How does live streaming boost sales?

Undoubtedly, the strong rise of live streaming e-commerce is the biggest black swan in the domestic consumer market in the past year.

The "Guangzhou Live Streaming E-Commerce Development Action Plan (2020-2022)" previously issued by the Guangzhou local government and the "12 Articles on Live Streaming E-Commerce" recently issued by Hangzhou Yuhang both show that local governments are making great efforts to develop the local celebrity economic ecosystem, especially regarding high-quality celebrity anchors as the absolute C position of this business innovation. Guangzhou is determined to train 10,000 live streaming influencers, and Hangzhou Yuhang even supports first-class live streaming e-commerce talents to enjoy relevant policies according to the highest Class B talents.

At the policy level, celebrity anchors have been regarded as an important resource and element in the new economic era. Efforts have been made to incubate the market and promote the evolution and development of the celebrity economy in a wide range and in depth.

Behind the unprecedented prosperity of live e-commerce, various bottlenecks and embarrassments are looming:

• The prices charged by top celebrity anchors have skyrocketed, and if brand companies working with them want to put their products in their live broadcast rooms, the price they have to pay is no less than the advertising fees of CCTV. If your product does not have an extremely high gross profit margin of 70% or even more than 80%, you will not be able to bear such high marketing costs. The more products you sell, the higher the value of the anchor will be and the more you will subsidize your fans.
• There is a huge bubble in celebrity live streaming sales . Many celebrities have more than 10 million followers on Weibo and Douyin, but their actual live streaming sales results are negligible. The brand companies that cooperate with them have suffered considerable losses and pain. Some celebrity artists appear to be very unprofessional and often fail to choose products based on their "fan portrait and purchasing power", resulting in mismatches in personality, products and crowds, causing various embarrassing situations.

Brand companies need to seize the trend of live streaming e-commerce, but they should not have a gaming mentality. You can't always think in speculative and short-term terms, investing X million in marketing expenses and aiming to achieve Y million in sales revenue. If you make a profit this time, you can increase your investment next time.

Live streaming e-commerce is not just a trend for a few people or companies. In the long run, the real C position does not belong to Li Jiaqi, Viya, or movie stars.

The migration of the C position has already occurred, and professional anchors and nano-celebrity are launching a "war beyond limits".

What does it mean?

• In terms of space, the sales profession has become a “widespread celebrity”. In various vertical consumer markets, countless upgraded versions of shopping guides 2.0 and 3.0 have been hatched.
• The time dimension is a long-term sustainable integration of product and effect. A truly good live e-commerce is not about pursuing a sales performance that will set off a particular show, but about countless professional anchors and professional shopping guides helping small and medium-sized businesses to increase sales by 1,000, 2,000 or even 5,000 yuan a day.
• From a strategic perspective, it requires thousands of celebrity anchors to penetrate into various segments of the consumer market based on a set of replicable and iterative e-commerce live streaming skills.

Professional anchors, an important economic element, have achieved full coverage across the entire region. This is not only the true implementation of the concept of "decentralization" in the consumer market, but also a major measure to optimize the allocation of social resources, judging from the policy support of governments in Guangzhou, Hangzhou and other places.

01 There is no need to spend twice as much money to sell one item

Today's clients (consumer brands) are increasingly reluctant to spend money on branding, fearing that they will waste money and not see any benefits in the short term.

This is not a question of whether you are rich or not. Even big companies like McDonald's and Unilever are considering whether the position of CMO (Chief Marketing Officer) is necessary? After all, there's no need to spend twice as much to sell one item.

• The first money: A traditional brand might spend 1 million to shoot a beautiful TVC, and 500,000 to plan a beautiful copy, and then put it in buildings and roadsides. Do you think people will be annoyed by this long-term advertising bombardment?
• The second money: When a brand distributes its products through all channels, it first hands them over to dealers, who then sell them to distributors, who then sell them to supermarkets. Each link has fees. For example, supermarkets charge an entry fee of approximately 20%-30% (i.e., "shelf fee").

What is the meaning of brand? It is nothing more than putting goods in people’s minds (advertising channel) and in front of people (shelf channel).

There is no need to be confused about "who cut the brand budget" or "who killed Adman" (advertising staff). Change your perspective and look at the problem. In the past, people often thought of using advertisements and shelves to solve problems, but now they are trying to use all means to solve problems.

The biggest advantage of e-commerce is that you make a lot of investments outside. If you don’t have money to distribute goods offline, it’s okay, because you only need to put out advertisements and open an e-commerce store, and the traffic generated can go in and buy the goods.

The biggest advantage of live streaming e-commerce is that you don’t have to spend money on advertising, and you don’t have to rent other people’s shelves offline, because good content, celebrity IPs, opinion leaders, and community experts are a combination of “advertising space + new shelves.”

When TV stations, portals and supermarkets were in the center, it took about 10 years to incubate a brand.

When e-commerce websites and search engines were in the center, it took about 5-6 years to incubate a brand.

