale reaches this level, the user will be eligible to enter the market and obtain returns that exceed the market average.

Lend money to the rich

The most representative traditional financial institution is the bank. Many middle-aged and elderly people in China deposit their life income into banks, which then lend the funds to factories or real estate developers to expand their operations and obtain returns on their industrial assets. In this process, all excess profits belong to the banks, the returns to individual customers are very small, and the interest income is almost unable to resist inflation.

In the field of Internet finance, it is very typical to package and sell debt transfer products through SPV. The financial products purchased by individual customers are eventually transferred to real estate companies or other large institutions through the platform, helping the latter to realize capital appreciation. Since there is no intermediary role like a bank, channel costs are greatly reduced and the income of financial management users has increased by a certain percentage. But in the final analysis, compared with the companies that receive capital investment, these small investors can only be regarded as "poor people" in quotation marks.

Lend money to the poor

This category falls entirely within Internet finance, with the most typical example being P2P companies. Some college students want to buy a red iPhone 7 and some white-collar workers want to buy a house, so they send a request for borrowing money on the platform, and then other college students and white-collar workers lend them the money. P2P companies build such a platform to allow poor people to lend money to other poor people.

From the perspective of traditional financial institutions (taking ICBC’s customer stratification principle as an example):

General customers (<50,000)

The financial services that banks provide to this group of customers are very basic deposits, loans and fund investments.

Financial management customers (50,000-500,000)

In this range, the services users receive have expanded from deposits, loans and funds to bank wealth management products. When financial management clients arrive at the bank, they can go into the financial management room and have a one-on-one conversation with the financial manager. They do not have to queue up in the bank lobby and enjoy convenience and comfort.

Wealth management clients (500,000-5 million)

Customers in this range enjoy services including financial consulting, trust, wealth planning, and asset management. In addition to one-on-one services, customers can also enjoy asset allocation advice and market change notifications from financial managers. Generally, each bank financial manager’s mobile phone address book contains about 150 customer information, of which about 20 are such customers.

Private banking customers (>5 million)

This group of customers enjoy the most advanced financial management services, such as loan financing, estate planning, real estate investment, global asset allocation, retirement and insurance planning, study abroad plans, etc. Financial managers provide customers with a full range of wealth management services

If we look at it from a simpler and more crude perspective, there are two more common dividing points: financial products and trusts .

Financial products

The minimum purchase threshold for bank wealth management products is 50,000 yuan . This cutting point divides customers into those with less than 50,000 yuan and those with more than 50,000 yuan. Those with less than 50,000 yuan can only make deposits and loans, and make small fund investments, which are outside the scope of the bank's traditional financial management services; those with more than 50,000 yuan have just stepped into the threshold of financial management services, and banks will provide more standardized services for these users.

Trust Products

The minimum purchase threshold for trust products is 1 million (the common standard, some may be lower), which divides financial management customers into low-end and mid-end customers and high-end customers. The so-called asset allocation and wealth management are aimed at this group of people.

At this point, we can see that the level of service enjoyed by customers of traditional financial institutions is closely related to the size of their assets.

Based on the above framework, we can observe the relationship between users and institutions providing financial services through the two dimensions of "price" and "number of users":

The figure above is a very typical power-law distribution curve. The head on the left is the living space of traditional financial institutions, which serve users with larger assets and stronger willingness to manage and invest. In the long-tail shadow part, users hold smaller amounts of assets, and their willingness and ability to manage finances are not particularly strong. Traditional financial institutions do not think highly of this part of users, but this happens to be the living space of Internet finance, and these are the users that Internet finance products and operations compete for.

From the perspective of security, liquidity, and rate of return, users can be divided into the following three categories according to their risk tolerance:

Conservative: Safety > Liquidity > Yield

The investment goal of conservative users is to maintain investment stability and preserve the value of assets. The primary consideration for these people is safety, that is, not losing money; secondly, they want strong cash conversion capabilities, so they can take the money away whenever they want; as for the requirement for returns, generally it is best to have some, but none is also fine. In terms of demands, the goal before June 2013 was to outperform bank fixed deposit rates, and the basic goal now is to outperform Yu'e Bao.

The products purchased by such users are generally baby products or pension insurance plan products, such as "Ping An Huiying" in Ping An One Wallet. Its yield can outperform most money market funds, and its liquidity can be redeemed on T+1 day, so it is very popular among such users.

Stable type: yield = safety > liquidity

The investment goal is asset appreciation. For conservative users, they emphasize the balance between investment risk and asset appreciation. This group of people have the need to make money, but they want to make money without losing money. It can be said that they attach equal importance to returns and safety, and can tolerate poor liquidity to a certain extent.

The products they purchase generally include fixed-income products, with a basically fixed rate of return over a certain period of time and repayment of principal and interest upon maturity; there are also bond funds; as well as Ant Financial 's Zhaocaibao and Lufax's Rainbow Plan, etc.

