Fine-tuned operations: How to provide good user subsidies?

" Subsidy " is a common operating method in Internet order products. Whether it is sending red envelopes or discounts on goods, they are all forms of subsidies.

The essence of business is profit, which is the difference between revenue and cost. The difference between the Internet model and traditional business practices lies in its " postponed profit " approach. A large amount of cost is invested in the early stages to attract users to use the product, and the cultivation of user habits often takes a long time, rather than just giving users a one-time opportunity to experience it.

In this process, how to use subsidies most efficiently to acquire users and retain users until they develop the habit of using the product? So, today I will summarize how to implement user subsidy strategies based on my own work in user operations .

In the initial stage of product launch when users are being acquired quickly, the subsidy strategy must be extensive. When the product has accumulated a certain amount of old users, it is necessary to start refined operations and provide user-tiered subsidies. On the one hand, this can save costs, and on the other hand, it is also necessary to weigh the investment in the product and find the best subsidy method.

I divide the subsidy strategy into “who bears the cost, in what scenario, for what product, in what city, for what user, in what method, and what amount can bring the best effect” , and summarize it into the following elements:

one person

People are users, which are divided into new users and old users. User attributes are divided into behavioral attributes in the traffic dimension and economic attributes in the order dimension :

1) New users

There are many new user labels , including unregistered pure new users , old platform users converted to new users for this business , registered users but not placing orders , new users who did not place orders after visiting , users who canceled their first order , etc. Generally, we will offer large subsidies and discounts to new users, and the indicator that needs to be paid attention to is the customer acquisition cost.

2) Old users

There are many stratification dimensions for old users:

• Active, churned and dormant by activity level
• Divide primary users, growing users and mature users by cumulative number of orders
• Divide into high value and low value by user value
• According to the sensitivity of discount, users are divided into the most sensitive, medium-high sensitive, medium-sensitive, low-sensitive and insensitive users.
• Divide users with different consumption levels by consumption unit price
• Users with different average subsidy ranges are divided according to the average subsidy rate
• Loyalty and competitor transfer swing users by user loyalty segment

2. Scenario

1. Business Type

Business type refers to different businesses within the same product. For example, in addition to food, the Dianping APP also provides movies , hotels, travel, leisure and entertainment and other services. The subsidy amount for different businesses is definitely different. For high-frequency, low-unit-price products such as Dianping takeout, the subsidy amount will not exceed 10 yuan, while the low-frequency, high-unit-price hotel business will be subsidized with coupons of 20-50 yuan. Therefore, the subsidy amount is strongly related to the business type, and each business line has its own subsidy strategy.

2. Demand scenarios

User demand scenarios refer to the needs of different types of users for using products at different times and places. For example, in the hot summer, we all tend to stay in the office and order takeout to solve our lunch needs. The scenario at this time is that white-collar users need takeout due to bad weather. In this case, the subsidy amount of the platform can be reduced and the delivery fee can be increased, and the same applies to rainy days.

Another scenario might be a college student who stays in his dormitory playing games , struggling over whether to go to the 500-yuan cafeteria or order takeout from an off-campus food court. If you want to convert this student user, you need to invest in coupons that are attractive enough to cultivate his lazy usage habits. Therefore, the subsidy strategy also needs to fully consider the demand scenarios, such as weather, environment, season, time of year, consumption time and other factors as well as the strength of demand intentions of different types of users.

3. Cities

Cities are the most common dimension for division, and are generally divided into first-tier, second-tier, third-tier and fourth-tier cities for operation:

1. Market share

In addition to promoting in a way that suits local characteristics, city-by-city operations can also specify operating strategies based on the market share of local products. Cities with relatively advantages can reduce subsidies, while disadvantaged cities need to compete with competitors for users, so the subsidies they invest are naturally sincere enough. Therefore, when formulating subsidy strategies, we need to consider the market share of the products.

