Learn from Didi to provide subsidies to attract users? But you don’t know the essence of its subsidies!

The article is a sharing of operational experience from Didi’s operations director . It mainly reviews Didi’s past operational examples, hoping to bring benefits to everyone.

1. How to subsidize?

What is the purpose of the subsidy?

The first is to cultivate user usage habits and educate the market. At first, no one used mobile payment, so the earliest subsidy war was actually more about market education and user habit education, so that users would get used to using apps to hail taxis.

The second is to increase the activity and retention of old users. Many users have a certain budget for travel, and with subsidies, they may take taxis more often.

The third is to create word-of-mouth and acquire new users. Use word of mouth to spread through NPS and acquire more new users. For old users, if the experience is good and they gradually get used to this mode of travel, it will quickly turn into word-of-mouth marketing , so it can achieve very rapid growth. As for the active retention of old users and the marketing word-of-mouth to attract new users, these two aspects are mainly for expanding market share.

The three essences of subsidies

The most important essence of subsidies is to provide a good user experience for those who receive subsidies or enjoy services. There can be a fundamental difference between using your product and not using your product.

For example: During the Double 11 event in 2014, Didi and Kuaidi fought fiercely before their merger. Didi’s strategy was not to subsidize users, but to subsidize drivers. Because taxis are a very limited social resource, and when social resources are limited, you can only win the war if you can reach the bottleneck point, so we subsidize the drivers. Because many users know that Kuaidi has subsidies, they open Kuaidi to make calls. But when he finds that he can’t get a taxi, he will turn on Didi. So the response rate of Kuaidi was 20%, while that of Didi was over 70%. So at that time we used this strategy to control users and give them a very good experience. Therefore, a very important point is not to be afraid of subsidies, but to ensure that users enjoy the subsidized experience, otherwise these users will only become negative word of mouth.

The second essence of subsidies is to let more people know about it. If you are organizing an event, you must promote it through PR to let more people know about it and attract more users, so that you can increase your order utilization rate to a certain level.

The third is the amount of the subsidy. When the amount of subsidies reaches a certain level, the efficiency of the subsidies is very low. For example, a subsidy of 11 yuan is enough to attract many users. If it is increased from 13 yuan to 15 yuan, most of these two amounts will be wasted. Therefore, subsidies are different for different people. For example, a subsidy of 5 to 8 yuan in big cities will stimulate them to take a taxi. For small cities, the price will be lower, and the attenuation will vary depending on their consumption capacity.

The three stages of subsidies and the nature of subsidies

In fact, in the era of taxis, we divide the tasks we assign to drivers into three types.

The first stage is a multi-dimensional ladder reward.

For example, three orders are ten yuan, and six orders are twenty yuan. This reward is easy for drivers to understand. The disadvantage is that it is easy for drivers to complete the task and get the money. It will be very beneficial for the drivers' behavior development. Drivers are used to grabbing three or six orders from you. But when the primary stage lasts for a period of time, this form of subsidy becomes inefficient.

The second stage is the personalization task.

Some people can take 20 to 30 orders a day, while some drivers only take one or two orders. The drivers’ contribution rates to the platform are different. Based on the driver's contribution to the platform, we set some personalized tasks for him. For example, if this person takes three or four orders a day, assign him the task of five or six orders. The biggest advantage of this subsidy is that each person’s task is customized, which will have an incentive effect on each driver’s behavior. The bad thing is that the incentive effect on him is based on his previous average behavior.

The third stage is to increase the price of the order.

It costs nothing for a taxi driver to pick up an order on the roadside, but there are many extra costs for accepting an order through an app. For example, after picking up the order, he needs to see how far the passenger is from him and drive to the location, which may be one or two hundred meters. First, it takes time, and second, it costs phone bills, which are extra costs. We just want to subsidize this extra cost, and the markup amount is different for each order. In fact, this subsidy has two aspects: one is to subsidize GAP, and the second is to reward behavior.

How to optimize and reduce subsidies?

1. Changes in coupons.

When Didi first started, the subsidy red envelopes were the balance, which was a rigid cost and the balance could not be recovered. After the red envelopes were launched, they quickly became coupons, each coupon was worth three or four yuan and would expire if not used. The advantage is that it is cost-effective and controllable, but the amount is generally high, so later we added coupons for purchases over a certain amount and discount coupons. Now there are various types of coupons on the market, which can optimize costs very well.

