Pinduoduo’s paid membership model and operational ideas!

Everyone is familiar with the gameplay of paid membership , and everyone should be familiar with the operating modes of online shopping platforms and knowledge payment platforms. This article takes Pinduoduo as an example to break down the paid membership tier model and operational ideas. Let’s take a look.

There are endless ways to play with paid membership, and it has become the mainstream way of playing on e-commerce platforms.

There are two reasons why it can replace the rights and interests of level members:

• On the one hand, members who originally upgraded mainly based on experience points need to spend a long time on the platform to obtain high-level membership rights. As competition on e-commerce platforms intensifies and substitutability becomes stronger, high-value loyal members are becoming increasingly difficult to maintain, and the churn rate remains high.
• On the other hand, the paid membership system replaces time with money. As long as you are willing to pay, you can obtain the original high-level membership rights and interests. The increase in sunk costs for users makes it easier to retain users.

There are two mainstream payment methods on e-commerce platforms: one is the value-oriented annual card system, and the other is the money-saving-oriented monthly card system.

Representatives of the annual card system are JD PLUS membership and Taobao's 88VIP membership, and representatives of the monthly card system are Pinduoduo's money-saving monthly card and Taobao's red envelope saving card.

The marketing logic of the annual card system is to provide high-net-worth users with super-value service rights and interests, and the target user group is generally the user layer at the top of the platform pyramid.

By providing this group of users with services that exceed the overall user service level and have belonging value, we can maintain a group of very sticky users who are not easy to migrate to competing platforms.

For example, Taobao’s 88VIP logic is to only provide card opening services to users with a Taobao value of 1,000 or above. Ordinary users need to pay 888 yuan to open an account, which is a typical case of price discrimination.

Common articles interpret this practice as encouraging ordinary users to consume more and increase consumption frequency in order to obtain activation qualifications.

But on second thought, this understanding is untenable. The ordinary user layer means a group of users who are price-sensitive and have a low sense of belonging to the platform. Comparison shopping is the mainstream behavior pattern. Why would they spend more on Taobao just to open an 88VIP membership?

Taobao’s typical logic is to use price discrimination to give top users a very strong sense of value belonging, and to actually obtain rights and interests that ordinary users cannot enjoy.

For example, the co-branded benefits of Taobao’s entire family bundle allow you to enjoy the benefits of multiple membership identities by opening one card.

The shopping migration cost for this group of users is very high. Once they go to JD.com to shop, it means giving up the accumulation of Taobao points.

In this way, Taobao has retained high-value and high-frequency consumption users, which also means digging a moat.

As long as the moat is built at the city gate, the base camp will have nothing to worry about. We can then go all out to expand into lower-tier markets and other hot spots to compete for users.

The marketing logic of the monthly card system is to provide preferential benefits to price-sensitive users, and the activity attributes are far greater than the value attributes.

By issuing monthly cards, the platform locks in a group of price-sensitive users who are easily lost, thereby increasing the number of repurchases by users.

Currently, the mainstream user groups of most platforms are price-sensitive users, and the user acquisition and retention costs remain high.

Especially Pinduoduo, which mainly serves users in the sinking market, and various players competing in this market.

Including Taobao Special Price Edition and JD’s Express Edition, which are aimed at low-end users.

The logic behind the monthly card system is to simplify the rights and interests, use saving money as the core selling point, and focus on the concept of return on investment.

It only costs a few dollars to open an account, and once you open it you will get a coupon to recover your investment. Once you make a profit from one order, you will make money from the next order.

So we can see that the core benefit of this type of card is the coupon, and the logic of the platform is also very simple.

By issuing coupons to lock in customers, the corresponding users will also have certain sunk costs.

Vouchers are purchased with payment and if not used, there will be a certain loss. However, the core problem of this type of paid voucher package is that users will not actively consume for the vouchers and it will not create additional demand.

In other words, users will not actively place an additional order in order to use up a discount coupon, which is often a certain deviation from the frequency increase that the platform hopes for. The platform also needs to guide users through other rights and interests.

Let's break down Pinduoduo's monthly payment benefits:

This is a model of Pinduoduo's money-saving monthly card that I sorted out. The model can be divided into two parts:

• First, what goals does the platform achieve through the equity level?
• The second thing is to solve the problem of how to let users open cards.

