[App Promotion Case] Didi Taxi: 4 Amazing Secrets Behind the Sky-High Subsidies

Recently, the battle between Didi and Uber is getting more and more intense, which reminds people of the subsidy war in 2014. The sky-high subsidy war launched by Didi and Kuaidi in 2014 was a benchmark event in China's Internet industry, so much so that many companies, when faced with promotion difficulties, would think of one solution: provide subsidies. Didi used sky-high subsidies to increase the market value of a startup to US$10 billion in just one year. Why? Money-burning wars were also popular during the group buying wars, but they killed many companies. Why didn’t Didi and Kuaidi repeat the same mistakes? How much real money did Didi and Kuaidi spend in subsidies in 2014? Cheng Wei mentioned a number in the second half of 2014, saying that Didi spent 1.5 billion. Including subsidies in the first half of the year and red envelopes in the second half, my estimate is that Didi and Kuaidi spent about 4 billion yuan. Sky-high subsidies are not as simple as just giving money. There are overt conspiracies, covert battles, bloody bayonets, and product black magic. Four key points behind Didi’s sky-high subsidies: The first key point is that WeChat is the driving force behind the scenes. In August 2013, WeChat Pay was launched. However, compared with Alibaba's Alipay, WeChat Pay has always lacked a very explosive application scenario. This scenario must meet three conditions: first, it must be mobile; second, it must be high frequency; and third, it must be a pain point. I guess Tencent founder Ma Huateng was thinking about bundling Didi with WeChat when he first met Didi’s CEO Cheng Wei. I have dealt with Ma Huateng many times, and what impressed me most was his "layout" ability. It is said that Ma Huateng's early QQ signature was called "Laying out". Tencent was eager to cooperate with Didi, and the two companies hit it off immediately. Alipay has a dominant position in the mobile sector, while WeChat Pay is on the rise. The two sides are one defending and one attacking, and the attacking side will naturally gain greater benefits. In January 2014, Didi connected to WeChat Pay. Cheng Wei wanted to do a promotion, and he initially asked Tencent for a budget of several million. Tencent replied: Your budget is too small. In the end, Didi was given tens of millions. The effect of the subsidies was amazing. Didi's transaction volume skyrocketed, and the subsidies exceeded 100 million in one week. For drivers and users, binding bank cards and credit cards has a relatively high usage threshold and brings security risks. It is easy to cause user loss during actual operation. Connecting to WeChat Pay is very convenient and can basically be done with one click. Combined with cash subsidies, the effect is amazing. In late January, Kuaidi launched a more aggressive subsidy campaign to subsidize passengers and drivers. At that time, Didi’s subsidies were cancelled, the situation quickly reversed, and Didi’s transaction data began to decline sharply. One day, Cheng Wei said at the board meeting: "In two weeks, Kuaidi's data may start to surpass ours." Everyone was stunned. The conclusion is that Tencent must continue to participate in subsidies. The first subsidy was entirely paid for by Tencent, and the plan reached later was that Tencent and Didi each took 50%. Tencent’s senior management readily agreed. The subsidy war is in full swing. The number of orders increased rapidly, and then the two sides entered into a tug-of-war, burning money faster and faster, from several million a day in the early days to tens of millions, and then to 100 million a day during the peak period in March and April. Kuaidi’s subsidy is 10 yuan, Didi’s subsidy is 11 yuan; Didi’s subsidy is 11 yuan, Kuaidi’s subsidy is 12 yuan. Later, product manager Ma Huateng came up with another idea: the subsidy for each order would be random, ranging from ten to twenty yuan. This way the other party will be completely unable to follow up. The second key point is that this was a battle with tacit understanding, and even a bit of a subsidy show. Some people say that the battle between Didi and Kuaidi is a proxy war, and the real battle behind the scenes is between Tencent and Alibaba. Are these four companies really out of their minds? Definitely not. Let me reveal something to you all. This was a tacit battle and the top leaders of both sides had been communicating under the table. You should know that although Didi is a Tencent-affiliated company, Cheng Wei used to work at Alibaba, and Didi's angel investor Wang Gang is also a former Alibaba executive. Li Zhiguo, one of Kuaidi’s angel investors, is