2. Which orders can be unsubsidized or subsidized less?

Subsidies can be reduced during times of strong demand, for example, during the National Day holiday, Didi receives a lot of orders. On the National Day, the number of calls for express trains exceeded 30 million. So one is during holidays, and during major festivals like the Spring Festival, this kind of rigid demand can reduce subsidies. Then there is the price advantage. For example, compared with taxis, express cars may have an advantage in short and medium-term orders because users have no other choices. This can reduce the subsidies for short and medium-term orders. This is the user side.

At that time, the subsidies on the driver side were very high, and they requested that the subsidies be reduced and thought of many ways.

The first type is long-distance trips. For example, if a customer comes into the city from Changping, he can earn thirty or forty yuan by accepting an order, so this order is more attractive to the driver. This has a strong influence on the driver and can completely reduce the cost of additional subsidies.

The second type is price insensitive. Some drivers drive good cars and are not sensitive to prices. They have no idea about the ten-dollar subsidy, but some are sensitive. Therefore, based on his previous behavior of grabbing orders, we calculate the value of the orders he has grabbed, and then label these drivers. This will reduce the subsidies for drivers who are not very sensitive to prices.

The third type is very convenient. If a person’s route is very close to yours, and his starting point is your community, then it is very convenient and this type does not require subsidies. Finally, there is a situation where supply exceeds demand. For example, there are many people traveling back and forth between Zhongguancun and Huilongguan, so there are more wolves than meat, and subsidies can also be reduced.

3. User tags and precise subsidies.

Users are divided into three categories. The first is user attributes: new users, old users, and silent users. The second is the city’s starting price. The lowest starting price is, for example, 5 or 6 yuan in a city. The third is price-sensitive behavior. Based on the proportion of coupons used in their order behavior, users are divided into sensitive and insensitive users. These users are divided into labels and set as sensitive users or insensitive users. Some users have a very low taxi-hailing rate, so it is difficult to judge whether they are sensitive or not, so they are classified as unknown users.

4. Find a substitute for money - Dimi

It is difficult for Didi to make money in the taxi business, so there will definitely be no subsidies in the long run. If there are no subsidies, how can you keep drivers on your platform? This is a challenge and a long-term problem facing the platform.

Later, the product and operation department invented something called Dimi. For a taxi, a good order must be a big order, that is, a long-distance order. The income from this order is very high. Drivers do not like orders with a starting price. Someone must pull the bad orders, so this is to balance the good orders and the bad orders so that everyone can be balanced. When we created Dimi, we set it to a number, for example 500, because when people grab orders, they must judge based on distance. The closer I am to the user, the better experience I can provide to the user. Therefore, the platform decided who to give the order to based on the driver's location and distance from the user. And Dimi adds a floating value. If Dimi is positive, the distance can be reduced, and if it is negative, the distance can be increased. For a large order or a high-priced order, the platform will deduct Dimi, and will reward the platform for orders with a small starting price.

Second, how to do user operation

The first is the killer tool – the red envelope.

The red envelope product creates many scenarios for users. For example, third-party traffic platforms or many cooperative apps can help users send red envelopes. For example, online platforms can send red envelopes if they want to provide some benefits to users, and offline manufacturers can send them by scanning the code.

The second is what can users do?

Taking Didi's platform worth hundreds of millions of dollars as an example, nearly half of the users who come every day are fake users. They are old users who just changed their mobile phone numbers, because the average usage time of a mobile phone number is 10-12 months. These fake users can be identified systematically, reducing subsidies for fake new users. This aspect can monitor how many people are real users. Then there is active retention and cost recall. Cost recall can be divided into real churn and false churn. Real churn means the user has not left but has just changed his phone number.

The third is how to reach users.

Generally there are three scenarios. The first is the demand scenario. Generally, users have demand for services during holidays, so at this time I tell users that they can take a taxi, and tell them where they can take a taxi if they cannot get one. The second is marketing activities. Didi carries out marketing activities every time. These activities give users some free experience opportunities to a large extent. At this time, new users can be attracted through word-of-mouth communication, which can increase the number of users very quickly. The third is when the product is released. This is when the user experience is improved. If there is a gimmick or rhetoric at this time, give users a chance and give yourself a chance.

The fourth is the lever that influences user reach.

This lever can be understood as resources or channels , for example, VIP users can make the cost of taking a taxi higher.

The fifth is to build an ecosystem.