1. How does the equity hierarchy achieve platform goals?

The core logic of equity design is based on the core closed loop of retention-new customer acquisition-activity.

1. Retention is the primary core issue that the platform needs to solve. For platforms like Pinduoduo, which mainly serve users outside the Fifth Ring Road, users are highly price sensitive and their consumption is mainly based on price comparison. They will go to the cheapest store. How to retain customers is the core issue that needs to be solved.
2. Secondly, attracting new members and fission is the most advantageous part of Pinduoduo's social attributes. The fission and new members of monthly card members are easy to do;
3. The second is activity. Pinduoduo's model is similar to Taobao. The platform model must have a large number of mid- and tail-end merchants. What these merchants lack most is traffic. What Pinduoduo does is to enable traffic and provide traffic support to tail-end merchants, which is of great significance to the platform ecology.

We use this logic to analyze Pinduoduo's equity design ideas . The first is the retention and activation logic , which is what users stay to do:

• First, it increases the frequency of users’ consumption;
• The other is to work hard to increase the user's consumption order. The product of frequency and order is the user's ARPU value.

Pinduoduo has designed two benefits for retention, one is the daily coupon, and the other is the free order privilege.

Let’s take a look at the benefits of the daily coupons:

How magical is this advertised daily coupon? I studied it carefully.

The coupons are distributed over four weeks, with one 5-yuan unrestricted coupon and one 26-yuan threshold coupon each week. The limit is one coupon per day, giving you the feeling that you will lose out if you don't use it.

So the 104 yuan discount coupon and four 5 yuan no-threshold coupons are indeed genuine, but there are also pitfalls.

The no-threshold coupons for groups of 10,000 people and the products with billions of subsidies are not available, and the sense of value is greatly reduced.

It is really possible that you cannot spend the money when many commodities participate in the 10 billion yuan subsidy. The discount coupons are real, and their purpose is to increase the frequency and customer orders. The magic coupons are limited in quantity and are basically impossible to get, just like grabbing Moutai.

Let’s take a look at Pinduoduo’s free order benefit. This benefit has two purposes. One is to increase the frequency, and the other is to increase activity, that is, to accelerate the function of the special session.

It is still very difficult to get the right to free orders. You need to complete 15 orders, with each order starting from 25 yuan, which means you need to spend at least 375 yuan a month to get the free orders.

In fact, placing 15 orders is just a smokescreen or a price anchor point. Who can place an order within two days?

This is designed to highlight the acceleration welfare special.

In the accelerated welfare special session, one order is counted as multiple orders, and users can be easily introduced to various special sessions on this page.

That is to realize Pinduoduo's traffic distribution logic. Pinduoduo will introduce traffic to where there is a lack of traffic, thereby providing traffic support for mid- and low-end merchants.

Through this benefit, we can see that users can get a free bill if they actually consume 3-5 times per month. The average consumption frequency of users is often just a little more than once, so if they can achieve it three times, the goal of increasing the frequency will be achieved.

Once again, it’s the logic of attracting new customers, which is very familiar.

You can renew your account for free by inviting your friends to open it. The most effective way to quickly acquire new users is fission.

The core of fission is to make both the inviter and the invitee feel that the reward is irresistible.

If it is not used, it will be a loss. This can promote the continuation of fission.

For example, Pinduoduo’s common tactic is to receive free red envelopes. A pop-up window will appear saying that the 300 yuan red envelope can be withdrawn. The first cut you make is 299.9 yuan, and you are still 0.1 yuan short of a successful withdrawal. Can you refuse?

This 0.1 yuan requires you to invite your friends to help. You are very excited and go to your friends for help. Similarly, after receiving the invitation, your friends will also get the money, which is only 0.1 yuan away from cashing out, and they will also have the same irresistible impulse.

The monthly card membership also applies this logic. Friends can be given a special monthly card with free renewal for 6 months, which is attractive enough to the inviter. After receiving the invitation card, the invitee can click on the flip card to draw a privilege of 3 months for free.

The first trick is to invite friends after opening a monthly card and they can get 6 months of free monthly cards. This is the core interest point to stimulate sharing fission. At the same time, it helps friends save money and reduces the psychological burden of the inviter. You share not to disturb your friends, but to help them save money.

