Why is private domain traffic so popular?

During the epidemic, Heytea started a delivery business through its own mini-program, which became its main profit point.

Why are some businesses caught off guard and even collapsed by the impact of the epidemic, while some businesses are able to cope with it calmly and even rise against the trend?

Because of private domain traffic .

01

To understand private domain traffic, we need to first understand "traffic".

There is a cost to obtaining traffic. It is an inevitable trend that traffic is becoming more and more expensive. Why?

When opening an offline physical store, the location rent is the cost of traffic. The flow of people entering your store every day is the one-time traffic that you purchase from various business districts using rent.

Opening an online Taobao store, paying commissions to the platform, and spending money on advertising space are all your traffic costs.

In the early days, merchants who entered platforms such as Taobao and Meituan benefited from the fact that traffic migrated from offline to online on a large scale in a short period of time. The large amount of traffic and the small number of merchants, that is, the high demand and low supply, formed a temporary imbalance between supply and demand.

This bonus is the excellent cost-effectiveness, and it is the price advantage and possibility of obtaining "traffic".

But where there are dividends, there is competition. As more and more merchants flock in, traffic tends to stabilize, and the cost of acquiring customers through e-commerce approaches that of offline businesses, the dividends gradually disappear.

At this time, the traffic is in the hands of the e-commerce platform, and merchants need to pay fees in order to expose their products and reach more consumers.

Moreover, traffic is limited. When demand increases, the cost of purchasing traffic becomes higher and higher, and the cost of acquiring traffic becomes higher.

It's like the number of houses within the Second Ring Road and in prime locations is limited, but the demand for houses is still growing and supply is insufficient to meet demand, so housing prices in these areas continue to rise.

As competition becomes increasingly fierce, traffic has become a scarce resource and is becoming increasingly expensive. what to do?

02

How to obtain lower-cost traffic and find new traffic dividend windows has become an urgent issue for major businesses.

One of the antidotes is private domain traffic.

What is “private domain traffic”?

If we regard Baidu, Tmall, Douyin, JD.com, WeChat, and Weibo as public domains, then e-commerce flagship stores, merchants' or personal apps, mini-programs, WeChat public accounts, video accounts, Douyin accounts, and communities are private domains.

For example, by using WeChat public accounts to accumulate fans, after users enter their own private domain, merchants have a window to reach users to interact and cultivate relationships.

For example.

Now, if you order takeout, what app would you open? The most likely ones are Ele.me and Meituan. At this time, Ele.me and Meituan are public domains for the merchant you ordered.

What if you ordered McDonald's or Heytea? What to use? Use their own app. For McDonald's or Heytea, their own mini-programs are their private domains.

What is the difference between the two? The difference is that some small and medium-sized merchants who rely on Meituan and Ele.me online have to pay commissions. Heytea, on the other hand, places orders independently through the mini program, which is traffic that Heytea controls itself, and does not need to pay traffic costs to the platform.

However, for businesses or individuals, cultivating and nurturing private domain traffic still has costs, even if they do not need to pay the platform, and the fixed costs are not low.

For example, for businesses, developing a mini-program system, adding WeChat, and creating a WeChat public account are all pure investments. Sometimes the investment in these fixed costs is more expensive than directly purchasing traffic.

So, why not just buy traffic and create your own private traffic?

Because private domain traffic is valuable.

03

Last month, I attended Tencent’s largest annual event, the Tencent Ecosystem Conference, and interviewed three companies as a guest commentator.

The first one is Powerlong Group. A commercial real estate company.

Chen Deli, co-president of Powerlong Group, said that during the epidemic, offline retail was hit hard, so they had to do live streaming to sell goods on WeChat mini-programs. Unexpectedly, the live broadcast sales were 7 times higher than the normal sales of offline physical businesses.

I was very interested after listening to it. I quickly asked: How did you do it?