When celebrity IPs and KOLs (celebrity opinion leaders) are in the center, it only takes three years to incubate a brand. Look, among the rise of "Zhong Xue Gao", "Heytea" and "Yuanqi Forest", which one took more than 3 years? A small team called "Luo Yuanyuan" created a miracle in the fierce competition of snail noodles within less than three months of its establishment. Three products sold 1 million copies, setting a very good momentum.

There may be only 10 well-known top KOLs, but today there are hundreds of thousands or even millions of live streaming practitioners, among which 100,000 or 200,000 may be more suitable for some brands.

Which one of “Luo Yuanyuan”, “Zhong Xuegao”, “Heytea” and “Yuanqi Forest” has risen solely by relying on top KOLs? Behind the rise of these brands is the optimized combination of countless shoulder influencers, waist influencers, and nano influencers, which enables the most precise reach to the target users. Yes, the future influencer economy will increasingly tend towards fast-paced, global reach.

02 The “Global Reach” Methodology of Live Streaming

In recent years, words such as "global" and "link" have appeared frequently in business theories.

At first, Alibaba’s “omni-channel marketing” theoretical framework proposed the “AIPL” model; later, Tencent explicitly proposed “full-link marketing”; last year, ByteDance proposed a link model called “5A”; at the beginning of the year, iQiyi also talked about its own link model “AACAR”. There is no need to delve into the specific content of these business theory models, but the direction is very clear - covering all aspects of user lifestyle and all scenario details that affect consumption decisions.

Although live streaming e-commerce also aims at "full-area reach", it pays more attention to the natural connection of different consumption scenarios and the interactive cycle between celebrity brands and fans (consumers). The real core of the methodology is three keywords: consumption link, cycle iteration, and system sedimentation.

1. Consumption chain: product selection will "borrow scenery"

There are three famous scenic spots on the banks of Slender West Lake: Wuting Bridge, White Pagoda and Diaoyutai. When Emperor Qianlong was on his southern tour, he came to the Slender West Lake to enjoy the scenery. In order to please the emperor, the two richest salt merchants in Yangzhou paid for the construction of the White Pagoda and the Five Pavilion Bridge respectively, hoping to win the favor of the emperor. There was another salt merchant who didn't have that much money, but was very smart. He built a Diaoyutai between the White Pagoda and the Wuting Bridge.

When Emperor Qianlong went to Diaoyutai to rest, he could see the White Pagoda on one side and the Five Pavilion Bridge on the other side, both beautiful sights being within his sight. Therefore, Emperor Qianlong generously rewarded the clever salt merchant who had little money and could only barely build Diaoyutai. The cleverness lies in the architectural concept of "borrowing scenery".

In the entire decision-making chain of consumers, the real key to the role played by celebrity anchors is also "borrowing scenery".

For example, for a brand of razor or hair dryer, you may first see it on self-media, and then be exposed to it during the "618" promotion on e-commerce, but you have not bought it yet. You were also exposed to magazine ads while on an airplane, and then tried the product in a physical store offline. Finally, in the live broadcast room of a certain celebrity anchor, you finally decide to buy and place an order and pay through Tmall.

A consumer will piece together a complete purchasing chain in multiple different scenarios. In fact, this consumer did not make a sudden purchase decision based on the recommendation of a certain anchor. Self-media, e-commerce 618, aviation magazines and offline physical stores had already planted seeds in his mind. These were all the "scenes" borrowed by the celebrity anchor, which gave him the final push and facilitated his final purchase.

Recently, in a live broadcast by a financial celebrity, a merchant paid the host a six-digit fee, but ended up with only three-digit sales, which was because the merchant did not understand the consumer purchasing chain.

The fans of this financial big V are mainly business owners and front-line white-collar workers. The consumption scenarios they experience are more of a small circle of exquisite people. You cannot serve these high-end users in the same way as you sell mass products. If you fail to use the right scenery when selecting goods, and the people do not match the goods, and the goods do not match the scenery, you will inevitably encounter embarrassment.

Luo Yonghao is quite clever in this regard. He focuses on a group of die-hard otaku fans and their life trajectories, borrows many direct and indirect experience scenarios that already exist in their minds, and focuses on products such as projectors, razors, office supplies, etc., which are just the finishing touch that prompts fans to buy.

2. Cycle Iteration: Promotion with Rhythm

Brand merchants should not misunderstand the celebrity economy and should not simply pin their hopes of selling products on celebrity anchors. Truly smart brand merchants are good at leveraging the influence and communication power of celebrity anchors to establish a "self-circulating cycle that is beneficial to themselves."

Let me give you an example of a snail noodle brand: Luoyuanyuan.

Snail noodles are a very distinctive product. Some people feel uncomfortable if they don't smell the taste of snail noodles for three days, while others hate it very much. There are probably hundreds of snail noodle brands in China. In such a highly competitive market, how did Luoyuanyuan, an online brand with no offline channels at all, manage to sell 1 million of its three products in three months? The key lies in the operation of influencers.