also a former Alibaba executive. When the battle between the two sides was the most fierce, the investors of both sides had relatively close contacts, and it also facilitated a meeting between Didi CEO Cheng Wei and Kuaidi CEO Lu Chuanwei. On May 16, 2014, both parties announced the cessation of subsidies. It is impossible that there was no discussion behind the scenes. The amount of subsidies is gradually decreasing, and some cities have even stopped subsidies. They are worried that the weakening of driver and user stickiness will lead to a decrease in order volume. However, there has been no sudden drop in order volume, but a slow decline. A Didi executive told me that his hands were shaking when he was burning money like crazy in the beginning. Our original intention was to grab market share, but later we found that the more money we burned, the more valuable it was. The subsidy war is not a zero-sum game, but a positive-sum game. When we first started burning money, we didn't know whether it was for Kuaidi or for ourselves, but the taxi market expanded rapidly, jumping from hundreds of thousands of orders to millions. At the same time, the market share of both parties has not decreased, but has played a role in educating the market. Instead of spending money on TV advertising, it is better to let users experience the product directly. This is the most profound experience accumulated from the subsidy war. Behind Didi Kuaidi’s sky-high subsidies is a conspiracy between the two giants: to cultivate mobile payment habits and to occupy a space for mobile payment. But why is Tencent + Didi slightly better? The third key point is the appearance of red envelopes. After stopping subsidies in May 2014, Didi began to think about its next strategy. Cheng Wei was the first to come up with the product idea of giving out red envelopes when taking a taxi, which is a brilliant idea. Didi Red Packet was a great product in 2014 with extremely strong impact. Turn subsidies into a product and amplify its dissemination through social media. Sending red envelopes is a good way to motivate social interaction. People all have the need to show off and connect with friends. Sometimes you don’t know how to find a suitable reason to deal with others, but sending red envelopes is the best tool to connect with others. Users all have a sharing mentality. Meilishuo satisfies the pain point of young women who have nowhere to talk about their shopping experiences, while Didi Hongbao allows users to share their red envelopes with friends after taking a taxi. Users can't help but send them, and they will feel unhappy if they don't send them to their Moments or WeChat groups. Didi has a very methodical approach to sending out red envelopes, and its competitors simply cannot copy it. The first trick for taxi red envelopes is to attract new users. Users can attract new users by distributing them to their friends circle. The second trick is to invite domestic first-line celebrities to send red envelopes to users and use the celebrity effect to promote products. For example, many celebrities such as Huang Xiaoming, Hai Qing, Tong Dawei, Angelababy, Wang Luodan, and Li Xiaolu have participated in the "red envelope" craze, which is equivalent to attracting users from celebrity fans. The third trick is to send red envelopes to users through corporate sponsorship. It is said that the largest scale of cooperation was with Mengniu, which issued tens of millions of red envelopes, which became a way for Didi to make money. The fourth trick is to give out red envelopes on TV. Didi was one of the earliest products in China to use the shake function to send red envelopes. It sent out red envelopes through a TV variety show on Christmas Day 2014, and during Jiangsu Satellite TV's Spring Festival Gala on January 1, it sent red envelopes to users by shaking the app, attracting 17 million users to participate and sending out a total of 300 million red envelopes. The fourth key point: big data. In December 2014, Dimi went online. This is a point reward system for drivers, which relies on big data to prevent drivers from picking orders. I think Dimi is a better product design than the taxi red envelope. The product logic of taxi-hailing software is how to enable users to get a taxi. The subsidy is to encourage users to use the cars. How to motivate drivers to enable users who cannot get a taxi to get one depends on Didi Mi. When he first started Didi, Cheng Wei faced two choices: whether to tell users and drivers the destination. The advantage of not telling the destination is obvious: the driver will not be picky about the job, but the disadvantage is that the driver may refuse to pick you