Active: Yield > Safety > Liquidity

The primary investment goal is to obtain excess returns. The investment demand of this group of people is to make money. They have a certain amount of spare money, so even if they suffer a relatively large loss, it will not affect their normal life.

In mutual finance, the products they purchase are generally stocks, mixed funds, stock funds and P2P, etc.

The first three dimensions are user segmentation based on the user's objective situation, and the fourth dimension is segmentation based on the user's subjective perspective. Internet financial companies can find the quadrant that best suits their characteristics.

Don’t understand & don’t want to understand: Yu’ebao, Licaitong

This group of customers accounts for the largest proportion. They don't understand the market well enough, nor do they want to understand it. They only have the desire to make money, but are unwilling to pay any costs other than money. Its entry into the wealth management market is generally triggered by other basic needs. For example, due to social and payment needs, it enters WeChat or Alipay , which in certain scenarios triggers the Yu'ebao wealth management function of "yields that outperform bank deposits." All they enjoy is the convenient financial management services on the big platform.

Due to the advantage of huge user base of such platforms, more and more financial management users are converted . They become the first wave of users introduced to Internet financial management and have completed the first round of market education, enabling the more professional financial management platforms on the back end to carry out secondary development and processing for these users and convert these users into their own users. This is a very typical process of food chain evolution, from Yu'e Bao's "yield outperforming bank deposits" to other back-end platforms' "yield outperforming Yu'e Bao".

Don’t understand & want to understand: Tonghuashun Love Fund

The level of specialization of this group of users is not particularly high, but they are willing to improve their investment level through learning. The main products targeting this group of users include "Tonghuashun Love Fund", which can provide users with a lot of basic investment education, market analysis, investment strategies, etc., to help users gain a certain amount of growth space. This group of users still has a certain size. After all, in order to make money, some people are still able to overcome the laziness in their bodies.

Understand & Want to Understand (More): Snowball, Egg Roll Fund

In the non-financial field, Zhihu is a typical platform that serves this type of people. In the field of finance and investment, the more typical ones are Snowball and the Egg Roll Fund that was later launched by Snowball.

On such platforms, there are some god-level users who share their analysis of financial products and markets, show off their investment portfolios, and attract fans to follow them. At the same time, many of these fans are top experts, and they learn and observe each other's market analysis and portfolio management methods.

Recently, many companies have slowly grown and developed in this quadrant, but the number of people in this quadrant is very small, and competing in such a small customer base, the companies have little room for imagination to gain returns.

Understand & Don’t Want to Understand: Wind Mobile Financial Terminal

The "I don't want to understand" here actually mainly means that this group of people do not need a platform to educate and guide them, they just want to quickly understand some simple information.

This group of users is the most professional in the market and is at the top of the pyramid . Their roles are often fund managers, researchers, etc. Their needs are concentrated on querying data, announcements, or managing their own investment portfolios. A typical product serving this group is the financial terminal of "Wind Information".

However, this market is relatively small, the technical threshold is relatively high, and it cannot accommodate too many competitors, so we can see that this market has not achieved vigorous development.

So, who are the users?

We have discussed many methods of user segmentation above. We need to step back and think carefully about who the user is.

Standard definition of "user"

• Surface meaning: XX people using XX product in XX scenario
• Intrinsic meaning: A set of XX requirements that are met in XX scenarios and by XX methods

For example, Didi Taxi , according to the superficial meaning, users are mobile phone users who use Didi Taxi when they need to travel.

However, this definition is too superficial. If we develop products and operations based on this definition, the results may be very limited. Let’s look at the inner meaning. Didi’s users are a group of people who want to quickly reach another place through a convenient payment method when time is limited. By grasping these three points and continuously optimizing products and operations, you can get better returns. Comparing with the series of operational activities currently used by Didi, they are basically based on these three points.

The definition of "user" in the context of Internet finance

• Financial users: The need to exchange value across time and space under uncertain conditions.
• Internet finance users: Financial needs that appear in the "Internet + XX scenario" Internet finance users are also financial users, but the channels are narrowly defined on the Internet.

Here we analyze several definitions of users from the perspective of financial users:

• Spend money today: Paying users - satisfying the need to spend money today by using their own funds in consumption scenarios
• Money today is put aside for tomorrow’s spending: Savings/investment users - obtain a certain return by transferring the right to use funds, which is reflected in the product’s rate of return or interest
• Want to spend tomorrow’s money today: Credit/financing users – insufficient own funds, borrowing to meet their needs

User needs are not equal to the user, and user needs cannot be solidified into the user himself. Changes in users' roles will lead to changes in user needs. The same user will have different financial life events, such as marriage, buying a house, having children, serious illness, retirement, death of spouse, divorce, etc. If users are solidified through user portraits or user stratification, it is very likely to cause a mismatch between operational methods and actual user needs.

Therefore, we must always be in awe of our users and admit that we do not really understand them. After this premise, we can think of and use more reasonable operation strategies to promote user growth .

This article was compiled and published by @张德春(Qinggua Media). Please indicate the author information and source when reprinting!

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