First of all, we are very clear about our business, what is a good driver and what is a good passenger. For a platform, especially Didi's bilateral platform, what needs to be focused on is the development speed and experience between the two parties. If the driver experience is bad and the user experience is good, then drivers will be lost; if the driver experience is good but the user experience is bad, then users will be lost. Therefore, drivers must be able to make money and the user experience must be good. Whether it is a bad driver or a bad user, it will have an impact, so there must be better methods and strategies to control this system to control users and drivers. Therefore, we formulate a set of management and control strategies for them, based on the moral or legal levels, to make it easier for drivers or users to use the platform.

The sixth is marketing activities.

Because Didi always attaches great importance to marketing activities, each marketing activity can cover many new users and improve the business to a higher level. However, after raising the price to a certain level, the subsidies may gradually decrease, so there will be fewer price-sensitive users.

3. How to operate a driver

First, the service provider’s management strategy.

Because there are too many drivers, with millions of drivers online every day, how to manage these drivers is a big problem. For most people, drivers are managed by leasing companies or third-party companies. Therefore, it is generally divided into three categories. There are certain ratios required for drivers, and a macro approach is formulated to require these rental companies from the perspective of requirements or rules. The last one is that the profit distribution of different types is different. For example, the commission of Class A is very high, and most of the commission of the turnover will be rewarded to the leasing company. Class B has an intermediate share, and classes C and D have no commission at all. This is a method of rewarding leasing companies through different levels of commission.

Every company has its own drivers. Because we require a ratio of A and B drivers, some drivers have been in C or D category for a long time. These drivers are definitely not wanted by the leasing companies and will definitely be sent to the high seas. If Company A fails to handle the problem and returns the driver to the high seas, Company B can be split into Company C. Similar models can be circulated and managed continuously, which can greatly motivate these leasing companies to continuously constrain their business models and keep their drivers at a high level of activity.

Second, the management structure of the service provider.

If the scale is relatively small, a very simple method can be used, where the leasing company sets up a special position to manage the drivers. If the number of people is very large, they will be divided into levels: operation management, driver management, operation support, and vehicle management, and people who specialize in managing drivers will manage the drivers. When there are a large number of drivers under the company, the third option will be adopted, which is to split the operation management positions and classify the drivers into fleets. The fleet also has a team leader who manages the team leaders, and the team leader then manages the subordinates. As the scale expands, the leasing company also has different stages and methods when managing drivers.

Third, how to manage drivers.

First of all, the driver’s behavior must be tracked. Since the driver is working offline, has he greeted the user? Is the service attitude good? Many times we don’t know whether the clothes are clean or not, so we have no way to control the driver’s behavior.

Second, behavior can be quantified. Didi’s service can be seen by the driver but not by the user. The driver’s own service score is shown above. A high score means good, and a low score means bad. It is managed through service points. For example, the rejection rate, response speed, average time to reach the user, and the five-star ratings given by users will all have a great impact. The service score is basically an all-round assessment of a driver.

Finally, how to determine responsibility. If a dispute occurs between a driver and a passenger, who is responsible? Punish the driver or the passenger? This is difficult to judge, especially for offline O2O business. So how does Didi make the judgment?

We use a relative or absolute approach. C stands for the passenger, B stands for the driver. A green B means that the user has always behaved very normally and does not give bad reviews to others casually. For such a user, if he occasionally gives a bad review, the platform will determine that the bad review is real and valid. If a user frequently gives bad reviews to drivers, this user can be called a picky user or a troublemaker. For drivers who frequently receive negative reviews from users, the scoring platform will downgrade them. For example, if the evaluation platform considers C to be untrue, the evaluation will be downgraded. So it is not the passengers who evaluate the drivers, and the platform will not think that it is all the driver’s responsibility. This is true for users and drivers, so please do not give bad reviews to drivers at will. If you do so casually, the platform will think that this user is bad or has problems.

Fourth, the driver’s capacity scheduling.

There are very good tools for driver operations and mobilization.

This is Didi’s urban operation. This graph represents the number of orders that have not been answered or completed at this moment or over a period of time.

First of all, this number is very dynamic, some are very high and some are very low. For example, such a pillar can draw a circle around it and send a dynamic report to the driver, telling the driver which place is in short supply of vehicles and allowing the driver to go there. At the same time, there is also a graph on the B side, where drivers can see changes in orders and changes in the heat map, so a good set of visualization tools is needed to mobilize drivers in real time.

Secondly, it is to monitor the retention and circulation of the entire driver ecosystem. For example, when a new C starts from registration and activation, we divide the situation in the first and second weeks into many types. This is the income situation of each driver, whether full-time or part-time.