Chen Deli always said that this was because Powerlong had been operating its own APP in the past 2-3 years, diligently migrating offline users to the APP. Probably more than one million in size. When the epidemic suddenly hit, Powerlong Group opened this huge user platform to WeChat mini-programs, which attracted a lot of users at once.
After listening to it, I was a little disappointed. It turns out that it was not during the epidemic that he used the Midas Touch to turn the tide. It turned out to be the natural result of 2-3 years of hard work.

So I asked the second company, the Bestseller Group. A fashion clothing company.

Mou Nanxi, head of the smart retail business of Bestseller Group, said that Bestseller has thousands of offline stores and has accumulated millions of "private domain traffic" from WeChat and WeChat for business by adding WeChat. Therefore, during the epidemic, Esprit organized hundreds of live broadcasts, and business increased instead of decreasing.

My god, millions of WeChat and WeChat for Business connections. How did you gather so many users all at once?

Mou Nanxi said that it was not "all at once" but the result of continuous and diligent work for several years, and it was deep work. By laying the groundwork for organizational structure and product technology one, two, or even three years in advance, we can have a good outbreak when we urgently need it.

It turns out that this is not a story of turning the tide and changing the world.

I turned to the third one, Luzhou Laojiao. I placed my only hope on this famous liquor company.

Luzhou Laojiao CIO Su Wanghui said that they also developed very well during the epidemic. Why? Because of the implementation of the membership system, a shorter connection has been established between us and users, so the reach rate, repurchase rate, and linkage rate have all been greatly improved.

How is this done? I asked.

Su Wanghui said that we started to promote the construction of "one item, one code" a few years ago, linking five codes: bottles, boxes, lids and logistics. This not only solves the problem of channel cross-selling and product traceability, but also uses various activities to encourage users to scan the code and join as members. Now this number of members is already a huge number. We simply made good use of the asset of our membership system during the epidemic.

I see. The reason why these three companies were able to buck the trend during the epidemic was not because they did something suddenly during the epidemic, but because of what they had been doing for a long period of time before the epidemic.

WeChat mini-programs, enterprise apps, enterprise WeChat, and membership system are the "private domain traffic" that these three companies have been deeply cultivating.

However, when we started to work on private domain traffic in the past few years, we did not have any income, which required a strategic vision.

04

What strategic vision?

Long-term ownership of traffic means that every business needs to manage its own customer base. Private domain traffic requires long-term cultivation and can only be used when necessary.

However, long-term private domain traffic is something with very high fixed costs and very low marginal costs. Marginal cost refers to the increase in total cost resulting from producing or selling each additional unit of a product.

Suppose that the annual fixed cost of running a WeChat public account is 1 million. Whether serving 10, 100, or 10,000 users, the fixed cost remains the same.

When serving 10,000, 100,000, and 1 million users, the cost is 100 yuan, 10 yuan, and 1 yuan per person respectively. If you can reach users 200 times a year, the cost of each reach will be 0.5 yuan, 0.05 yuan, and 0.005 yuan respectively.

As the number of users increases, the cost per user becomes lower, and at this time, the marginal cost continues to decrease. As the number of users covered increases, the marginal cost continues to approach zero.

The value of private domain traffic can only be reflected when the number of users is large enough and the marginal cost becomes low. And this value needs to be accumulated slowly through initial fixed cost investment and time investment.

Today, those companies or businesses that have successfully used private domain traffic to bring conversions and make profits have actually already started working quietly when the cost of public domain traffic was still relatively low.

Therefore, a strategic vision and good planning are needed. When you can hunt today, you also need to know how to store food. Opportunities belong to those who are prepared.

Final Words

Obtaining traffic has a cost. As traffic becomes more and more expensive, how to obtain lower-cost traffic and find new traffic dividend windows has become an urgent issue for major businesses.

One of the antidotes is private domain traffic.

Private domain traffic, like membership management, aims to cultivate deep relationships with users, build trust with users, and reach users directly.

Building private domain traffic is not something that can be achieved overnight or with immediate results. It requires long-term cultivation and accumulation.

Every business needs to manage its own customer base and maintain long-term traffic.

Building private domain traffic through digitalization, independently reaching and attracting users at a high frequency is the future of every brand.

Author: Liu Run

Source: Liu Run