The most comprehensive paid membership system analysis
|
In the well-known AARRR model , the membership system is the most common means of operation in terms of activity, retention, and revenue. It has two types: paid membership system : purchasing high-value, differentiated rights through payment. 1. How to understand the paid membership system?
Figure 1: Derivation of membership system objectives
The formula is too abstract, for example: Ever since Eric signed up for the VIP membership of Get Audiobooks, he has been spending every day on Get, absorbing the anxiety taught to him by Mr. Luo Zhenyu, as he feels bad about the 365 yuan membership fee. Two weeks later, he was no longer satisfied with just listening to books, and successively purchased popular courses such as "Liang Ning's Thirty Lectures on Growth Thinking" and "Xue Zhaofeng's Economics Class". In the following year, Eric immersed himself in the ocean of knowledge on Get every day, and persisted until his performance score reached 3.25. Eric spent a total of 851 yuan this year. If he had not purchased the audiobook VIP, his spending on the platform would not have exceeded 150 yuan. Not only that, he also stopped subscribing to Wu Xiaobo Channel. Summary: Paid members can not only increase the ARPU and retention of the overall market, but each new member may also mean the loss of paid members of similar competing products. This is particularly important during the business competition period (since the launch of 88VIP, the annual fee of JD PLUS has dropped from 198 yuan to 99 yuan). Figure 2: How to achieve success? ① Incentives and utility 1. Paid membership system Figure 3: Positive feedback from paying members For a good paid membership system, the user's utility demands are very clear:
Low-frequency, low-use benefits such as "membership badge" and "exclusive customer service" are mostly just for the sake of making up the numbers. In general, the implementation cost for paid members to obtain benefits is low (just pay, no behavioral accumulation is required), and the services obtained in exchange for payment are usually higher-utility services. With the development of paying habits among domestic users and the intensification of crackdowns on piracy (increasing the "search cost" of using pirated resources), paid membership has become a core operating project for many Internet products. On August 8, 2018, Alibaba launched the 88VIP plan, attempting to use this "one-card pass" to connect Alibaba's ecosystem, including shopping, local life, and large-scale entertainment. It is known as Alibaba's "No. 1 project." Figure 4: 88VIP 2. Growing membership system Figure 5: Positive feedback from growing members For most Internet products, the "growth membership system" has a relatively low impact on user behavior for two reasons: 1) The growth system is a global operating system and has no income. If the subsidy rate is too high, the operating costs will increase as the scale grows. For example: In 2018, Didi points could be exchanged for express coupons, but now they can only be exchanged for luxury car coupons. 2) Still because it is free, the positive feedback of the growth system is unlikely to be high-frequency and infinite , and is more suitable to appear in the form of medium- and low-frequency "aha moments". For example:
In summary, compared with paying members, the implementation cost for users to obtain "utility" in the growing membership system is higher, and the utility of their rights is much lower. This means that growth membership can only serve as a supplementary means of operation in most cases, combined with a points system, to reasonably consume accumulated values and provide targeted subsidies to highly active/valuable users. ② Starbucks: A hybrid approach of paid and growing membership Star Rewards is a membership system that combines "paid membership" and "growth membership" better: 1. Will there be discounts if I pay? The 98-yuan Star Rewards Card does not provide continuous benefits like the Tencent Video VIP, but rather allows users to obtain "6 consumption coupons + direct upgrade to Jade Star level membership" by predepositing cash. How much money can users save?
If all the coupons are used , the total consumption = 218 yuan + 98 yuan = 316 yuan. If a non-member purchases, the total consumption = 32*4+160+48=336 yuan. Discount rate = 20 ÷ 336 = 5.95% (Excuse…). It’s really hard to accept this routine. So...did Starbucks make money? A: Of course. ——"Negative Interest Rate Loans: Starbucks' Monetary Miracle" 2. Cycle of Growth Figure 8: Starbucks’ growth system As a classic "growth membership system", the core design of Star Rewards Card is:
Since this article focuses on introducing the paid membership system, a detailed analysis of the growth membership system will be introduced in detail in the next article. ① Grab the person who pays Currently, the market is facing the dilemma of incremental depletion. The competitive strategy has changed from free in exchange for traffic to paid in exchange for quality, a battle for high-value users. As mentioned earlier, the competition for paying users is driven by the pressure of a zero-sum game, and it is difficult for users to pay for similar services from multiple sources. But most of the users who are willing to pay are high-value users.
