After Luckin Coffee was suspended and delisted, it began to change its current operating methods, from the initial rapid acquisition of new customers to the current private domain operations. Can Luckin Coffee regain its footing by utilizing private domain traffic operations? The author of this article analyzes Luckin Coffee's current operating model in detail.

As a star company, Luckin Coffee is never short of topics:

• In 2017, the first coffee shop was opened;
• In 2019, it was listed on the Nasdaq in the United States;
• In 2020, the company was delisted due to financial fraud.

After the ups and downs, Luckin Coffee began to calm down. There were no more high-speed store openings and no more brand advertising. Luckin Coffee, which started out as an Internet company, also began to focus on finding new development and growth opportunities through the Internet.

In its early days, Luckin Coffee's growth approach was relatively aggressive, with brand advertising, celebrity endorsements, and rapid store expansion to capture the minds of users, high-subsidy fission growth (place an order to share millions of cash, invite friends to get free orders, and new customers' first order is free), and rapid user growth. Although there were some criticisms, Luckin's performance was still recognized.

On the supply side, there are more than 4,000 stores spread across the streets and alleys, and on the demand side, there are 40 million transaction users, far exceeding its competitors. After attracting new customers, the next step is retention and repurchase to maximize user value. From the private domain operation activities launched by Luckin Coffee this year, we have seen its transformation.

I wonder if the highly praised private domain traffic operation can bring new vitality to Luckin Coffee?

1. Luckin Coffee Private Domain Operation Process

Luckin Coffee launched a welfare community activity in the personal center of the APP/mini program: by receiving a 38% discount coupon, users are guided to add the welfare officer’s corporate WeChat account and then join the WeChat group.

Benefits include:

1. 38% discount coupons for joining the group;
2. 15 yuan drink vouchers sent to the group every day;
3. Limited daily quantities of designated low-priced goods;
4. Other coupons and promotions.

Luckin’s community operation is relatively simple and direct. Users can enjoy a 38% discount by joining the group. The usage rate should be very high. After all, users join the group just for the coupon, which effectively increases the number of orders.

In addition, there are daily coupons and discounted products; through limited-time and limited-quantity methods combined with low-price discounts, users are encouraged to repurchase.

In an interview with Luckin Coffee's marketing team by self-media, Luckin revealed approximate data: 1.8 million private domain users, contributing 35,000 direct orders per day, and 100,000 cups of promotional orders; and the frequency and amount of user consumption have increased significantly, with private domain orders becoming the third largest source of orders after APP and mini programs.

2. Analysis of Luckin Coffee’s Private Domain Operations

Judging from the data, the effect of Luckin’s private domain operations is very obvious and positive.

In addition to its own traffic base, Luckin Coffee's grasp and innovation in private domain operations are also the key to its success, and there is a lot to learn from it.

1. LBS + exclusive discount + limited time and limited quantity

LBS+exclusive discounts+limited time and limited quantity constitute the basic framework of Luckin Coffee’s community operations.

The biggest feature of the Luckin Coffee community is that it is based on stores, that is, LBS (Location-Based Services). When joining the group, users can choose the Luckin Coffee store where they often place orders, and the group name is the name of the store.

By segmenting users based on stores, differentiated operations can be carried out, and since users in the group are geographically close, there is also room for imagination in subsequent social operation activities.

However, from current observations, there are no specific differentiated and personalized operations based on stores.

Moreover, the discounts within the community are exclusive to community users, and are mainly low-priced for a limited time and quantity. They are very attractive to users who are selected to join the group due to price discrimination, and greatly improve conversions.

2. WeChat group + personal account + Moments + mini program + public account

The greatest value of private domain operations is that they are user-controllable and can reach users stably and frequently, thereby achieving the goal of conversion and repurchase. Moreover, compared with public domain traffic, they are more efficient and less costly.

WeChat is the main platform for operating private domain traffic. Its channels of reach, or touchpoints, include personal accounts, WeChat groups, Moments, public accounts, and mini-programs. Users can only be reached through touchpoints.

In terms of operational procedures, Luckin Coffee guides users to add personal accounts, so that users can be reached through chats and Moments; then they join a group to receive benefits, and coupons and low-priced goods within the group are taken over through mini-programs; in addition, community operations occasionally send official account articles.

In this way, Luckin's private domain operations cover all touch points, ensuring efficient reach to users and ensuring the largest traffic base before conversion.

