One article to understand the operating framework of user operation and membership system

User operation refers to the users that can be reached by operation to achieve the operation goals.

It was first widely and maturely applied in Internet products, and gradually evolved into Internet + products. In the wave of digital transformation and upgrading in industries such as retail, clothing, supermarkets, and shopping centers, user operations have gradually been incorporated into the operational compass.

1. Who are the users that can be reached? Establish the understanding of the ceiling of customer acquisition

There are two points to know here:

1. Who is the target user? Commonly known as: user tag

For products that have not yet started operating, operators need to predict the labels of target users during the product planning stage. For products that are already in operation or mature, users’ labels can be understood through methods such as users actively filling in/authorizing or matching with third-party open tag libraries. Tags can be roughly divided into the following four categories:

• Basic tags: gender, age, region, device information and other basic attributes
• Behavior tags: generally refer to the interaction with the product, interactive behavior (forwarding, liking, commenting, etc.), browsing behavior (staying time, searching, sliding), usage habits (payment method, usage time, usage duration)
• Result tags: generally refers to result preferences, content preferences, celebrity preferences, retention, repurchase, etc.
• Predicted tags: generally refers to the inference of user trends through the above tags, which is applied to intelligent operation mechanisms, user status (low frequency-promotion mechanism, loss-recall mechanism, etc.), user preferences (recommendations based on content strategies), and demand mining (everyone likes it, and they have watched it again after seeing it)

2. User scale limit, commonly known as: ceiling

Basic calculation logic: Number of product users = Number of target groups * penetration rate * usage rate (penetration rate and usage rate need to be estimated based on user tags). For example, the maximum number of app users = (Chinese netizens * mobile Internet penetration rate * Internet penetration rate) * maximum app usage rate

According to CNNIC statistics, the penetration rate of mobile Internet access among Chinese netizens has reached 97.5%. Currently, the Internet penetration rate in developed countries has reached 97.5% (reference: World Internet Development Report 2017-General). According to the national population plan, China's population is planned to reach a peak of 1.45 billion in 2030. Assume that after 2030, it will reach the level of developed countries. Annual number of mobile Internet users = 14.5*97.5*97.5% = 1.378 billion

The customer acquisition ceiling also depends on whether the user preference attributes of the product are significant. If there are clear user preferences, it will also have a greater impact on the customer acquisition ceiling.

At the same time, online products can cover a wider range of people than offline products, and offline products can also capture user attention and cover a wider range of user levels.

2. Establish a user system and manage users efficiently

1. User system understanding

What is a user system? It means consciously grouping users within the internal operating system in order to more efficiently and accurately manage and market to users. It is a user evaluation mechanism established by operators for internal use in order to refine user operations. Users will not have a clear perception of it. In other words, what users can clearly perceive as a hierarchy or rights system is actually a membership system (user growth system), which belongs to the external circle division.

2. User system value

According to the previous conceptual explanation, the essence of the user system is to motivate. For example, e-commerce companies encourage users to consume at higher prices and more frequently; content companies encourage users to watch/listen to content for longer periods of time and more frequently; community companies encourage users to browse more content and spend more time interacting in the community, and so on.

• Encourage high-value users to continuously contribute high value;
• Encourage the second-highest-value users to contribute more high-value;
• Stimulate low-value users to gradually contribute high value;
• Clean out worthless users, reduce operating costs or change strategies;

3. Construction and application of user system

The above is the basic purpose of establishing a user system. Next, we will share the most commonly used and practical user system model, which is divided into two directions based on user value:

1) User life cycle model

The life cycle model is a typical operating model, which generally refers to the development paths of both time and users within the scope of an object. Currently, the scope of its application is relatively broad. For example, the market life cycle, product life cycle, and user life cycle are all inverted S curves.

This article specifically refers to the user life cycle, which is the process from the user's contact with the target product to the user's leaving. As shown in the figure below, it will go through five stages: introduction period, growth period, maturity period, dormancy period and loss period.

Highlight the key points! Essence! The differences and operation logic of each life cycle are as follows:

[Characteristic performance] [Operational methods] need to be viewed in conjunction with the specific industry and business. The above is mainly combined with some cases to facilitate understanding.

When operations staff divide users into different life cycles, they can further refine operations for users (two-step logic):

• Analysis of characteristics of each population. Users at different life stages may have different characteristics, and they can be split up based on user tags (mentioned in the first point) to see if there are any significant characteristics. If active users in the mature stage have one or several common characteristics, then we can find these users among users in other stages and implement targeted operation strategies. They may be more likely to be converted into mature users.
• Differentiated marketing. Think about the development direction of users at different stages and how to promote them in that direction

2) RFM Model

Another classic user operation model. Similar to the life cycle, both are divided according to user value logic; the difference is that RFM is built based on user key behaviors. RFM is defined as follows:

• • R: Recency, which refers to the time since the user's last consumption. Of course, the shorter the time since the last consumption, the better. It is more valuable for us and more likely to reach them effectively.
  • F: consumption frequency (frequency), the frequency of consumption of users in the product within a period of time, the key point is our definition of a period of time
  • M: consumption amount (monetary), representing the value contribution of the user

Initially, 5 levels were defined for each direction of R, F, and M, 5*5*5=125 user classifications, which was too complicated to use in practice. Now, each direction of R, F, and M is defined as high and low. We find the median of R, F, and M. R = the most recent consumption. A value higher than the median is high, and a value lower than the median is low. This results in 2*2*2=8 user classifications, as follows:

*Examples of main application scenarios after RFM model customer classification

After the operations staff divide the business users into eight categories according to their own business, they can formulate specific operations strategies based on the value scenarios.