2. Consumption level

There are differences in consumption levels in different cities, and product pricing also varies. For example, the same product on No. 1 Store costs only 1 yuan in Shanghai and Nanjing. There is no red envelope that falls from the sky in Shanghai, but there is a 4 yuan red envelope in Nanjing. This is related to the local warehousing, logistics, labor costs and consumption levels . Since the pricing is different, the subsidy intensity also needs to be adjusted according to the pricing, and the subsidy rate and cost budget should be within an acceptable range.

IV. Method

1. Subsidy form

Common forms of subsidies include coupons, red envelopes, cash back, discounts, and redemption of gold coins and points. E-commerce companies also provide subsidies for delivery services, such as free delivery for members of Ele.me , JD.com 's Plus membership, and free insurance for air ticket bookings from Ctrip. The essence is to give users certain benefits as bait to stimulate consumption, or to provide value-added services to create surprises and enhance the consumer experience.

The form of subsidies will also affect user conversion . For example, when you order takeout, if a dish costs 30 yuan and the delivery fee is 8 yuan, and a dish costs 38 yuan with no delivery fee, the perception you get is different. The former's expectation of the value of the product is not as high as the latter. Therefore, when we consider subsidies, we need to understand user psychology and use the best method to achieve the best benefits.

2. Subsidy channels

Users can use the product through multiple channels. In addition to the APP , there are also PC web versions, H5 pages , mini programs , third-party open platforms , etc. In fact, for risk control considerations, not all channels will provide subsidies, and the forms of subsidies will also vary. Therefore, we also need to consider channel characteristics when formulating subsidy strategies. For channels that are not very safe in risk control, we need to control the upper limit of the subsidy amount to prevent false orders.

V. Amount

1. Amount inflection point

The effects of subsidies of different amounts are different. Usually, the inflection point of conversion rate growth is found through testing. If the number of new customers brought by 14 yuan and 16 yuan is not much different, then the platform will be more inclined to provide lower subsidies to a certain group of users to reduce costs.

2. ROI

The cost must be measured against the benefits. The input-output ratio of new customers is generally used to calculate the customer acquisition cost, while ROI is used for old users. The calculation methods of ROI for different businesses will also be different. Generally, incremental ROI = incremental orders/input cost . E-commerce products involve the calculation of GMV, that is, incremental ROI = incremental GMV/input cost .

When formulating subsidy strategies, we need to distinguish between the control group and the experimental group to measure whether the ROI value is reasonable. If it exceeds the reasonable value based on experience, we need to readjust and optimize. For example, if the subsidy effect on users with low sensitivity to discounts is not good, it would be better to move this part of the cost to users with high sensitivity, which will bring higher benefits.

VI. Source of Subsidy

The costs of subsidies can be divided into several categories:

1. Self-budget

The budget for product promotion is borne by the initial team itself. Many startups spend a lot of their large financing on user subsidies. The most typical case is Didi Kuaidi. Didi can be called the most financeable Internet company in history. We have all witnessed the scene of Didi red envelopes flying all over the place from 2014 to 2015. Companies that issue their own budgets need to spend the company's reserve funds reasonably to maintain steady product development, so efficient subsidies are also a kind of hard power.

2. Third-party payment

Bank credit cards and third-party payment platforms such as WeChat and Alipay will have instant payment discounts. This type of subsidy can also stimulate user consumption, which is beneficial for acquiring new customers and cultivating users' online consumption habits.

3. Merchants bear

Platform-based products such as Taobao and food delivery, their store red envelopes and merchant discounts are all systems provided by the platform for B-side merchant configuration. Merchants can decide what kind of subsidy amount to use to attract users, use it flexibly, and bear their own profits and losses. The platform will share a small amount of costs when a new store goes online, and the cost will gradually decrease in the later period.

Summarize:

The above summarizes several factors that affect subsidy strategies. The importance of subsidies to user operations is self-evident. It is an operation method required by almost all order-based products.

Subsidies are not as simple as issuing coupons. How to issue them well is a very valuable technical job. Therefore, as a user operator, when you are worried about how to provide subsidies, you should analyze it from the above dimensions, combine the business and product characteristics, learn from historical experience and seek the assistance of the data mining team, and work together to obtain the most users and orders at the lowest cost and give full play to the functional role of operations.