After the invited friends receive your sharing link, they will see the following process page:

Try your luck and click to open a card for free. It’s a very reasonable strategy of taking advantage of the old customers.

Users who have never opened a monthly card often get 0 yuan, while the activation fee for invited renewal users ranges from 0.9 to 29.9 yuan. It can be said that the card opening price is different for each person and there is no need to worry about user complaints.

Because it is very reasonable to explain that the price is obtained through lottery and everyone's luck is different.

This can also serve as a reference for user strategy tools for platforms that have recently been troubled by the crackdown on "killing old customers first". The front-end prices should not simply be labeled as "new customer price" or "brand new price". This type of price label copywriting is itself a form of "killing old customers first".

Giving such favorable prices to new customers while old customers cannot enjoy the same prices, isn't that taking advantage of old customers?

This kind of lottery format can be used to let users try their luck and get the price they want.

The second trick is to attract new customers by combining it with trial privileges. Free trial is also one of the core benefits of the money-saving monthly card.

We see that there are many traffic-generating products among the free trial products provided by Pinduoduo. Products like Supor vacuum cleaners can easily arouse users' desire to get them for free.

However, this benefit is not 100% usable and the success rate is not high.

The core logic is the task system. One type of task is the golden process to promote conversion. It starts with simple browsing and gradually guides you to collect, add to cart, pay, and share. In fact, the more frequently you place orders, the greater the probability of being selected for a trial.

The other is the task of attracting new users. This type of task can directly stimulate users to invite new users who have never registered or opened a card, and it also has a very good fission efficiency.

2. How to stimulate users to open a card is the key to the success or failure of the paid membership system

The tiered benefits design of the paid membership system solves the core issues of retaining and increasing user frequency on the platform.

Another issue that needs to be addressed is how to make users willing to open a card. The target group for monthly card members is often highly sensitive users.

The willingness to pay is much lower than that of equity card users with annual fee system. We have summarized three tricks in the model:

1. Core interest driven

The decision logic for users to open a card is very simple. When the value of the benefits is greater than the cost of opening the card, the user will open the card.

Otherwise, the card will not be opened, so the platform only needs to make users feel the value.

Monthly cards all focus on the concept of “saving money”, making users feel that they can save more after opening the card; the second is to reduce users’ decision-making costs, focusing on the concept of “return on investment”.

Pinduoduo directly gives users a 5-yuan no-threshold coupon to help them get their money back. Initially, users can receive 4 coupons, and opening the app at the original price also means that they can get their money back.

From the perspective of operating costs, the platform will inevitably lose gross profit.

After opening a monthly card recently, users discovered that the 5-yuan no-threshold coupon could not be obtained at will, but was linked to tasks.

Of course, in the early stage of its rapid expansion, Pinduoduo provided subsidies in this regard, and users were able to receive them directly and have a better experience.

Secondly, we focus on the after-sales concept of "refund if you don't save enough", so that users have no worries.

2. The dizziness of winning

Pinduoduo is a master at stimulating users to make impulsive decisions, by catching them off guard by giving them a big prize.

What we said above about withdrawing 300 yuan with only 0.1 yuan difference and opening a card for 0 yuan in a lottery are all based on this idea, which fully grasps the user's desire to take advantage of small bargains and amplifies the psychological effect of loss aversion.

3. It’s the demonstration effect of others

On the one hand, the QA of the card opening page solves all the users’ doubts about card opening, which undoubtedly maximizes the efficiency of card opening.

On the other hand, the constantly scrolling interactive winning information makes users feel the popularity of participating in the event, which undoubtedly accelerates the user's decision-making process.

Conclusion

The core logic of the paid membership system is that the annual card membership system is a corporate moat that ensures that core high-value users can be retained. The annual card members who are retained are often very loyal and are not likely to flow to competing platforms.

Monthly membership, which is based on the concept of saving money, is often more like a tool to increase user frequency, improving the value of low- and medium-value users in the middle and middle parts of the platform.

The coordination of these two membership systems is more common at present. When companies become members, they can design their rights and interests based on the core needs of target users. It is believed that this will greatly enhance the user value of the platform.

Author: Zhao Wenbiao

Source: User Operation Observation (ID: yunyingguancha)