3. High frequency + low frequency, high price + low price

Anyone who knows a little about Luckin Coffee will know that Luckin doesn’t just have coffee. Although coffee is the main drink, new tea drinks such as Fawn Tea are constantly being launched, and there are also light desserts, snacks, nuts, etc.

Moreover, it has launched self-service vending machines offline to enter the unmanned vending market, and created Luckin Coffee's trendy products online to advance into the field of lifestyle e-commerce, and has been making big moves continuously. After all, it has a brand and traffic, and there is nothing wrong with extending its boundaries and pursuing monetization.

In its private domain operations, Luckin mainly promotes high-frequency, low-priced beverages and foods, supplemented by high-priced, low-frequency daily necessities. On the one hand, it educates users and gives them a new understanding of Luckin's products and services; on the other hand, it continuously iterates product operations through private domain feedback to increase users' average order value.

It is easier said than done to convert high frequency to low frequency and low price to high price. After all, even if you are used to buying coffee at Luckin, it is difficult to buy AirPods at Luckin. However, private domain has greatly helped Luckin's multi-category attempts.

Luckin’s private domain operations have their merits, but there are still obvious problems.

Through research and experience on its private domain operations, we found that: the content focuses on promotions, the community is not active enough, and many limited discounts have a lot of remaining places.

Another star company, MissFresh, also launched similar community operation activities, trying to compete with community fresh food group buying products, but it soon disappeared. It can be seen that private domain operations are a tough nut to crack.

However, Luckin's subsequent actions in this difficult situation are still worth looking forward to.

3. Let’s talk about private domain traffic operation

The Internet is an industry that is particularly fond of creating new terms, and private domain traffic is one of the best.

The introduction of private domain traffic has indeed changed the way of thinking about traffic operation. It is controllable, low-cost and has high conversion rates, making it popular among many companies. Because I have worked in a social e-commerce company, I have a great understanding and recognition of the value of private domains.

The operational analysis of Perfect Diary’s private domain traffic in 2019 brought everyone’s recognition of private domain traffic to a climax, but there are many followers but few successful ones.

Private domain traffic operation still leaves us with many challenges and opportunities:

1. Two legs to walk together: channel + content

The two legs of private domain traffic operation are channels and content. Many companies have only achieved channels and have ways to reach users, but they lack the content leg, resulting in low user activity and high user churn.

It’s like you finally get the WeChat of a beautiful stranger, and as soon as you say “beautiful girl, give me a discount on Pinduoduo”, you are immediately blocked and the exclamation mark is deleted.

The success of Perfect Diary's private domain operations depends largely on the combination design of its private domain IP personality, social interaction, beauty knowledge, product discounts and other diverse content, rather than 10 Moments every day.

Content design can be based on retention and conversion goals:

• Retaining content starts from user needs, brings value and fun to users, and builds user trust;
• The conversion content starts from business goals, reasonably designs discounts, and realizes user payment conversion.

2. Explore horizontally and vertically: User stratification + life cycle

Private domain traffic operation is user operation, and refined operation is the unchanging principle.

Horizontally stratify users and implement differentiated operations: In fact, Luckin’s private domain is a stratified operation based on geographic location, but there is currently no differentiated operation for different users.

Users can be stratified based on basic user information such as region, age, and identity; or based on user value information such as purchase amount, purchase frequency, and preferred categories; or based on user behavior information such as sharing, visits, and invitations.

At present, it is more convenient to connect the data of APP users and WeChat users, and private domain operation tools such as enterprise WeChat are becoming more powerful. It is feasible and effective to carry out layered operations in private domains such as WeChat.

Vertically, based on the user life cycle, maximize the user life cycle value : Selecting different operation methods for different stages of the user life cycle is the basis and core of user operation. The same applies to private domain operations, such as conversion, retention, repurchase, recall, and fission. Only by giving full play to the strengths and value of users in different life cycles can LTV be maximized.

In corporate strategic management, risk is defined as danger and opportunity. Private domain operation is such a high-risk field. There is the danger of investing heavily with great joy but achieving little in return, but there is also the opportunity to seize the opportunity, insist on innovation and ultimately make a small investment for a big gain.

We look forward to Luckin’s self-rescue performance in private domain operations, and we also look forward to more exciting performances in private domain operations.

Author: Wu Yijiu

Source: Wu Yijiu