Finally, there is the income situation, because income is the biggest motivation and source for drivers to work on the Didi platform. What they want when they come to the Didi platform is a job and a lucrative career. For drivers, the method we use to evaluate whether they are doing a good job is the hourly wage. He is high or low based on the value of the hourly wage evaluation platform, so the income level of different drivers in the city can be evaluated and monitored through the hourly wage. For example, in Beijing, if you work four or five hours a day, you can earn four to five hundred yuan. Due to different types and natures of drivers, expectations are different, so it is necessary to monitor the fluctuations and changes in drivers' hourly wages in different categories.

4. What problems does data operation solve?

There are mainly three aspects: the first is monitoring, the second is exploration, and the third is decision-making. The first thing to do in monitoring is to find out the key factors that affect the value data.

The second step is mining. What needs to be done in terms of data is to find the internal and external logic and rules that affect these factors. Under what circumstances will the magnitude have how much impact on the results? It is to quantify an influencing factor digitally so that it can be evaluated, predicted and measured.

Finally, it is decision-making, which is to provide various decision-making bases to the operations and company leaders through the analysis of some data to decide whether to do this or not. Each business has its own core formula. For Didi, B equals C. This is Didi’s core formula, with B on top and C on the bottom, so we need to be responsible for each business model.

Generally speaking, there are three perspectives on the data.

• The first is the conventional perspective and sequential perspective.
• The second is the side branch perspective and the branch perspective. What does this look like from the perspective of lost users?
• The third is the slice perspective. Especially for users with behavioral points, look at the changes before and after the behavior. There are also time points, such as the response rate of drivers, and what impact do marketing activities and subsidies have on users and drivers?

V. Operation of a large number of cities - city clustering

At that time, I was responsible for operations in 300 potential cities at Didi. There were too many cities and we had too few people. At that time, cities were classified based on the following criteria: first, order size; second, degree of balance; third, subsidy intensity; and fourth, the average growth rate of the city. Cities can be classified by these dimensions, and a set of strategies can be applied to each city. This makes it relatively simple and effective to configure operational strategies for these cities.

6. The Way, Technique and Tools of Operation

The first is the way of operation.

What I want to say about the so-called operation is to continuously strengthen the core value of our business. Didi’s core value is two: one is to enable users to get a taxi, and the other is to enable users to travel cheaply. Therefore, the foundation of every business, the foundation of operation or the foundation of business development is to continuously promote its two core values. Therefore, all Internet or mobile Internet businesses, in the final analysis, are nothing more than two aspects:

• The first aspect is that you have your own advantages or value in terms of experience.
• The second is that it has its own advantages or value in terms of price.

If the value provided on one side is sufficient, or if users feel that the value you can provide is attractive enough compared to other businesses, then the value to users will also be high. So from a Tao perspective, it means constantly improving your own value and finding the driving force behind the development of each of your businesses. The driving force for the development of each business is different, so at each stage we need to find the driving force, continuously develop the driving force, and let the driving force expand and grow. Only in this way can the business develop rapidly.

The second is technique.

The art is to assess the situation and formulate tactics based on the market's economic environment.

The third is the instrument.

First, it needs to be an operating tool, and second, it needs to be an ecological operation. Through the platform's rules and ecological construction, we can continuously encourage good drivers, suppress bad drivers, and encourage good passengers to suppress bad passengers.

The seven aspects of management and operations are the seven issues that large teams often consider.

The first is standards.

The standards for attracting new users, active standards, retention, or all operations need to figure out how to evaluate work standards. What are the most core KPIs now, and how to evaluate KPIs? How to formulate?

The second is the method.

Because Didi’s first stage is platform scale, the second stage is market share and growth, and the third stage is safety and efficiency. The standards for each stage are different. It is about what effective methods and means can be used to ensure that the results are achieved, forming a methodology, a set of strategies and a set of levers to ensure that the results are achieved.

The third is tools.

The tool is an online marketing and operation tool that enables efficient operation of user reach tools.

The fourth is resources.

What resources are needed to do these things?

The fifth is organization.

Because the characteristics of each team or each business are different from usual, different organizations may be suitable for different business lines. After organizational positioning, there is also architectural positioning.

The sixth is talent.

What kind of talents are needed for this position?

The seventh is process.

The process circulates between the company and other business units, and communication and management within the team are achieved through the process. So generally speaking, you just need to think more about these seven aspects in terms of operations management.

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This article was compiled and published by @Didi Operations Director Huang Yuyou (Qinggua Media). Please indicate the author information and source when reprinting!