up if he doesn't want to go there, which is inhumane for the driver. Cheng Wei felt that information transparency was more in line with the human nature of the Internet, but there were objectively orders that drivers were unwilling to take in a certain period of time and in a certain area, so Dimi was born. The emergence of Dimi has transformed the previous approach of "spreading love all over the world" into targeted encouragement for drivers during rush hours. Beijing drivers are very cunning. They will not take passengers when there is traffic jam at night. They will sleep on the roadside when users need their cars the most and wait until the off-peak period to take passengers. Anyway, there is no time when there is no work in Beijing. In order to mobilize drivers during peak hours, Didi analyzes the time periods, roads, and destinations where it is difficult for users to get a taxi based on big data, and directly rewards drivers during peak commuting hours. There is a very important and fun thing about the Dimi system. For example, if three drivers are competing for one user at the same time, Dimi can judge that this is a good job. If a driver responds more than 10 seconds after the user calls for a car, it means that it is not a good job. If no driver answers after two minutes, and finally a driver answers, we will give him Didi. After a certain amount of money is added and we find that still no one is competing for the order, and the user has called three times, we will directly give the driver more money, 5 yuan, 8 yuan, 10 yuan up to a maximum of 16 yuan. Nearby drivers will go to pick up passengers within a kilometer, and 16 yuan will easily go into his pocket. The user can hear "This order is a 16 yuan reward from Didi to the driver for you." A Didi insider said that DidiMi has increased Didi’s taxi-hailing success rate by 10%. Didi Kuaidi completely uses money to eliminate all competitors. During peak hours, there are more than 40 players in the taxi market. This way of playing is very barbaric and the company cannot afford it because it does not have so much money. After hearing this, do you feel that things like sky-high subsidies have nothing to do with you? This is a game of competing with your dad. You can’t play it without a godfather. This is indeed the case. One of the important reasons why Jueyaoyao Taxi, the first taxi-hailing app in Beijing, was killed instantly was that it failed to find a rich godfather. However, what I want to say is that behind the 4 billion yuan in subsidies for Didi and Kuaidi, there is a compulsory course for mobile Internet entrepreneurship, which must be learned by both poor entrepreneurs and rich and handsome men. [Second Knife] Destructive Knife: Ground Marketing Competitiveness What are Cheng Wei’s money rules? Starting from an enterprise with 800,000 yuan, Cheng Wei built a company with a market value of 10 billion US dollars in just 3 years. What destructive weapons does Cheng Wei have? This is a compulsory course for Cheng Wei on mobile Internet: it is not about relying on one’s father, but relying on one’s competitiveness in local marketing. The subsidy war between Didi and Kuaidi has made many people frequently see a word: ground promotion. To put it more directly, it is ground promotion. Cai Ming, the founder of Kohler, used to believe that Internet companies would just float in the sky. However, the sky-high subsidy war between Didi and Kuaidi made him see the other side of Internet companies: they also have strong ground mobility. He invested in an O2O e-car wash project and poached a senior executive from Didi. At that time, a company designed a 3 million three-dimensional promotion plan for eCar Wash, but all the money was cut off. They said they would not invest a penny and would subsidize all the money to users. This move directly brought about an ultra-high conversion rate of 40% and huge user growth. Regarding the competitiveness of local marketing, we will find time to interpret it in detail later. If you want to know which company’s ground marketing competitiveness is the most important, please send the company’s keywords to the WeChat public account [Jincuodao]. Another saying is: The biggest feature of the mobile Internet era is to give benefits directly to users. This is the most valuable hard truth in the mobile Internet market. If Didi’s subsidy war is from 0 to 1, then Didi’s battle with Uber is from 1 to 10. This is the battle of the future. Whoever you like, please vote. For the full version of "Didi Taxi: The Shocking Secret of Sky-High Subsidies", please check out iQIYI's "The Rules of the Wrong Money".

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