From the platform's perspective, paid members not only capture the "behavioral attention" of high-value users, but also provide effective user tags for the service supply side (merchants), facilitating their targeted marketing and improving business efficiency. ② User psychology analysis Why are paid memberships so effective? Because users are "loss-averse". Users are more sensitive to losing relatively free gains, especially annual memberships with high average order value. If they buy them but don’t use them, they will suffer a big loss. Therefore, once users pay, their behavioral attention will naturally focus on membership-related services, which also determines that the design of hooks to attract new users is very important (this will be focused on in the next chapter). It is worth noting that "loss aversion" is different from "risk aversion": "Risk aversion" means that users need more compensation for the same risk. Example: Option 1: If the coin lands heads up, the participant gets $100; if it lands tails up, nothing. Option 2: Do not participate in the game and get 50 yuan directly. The two options are weighted according to probability, and the expected returns are the same: Option 1: 100 * 0.5 + 0 * 0.5 = 50 yuan. Option 2: Get 50 yuan directly.
Figure 9: Investor P (Ip) is more risk averse than Investor Q (Iq) The application of risk preference is often seen in the operational practice of the points system, such as lotteries, spins, etc. Loss Aversion: The Comparison Between Gain and Loss Get the experiment: Option 1: Get $900 for sure. Option 2: There is an 80% chance of getting $1,000 and a 20% chance of getting $0. Many people chose to avoid risks in the experiment and 100% got $900. Lost Experiment: Option 1: A guaranteed loss of $900. Option 2: There is an 80% chance of losing $1,000 and a 20% chance of losing $0. In the loss experiment, choosing one means a certain loss of $900, while risking only $100 more may result in a loss of 0. In this case, many people choose to take the risk. Practice has shown that when there are no ideal options, people are more willing to take a chance. Because people generally hate losing much more than they like gaining. Loss is a stronger feeling than gain. This is very common in the stock market trap phenomenon (as long as you don’t sell, it’s not a substantial loss and there’s still a chance). Figure 10: The diminishing marginal utility of gains (right side) is greater than the loss, and its curve is smoother Design considerations for paid membership system Figure 11: The core design of the paid membership system ① Stored value type The most common business models that use this membership model are cinemas, gyms, swimming pools, hot pot restaurants, and barber shops. Membership privileges are gained by exchanging stored value for membership privileges, and all preferential behaviors are bound to stored value cards with balances. For stored-value paid membership, the product should meet the following requirements:
② Subscription Most common Internet paid membership systems are subscription-based. Among them, content platforms (news, music, video, knowledge, etc.), e-commerce platforms, and O2O platforms are the most typical.
The product strategy of paid membership can be developed from four dimensions: ① Diversified membership services Different types of paid membership products are packaged for users with different needs.
② User stratification of rights and interests We provide graded services for members with different payment levels. For example: The monthly upload traffic for Evernote free account, standard account, premium account, and professional account is 60M, 1GB, 10GB, and 20GB respectively. Figure 13: Evernote’s paid membership list ③ Price discrimination 3.1 First-degree price discrimination If the manufacturer can sell at the highest price that each consumer is willing to pay, that will be the maximum benefit. We call this model "first-degree price discrimination." Example: A bottle of Coca-Cola costs 1 yuan. A is willing to pay a maximum of 2 yuan, B is willing to pay 6 yuan, and C is willing to pay 1.5 yuan.
In real life, "first-degree price discrimination" is rare. Some super-large telecom operators will apply first-degree price discrimination when dealing with super-large customers. It is worth mentioning that in 2017, I used a time management product called "Tomato Potato". The way to unlock the premium version at that time was that users set their own prices. You could unlock it by paying 1 yuan, 2 yuan, or 100 yuan. 3.2 Second-degree price discrimination "Second-degree price discrimination" is also known as "range pricing", in which producers set different prices according to different purchase quantity ranges of consumers. Almost all paid membership products follow this guideline, and you will get more discounts by purchasing more months of service at one time (annual/quarterly package). Figure 14: Ele.me Super Membership Order Page 3.3 Third-degree price discrimination When a manufacturer charges different prices for the same product to "different markets" or "different consumer groups", it is called "third-degree price discrimination". The pricing information of paid memberships of several Internet products is briefly sorted out, as shown below: Figure 15: Pricing information for paid membership products from Zhihu, Tencent, Alibaba, etc. You can see:
These are all typical cases of three-degree price discrimination. QQ is a platform for young people. If it does not support "student authentication", the total number of subscribed members will be reduced a lot. ④ Joint Marketing Many paid membership products will be jointly marketed with other brands. There are two main forms of such joint marketing:
Figure 16: Joint membership of Caixin and Sanlian Zhongdu When designing paid membership benefits, two key issues should be considered.
