Analysis of Pinduoduo's promotion system: attracting new customers and fission

As usual, let’s start by understanding Pinduoduo

Founded in September 2015, Pinduoduo is a third-party social e-commerce platform for C2M (customer-to-manufacturing model) group shopping. It was officially listed on the Nasdaq in New York, U.S. in July 2018. As of December 2020, the number of active buyers on the Pinduoduo platform exceeded 780 million (surpassing Taobao's 770 million and JD.com's 472 million users in the same period), making it the e-commerce platform with the largest user base in China.

In just 6 years, Pinduoduo defeated the 18-year-old giant Taobao with a devastating momentum, and created a phenomenal performance in the e-commerce industry with its unconventional growth rate. Pinduoduo's rise did not follow the conventional routine. Its platform concept is "the price-performance ratio always exceeds user expectations". Its core value is to make consumers feel that anything they buy is a bargain, and the more they buy, the bigger the bargain.

In addition to the high cost-effectiveness of its products, the key factor for Pinduoduo's success is the use of extremely low-priced products to link with social media, thereby obtaining low-cost traffic; in the early stage, it had the strategic traffic support of WeChat and started to exert its efforts in the sinking market (that is, third- and fourth-tier cities with sufficient purchasing power); after the user base reached a certain scale, it achieved blood transfusion and blood production through the operation system it built, and finally completed the counterattack of surrounding the cities from the countryside.

In this article, let’s talk about Pinduoduo’s new customer acquisition and fission:

Like other platforms, Pinduoduo's user acquisition is also divided into two categories. One is external channels, which mainly include online advertising payment channels (including information flow, app application market, search, short video, splash screen advertising, etc.), offline hard advertising (bus, subway, projection and other advertising), media channels (including traditional portals, self-media, etc.), e-commerce diversion channels, coupon channels, distribution and other cooperation channels; the other is internal channels, that is, Pinduoduo's own operation and acquisition system, such as shaking for cash, bargaining for free, and receiving cash every day. Next, we will focus on how Pinduoduo’s three major functional modules achieve new user acquisition and fission.

The entrance to shake cash is Pinduoduo app->"Shake Cash" (middle of the bottom first-level navigation), the entrance to bargain for free is Pinduoduo app->Personal Center->Bargain for Free, and the entrance to receive cash every day is Pinduoduo app->Personal Center->Receive Cash Every Day (i.e. to the right of the bargain for free icon); since the core point of the logical design of the three is to invite friends to help unlock, especially friends who have not downloaded the Pinduoduo app to help, so as to gain greater strength, let's focus on Pinduoduo's assistance logic below.

1. Rules for assistance

1. Initially cash or red envelope

The cash you receive is generally in an amount of 100-500; you can choose the goods you receive yourself, and generally the larger the amount, the more friends you will need help from.

2. Limited time assistance

Cash withdrawals can only be made if the specified cash threshold is reached within 24 hours. If the time limit is exceeded, the accumulated cash will be invalid.

3. Limited time for picking up goods or withdrawing cash

(1) After the cash received reaches the withdrawal threshold through the help, the withdrawal must be completed within 72 hours. The cash withdrawn after the deadline will be invalid;

(2) Free products can only be shipped after you have completed the assistance and provided the delivery address before the limited assistance time, otherwise they will be invalid.

4. Assist in communication channels

WeChat friends or WeChat groups.

5. How much you can help your friends

The benefit is the greatest for friends who have not downloaded the Pinduoduo app and have not registered; otherwise, the benefit is relatively small.

2. Help from the perspective of word-of-mouth communication

1. Social currency perspective

That is, we share things that make us feel more accomplished or superior.

Compared to Pinduoduo's asking friends for help, the social currency of help is to let more friends participate through sharing, so that the sharer can get a sense of accomplishment than those who don't share, and achieve the goal (obtain goods or cash), and finally drive more friends to participate.

2. Cause angle

That is, the top memory and the reminder at the forefront.

(1) Low customer acquisition cost

When you help them by sharing with your friends, the process has already invisibly completed the process of attracting new users and activating users for Pinduoduo. At the same time, in order to ultimately achieve the goal, the sharer needs to attract a lot of friends to help. Regardless of whether the sharer can ultimately achieve the goal, Pinduoduo will eventually acquire a large number of users at a very low cost.

(2) Powerful viral fission

At the same time, Pinduoduo will constantly remind you on the sharing page that there are free products or cash red envelopes to be collected, which is very impactful and attractive to a new user. Under this powerful impact, you will also choose a product to be collected or a cash red envelope and ask your friends to help you. In the process of helping, you indirectly help Pinduoduo to attract and activate a group of users.

3. Publicity

That is, to build something visible and positive.

(1) Pinduoduo’s support is visible and public on its app. Without violating the red line, support is something that motivates users and meets their specific needs, which reflects its positive nature;

(2) Spreading through WeChat individuals or communities makes the dissemination process more visible and public;

4. Practical value

That is, if it is useful, we will share it involuntarily.

The value of Pinduoduo's designed support to the platform is the attraction and fission of new users, and the practical value to users is saving their cost of purchasing goods and earning extra income; such value is very consistent with the consumer needs of its platform, and therefore it has brought about huge user attraction and fission effects. The bargainable products and red envelopes provided by Pinduoduo have brought great surprise value to the target users, fully exceeding users' expectations and making users feel that they have got a good deal. This is highly consistent with Pinduoduo's brand value and has been deeply rooted in the hearts of the people.

Pinduoduo's three major new customer acquisition and activation functions, namely, shake for cash, bargain for free, and receive cash every day, are like a high-speed quantity-enabled machine. By seamlessly linking products that make people feel like they are getting a bargain with new customer activation, it operates continuously and efficiently, helping Pinduoduo's user pool to have a steady stream of low-cost fresh blood, creating one incredible achievement after another in the field of e-commerce.

Author: Minghang Talks about Operations

Source: Minghang Operations