There is a lot of information on the Internet about the RFM division method, so I will not go into details.

In a word, the establishment of a user operation system is not just about the model itself, but more importantly, the operator's ideas, discovering problems - proposing hypotheses - solving problems - regression effects - iterative experiments.

3. Establish a membership system to allow users to form their own circles

The user system is more of a user model built by internal operations personnel for refined operations. The membership system is a set of circle rules formulated for users by operators through data insight and analysis. Generally, registration and affiliation are based on user growth values, and it is also called a user growth system.

The user is more like a tourist. Members feel more like friends. This is why most companies are rushing to establish a membership system, in order to give users a home. Video websites, e-commerce websites, and Starbucks in the consumer industry are all excellent rule makers.

1. Why does the membership system appear?

• First of all, operators hope that users can be more active and understand that establishing a membership system can keep users moving forward, thereby gaining user loyalty or usage time.
• Secondly, operators also hope to establish a social circle for users. In addition to providing services, the membership system of high-end clubs provides members with a social channel. Daily-used apps and retail companies will also try to provide offline social channels for high-level members, hoping that when users make more efforts, get closer to brands and companies, and establish more connections, users may also be more loyal.
• However, although there are few consumers who are willing to pay loyally for the value of the level, they do exist. Most users are actually at the level of general understanding or indifference. After all, 20% of users create 80% of revenue. From this perspective, we will choose to give users a destination definition, they are called members

2. Basic logic for member growth

• The most important thing is to depend on the interaction of the main businesses to see what is the foundation of survival. If it is a content platform, it is the time spent on listening; if it is an e-commerce platform, it is the amount of money spent on consumption
• Generally important, user activity will be taken into consideration. Enterprises will use frequency as a flexible additional guide for growth value. This is the value logic of daily tasks and daily sign-ins.
• Relatively important, paid business oriented. For example, companies like iQiyi and Tencent Video will see a rapid increase in growth value if they purchase their paid VIP products, because the user binding degree of paid products is high and the loyalty is relatively high.
• It is better to have it. Taking advantage of the fact that some users care about the glory of growth value, a designated task system will be formulated, in which the tasks are to activate or help a certain business purpose.

The specific case of Tencent Video is as follows:

3. Membership rights and interests

• The most important thing is to look at the user's itch points or pain points. For content platforms, Tencent Video is a movie ticket (of course, due to the existence of paid members, the rights and interests of the growth membership level will be weakened), and the consumer industry may be a voucher (after all, for users, every consumption that can be discounted is good)
• Generally important, birthday gift package. It may be a high-value benefit of the general growth membership system and directly meet the pain points. Tencent Video will include free VIP time for paid users, and the consumer industry may provide free single products.
• To make the membership system look worthwhile, we need to top up the value! So everything will make up a big gift package. Generally, they will place benefits of related businesses or some vouchers with certain thresholds to stimulate consumption in the name of welfare.
• Basic content, exclusive nickname and skin, you have to give the membership a name. Points, a circle currency system.

Below are the benefits of Tencent Video membership levels, the basic logic is the same as above:

Highlight the key points! Based on the member life cycle, the member operation framework model is as follows:

There are many articles in the industry about the formulation of member benefits, but few people mention how to measure the value of the membership system (after all, the value must be proven if it is to be implemented). People usually treat it as a system that "others have it, so I must have it too."

4. How to measure the value of membership: First, the essence, an AB test

• First, data determines value. Whether sales have increased after the establishment of the membership system, or whether a user's contribution has increased after joining the membership
• Second, define the source of value. Why does the membership system lead to business growth? How to determine the benefits of the membership system? How to express and eliminate influencing factors?
• Finally, iterate to test value. If the previous point proves that membership is valuable, then how to improve the membership system and increase the contribution value?

A common misconception is that the increase in membership volume or some large-scale activity proves that the value contribution of membership levels is effective. Therefore, during the verification process, it is necessary to ensure data accuracy and eliminate influencing factors as much as possible.

We can figuratively compare the user system and membership system to the national system and understand it abstractly. It is the same theory of population division, but the national system and management are definitely more complicated.

The above is a framework understanding of the user system and membership system. As an operator, the most important thing is the ability to build an operations system and establish a thinking model, so that you can formulate response strategies in an orderly and logical manner according to the ever-changing market and actual operation conditions. Often things change but remain essentially the same.

Author: In Nice

Source: In Nice