① Trigger mechanism There are usually two types of benefits triggers for paid members:
Figure 17: Ele.me Rewards ② Preferential benefits Preferential benefits generally take three forms:
Figure 20: JD PLUS JD Beans ③ Privileged rights Privileged rights generally take two forms: The first type: exclusive resources
Operation strategy of paid membership system Regarding the operational strategy, there are two points worth recalling in this article:
Therefore, during the entire life cycle of paid members, the nodes that need to be focused on are: "Before subscription: traffic coverage and lowering the threshold" and "During subscription: increasing sunk costs" . The traffic of paid members comes from "external public traffic" and "internal traffic of the product". To grow faster, you should focus on two things:
Figure 25: Obtaining paid membership ① Traffic coverage When constraints allow, there are three ways to cover users more comprehensively:
Figure 27: WeChat Reading Invitation Rewards
Figure 28: iQiyi invitation rewards 2) Advertising reach: Make full use of external advertising resources and internal traffic resources of the product to convert paying users. Operations should pay attention to the ROAS and CPA levels of each channel. Figure 29: Caixin* Sanlian Zhongdu’s advertisement placed in Daxiang Guild, with over 12,000 views Here we should pay attention to the difference between ROAS (Return On Advertising Spend) and ROI (Return on Investment):
If it is a content-based membership product, the marginal cost is very low, and ROAS is a more appropriate evaluation indicator than ROI. If it is an e-commerce membership product, user income will only be reflected over a longer period of time, and CPA can be used to evaluate the effectiveness of the delivery in the early stage. 3) Key node coverage: In addition to advertising resources, the most frequent way to influence users is to guide user conversions at key nodes of the product. Example 2: Meituan Takeout guides users to recharge their membership on the order settlement page to save more. Figure 30: Meituan takeaway checkout page ② Lower the threshold The core of users' decision on paying membership lies in the relationship between the required benefits and price. Their perception of the utility of the benefits will also be quite different before and after use. Therefore, designing strategies that are more conducive to lowering the threshold for users' decision-making can more effectively promote users' decision to pay. Design Hooks Common hooks for paid memberships to guide users to pay are generally "first month/first quarter subscription discounts, subscription gifts" and so on. In addition, you can also try to design a more effective solution based on the specific circumstances of the product. Take the team collaboration product Trello as an example. As a product with a certain threshold, Trello is not in a hurry to guide new users to pay. Instead, it adopts a strategy of giving one month of membership for free for every registered user invited (up to 12 months), encouraging team organizers to introduce team members and carry out project management and coordination work in Trello. After more members join, users face two problems:
Figure 31: How Trello hooks users For products where user behavior can generate sedimentation and increase switching costs, Trello’s paid conversion strategy is a good reference. Figure 32: Raising sunk costs Generally speaking, the larger the payment amount, the stronger the user's loss aversion will be, so the best way to increase the user's sunk cost is to: ① Short subscription → Long subscription Some paying members, out of a trial mentality, usually subscribe on a monthly basis first; for retained users among this type (who recognize the value of the product), annual package promotions can be used to encourage them to convert into "long-term subscribers", further improving the retention level of paying members. Figure 33: Evernote’s marketing advertisements for monthly paying members Figure 34: The positive impact of increasing the proportion of annual fee users on retention ② Membership renewal discount For annual members, renewal discounts (coupons, limited-time discounts, annual subscription discounts, etc.) can be triggered for users whose expiration dates are approaching, thereby improving users' subscription retention rates. Figure 35: Process on Subscription Offer ③ Joint promotion Figure 36: Independent payment and joint promotion As mentioned at the beginning of this article, under an independent membership system, users can choose the most suitable manufacturer in each field to subscribe, for example: music subscription to NetEase Cloud Music, video subscription to Tencent. However, when the user overlap between services is high, cost-effective joint marketing is more helpful in exclusively retaining paying users (after subscribing to 88VIP, I immediately unsubscribed from Tencent Video and Meituan Takeout memberships) and consolidating their user habits and brand recognition through high-frequency business . Of course, the price of achieving high cost-effectiveness is a huge loss. ——Xiu Xun, head of 88VIP membership project Didi Chuxing is a typical high-frequency, low-consumption product with relatively simple core business operations, making it suitable for implementing a paid membership system. ① Orange Member and Green Orange Member Currently, Didi uses a "growth membership system" in its four-wheel vehicle system, focusing on subsidizing highly active users (diamond level and above). Figure 37: Didi Orange Membership System As mentioned at the beginning of this article, since "Growth Membership" is a global operating system, it is difficult to support a high subsidy strategy for a massive user base. Among the 11 rights and interests of the Orange Manager System, the ones that users should be aware of are:
We have also seen the following being ridiculed many times:
At the same time, Didi has also opened a separate two-wheel vehicle system:
Design gradient benefits around the two-wheel vehicle scenario. Currently, the Qingju level has been opened to LV30, and the rights and interests mainly consist of "experience acceleration", "drawing Ele.me red envelopes or bicycle coupons", and "dispatch fee reduction". Figure 38: Didi Qingju Membership System The Qingju Cycling Card mainly promotes continuous monthly subscription discounts (16.8 yuan/month, 9.8 yuan for the first month), with a maximum deduction of 5 yuan per ride. The excess will be charged according to the standard fee, with a maximum of 20 discounts per day. This card is a membership product that requires paying to purchase preferential benefits. Figure 39: Didi Qingju Cycling Card ② Coupon Package Mall Didi also sells various types of travel packages to provide money-saving solutions for high-frequency users, for example:
However, since the purchase entrance for the coupon package is located in the advertising area at the bottom of the homepage, the conversion rate may not be high. ① Necessary speculation Although there is a relatively considerable scale effect, instant travel is highly dependent on the responsiveness of the supply side. If there is no response in a short period of time, orders will easily be lost to other platforms. The "paid membership system" can enhance users' willingness to be active to a certain extent. Under the condition of limited supply, it is more conducive to allocating resources to high-value users and increasing platform revenue.
On the premise of ensuring basic user experience, some high-utility rights/operation models are more suitable for integration into the "paid membership system":
② Idioms about coupling or decoupling From the perspective of user coverage, a Qingju user is most likely a Didi user, but a Didi user is very likely not a Qingju user (a business in the development stage). So if you want to design a paid membership system:
③ Imagination about Members’ Rights This is a paid membership product called "Orange Gift Membership":
Note: The data in this paragraph are all nonsense and are for illustration only. The core benefits of Orange Gift members include:
Financial calculations regarding pricing and equity require comprehensive calculations based on the profitability of the business in different scenarios and the probability distribution of user behavior. For example:
Author: Eric, a maverick Source: Eric is a maverick |
<<: If you don’t understand these 6 points, you can’t be creative in advertising
Recommend
Methods to improve short video traffic conversion rate!
It is undeniable that Douyin videos have become a...
What is the difference between opening a Baidu framework account and a Baidu port account?
What are the Baidu account opening channels, Baid...
Hanekawa - Douyin Merchant Self-broadcasting Operator Online Special Class
Hanekawa - Douyin Merchant Self-broadcasting Oper...
Pinduoduo Promotion: Tips for Obtaining Free Traffic!
Just one trick allows you to quickly get free tra...
Pacific Rim Academy-MET Muscle Energy Technology
Pacific Rim Academy-MET Muscle Energy Technology ...
Let’s talk about how to increase followers on apps like Tik Tok and Zhihu!
Today let’s talk about the issue of increasing fo...
How to use the reverse method to improve the bidding effect of Baidu?
Generally, data analysis is done step by step fro...
ASO promotion and operation experience sharing: Get 1000+ new activations per day on the App Store for free
After this attempt, we can basically draw the fol...
A collection of 40 films by Eric Tsang, all of Eric Tsang's films can be downloaded from Baidu Cloud
A collection of 40 films by Eric Tsang, all of Er...
Analysis of advertising placements for clothing, shoes and bags categories in November!
Note: The clothing, shoes and bags related data i...
2019 hot marketing promotion calendar for the whole year!
Whether you are doing shopping mall event plannin...
Mantou New Media Operation Certificate Class
A millionaire trader will teach you the core skil...
Google SEM bidding promotion, how to set negative keywords?
When operating a SEM account, it is often necessa...
Traffic generation and promotion: Are there any better ways to generate traffic on the entire network?
There are dozens of drainage methods online. Can ...
These 3 information flow cases increased my monthly salary to 30,000!
Next, let’s look at some interesting cases. Case ...