• The earliest exploratory stage: They first found a lot of small and micro celebrities with good cooperation, that is, a dozen celebrities with thousands or tens of thousands of fans, and gave the products to many celebrities at different times for repeated cooperation. Through the practice of small cycles, Luo Yuanyuan will know: within a period of time, which product sells best, which price sells best, which lines sell best, and which packaging sells best. At the same time, we learned how to respond to questions and answers from live broadcast users, thereby continuously improving behavior patterns and improving live broadcast efficiency.
• Initial growth stage: Luo Yuanyuan deeply explored some mid-level celebrities to further highlight selling points and improve live broadcast conversion. Some people may have never eaten snail noodles. When they get home and open them, they find that they smell bad. Is it bad? So, how do I describe this taste to everyone during the live broadcast? How to interact with diners in the comment section? What kind of lines and demonstration details are needed to match these questions?
• Accelerated growth stage: Luo Yuanyuan tries to cooperate with more top celebrities. With the experience gained from small and medium cycles and the recognition from diners, Luo Yuanyuan collaborated with a more famous celebrity and sold 40,000 orders. This is certainly not the achievement of one or two top influencers, but various vague experience scenarios and hazy product perceptions have already been created in the minds of many people. The top influencers "borrowed the scenery" and took advantage of the situation to concentrate on releasing the purchasing power of fan consumers.

When small and medium-sized brands try live streaming to sell goods, they must start from small to large, starting with lines, interactions, and action details, gradually forming a system, and constantly establishing a "self-circulation that is beneficial to themselves", small cycles, medium cycles, and large cycles, progressively and iteratively layer by layer, to achieve rhythmic, stackable, and predictable sales success.

3. System sedimentation: live streaming is the beginning of sales

I sometimes make an analogy with people that to truly tap the potential of the influencer economy, it’s like losing weight; it’s unlikely that you’ll achieve it in one go.

A necessary step to lose weight is to do more slow but strenuous exercises. In the early stages of weight loss, the weight loss may be barely noticeable because the increase in muscle mass offsets the weight loss from the loss of fat. However, with the support of muscle strength, you can start to do more vigorous exercise. As your physical fitness increases, the amount of exercise gradually increases. At this time, the effect of exercise for weight loss gradually emerges.

By the same token, it is impossible to discover the commercial potential of celebrity anchors in one step. You should always think about what every activity in the celebrity’s live broadcast room has left in your mind? What long-term effect do you want? How can you achieve brand and effect integration?

Google often educates its customers not to place too much emphasis on "performance advertising" that immediately triggers consumption, such as e-commerce advertising, because the cumulative effect of such advertising is relatively poor, and as long as competitors run the same advertising, the traffic will be diverted away. Advertising guru Ogilvy believes that "every marketing action should be regarded as a long-term investment in the entire brand."

So, how can we achieve brand and effect integration with the help of celebrity anchors?

There is a beauty company in the start-up stage that has hired more than 500 celebrity anchors, with the number of fans ranging from thousands, tens of thousands to hundreds of thousands. The company also increased its investment in some of the celebrity anchors based on their actual sales results.

The biggest highlight of this company is that it has invited many famous anchors to enrich its brand communication matrix. Instead, we have established an AI database for celebrity anchors, products, topics, and fan interaction effects.

For example, in order to study the relationship between color numbers and sales, tens of thousands of lip gloss SKUs on e-commerce platforms were extracted, and AI machine image learning was established to match different color numbers according to the tone and temperament of different celebrities. After a comprehensive comparison of celebrity anchors, product color numbers, product sales, and fan interaction enthusiasm, the combination with the greatest potential for blockbuster sales was selected.

Note: This "hot-selling product" does not refer to a single product, but the optimal combination of celebrity anchors, product color numbers, product sales, and fan interaction enthusiasm. All of this will be accumulated in the company's AI system to achieve superimposable value accumulation.

Conclusion

"The most expensive thing in the 21st century is talent," and in today's business context, "the most expensive thing is celebrity IP."

If you compete with celebrity anchors, you will be suppressed; if you "follow" celebrity anchors to compete, you will be driven by them.

At this point, it is no longer a matter of live streaming e-commerce having to "reach all areas", but rather that you must adapt to the "all-area reach" of this new economic form. Professional anchors, nano-influencers, or top-level influencers, celebrity artists have all begun to influence the consumption chain of fans in their own areas of expertise. This is a "war beyond limits" that has penetrated into all scenes and details of modern life, and you cannot avoid it.

Whether it is Li Ziqi, Li Jiaqi, or Weibo, Douyin, Kuaishou, Bilibili, or even coffee shops, Sichuan restaurants, experience stores, and airports, these seemingly unrelated traffic entrances are all links in the user consumption chain. You never know when and where a subtle hint or a little stimulation will unexpectedly activate the brain circuits of fans (consumers) and make them make a purchasing decision.

If you are a startup company or a new brand, you certainly cannot and do not need to fully control the user's consumption chain. What you need to do is to steadily advance your cycle iteration, promote the iterative evolution of product brands in small cycles, medium cycles and even large cycles, and settle and optimize these celebrity economic resources such as celebrity anchors, hot topics, loyal fans, and matching people and goods in your own system.

Celebrity opinion leaders ultimately determine the direction of the consumer sector. Only when the direction is right can you gain meaningful user attention.

Wherever public attention reaches, wealth will come.

Author: IMS Li Meng

Source: Li Meng (ID: imslimeng)