How to transform public domain traffic into private domain traffic?

In recent years, the Xiaohongshu platform has actually seen the rise of many "new brands" - new brands founded from scratch. Shi Mingliang combined his operational strategies when he was the head of operations in the fast-moving consumer goods industry at Xiaohongshu, and also combined his many years of practical experience in first-line brands. During the epidemic, I stayed at home and proposed a new "STEP 4+3+1" business model of public domain + private domain.

That’s what we’re going to talk about today.

In the past, people were either familiar with how to play on the major platforms but were completely confused when it came to the “private domain”; or they ran very fast in a small circle, but looking back at the major platforms and the public domain where they had always been fierce, they felt that it was a declining scene and were dismissive of it. In fact, this is not the case. Public domain + private domain has long become a consensus and has become the capability foundation of major companies.

Shi Mingliang believes that several cognitions must be put in place in order to operate the private domain well: First, the value of the private domain. If a weak relationship can be transformed into a strong relationship, then what needs to be considered is whether truly effective incremental value is provided. Second, when doing private domain, the initial stage is definitely the best time to build an emotional account; third, private domain is not a free lunch.

This is the problem of global public domain + private domain growth that both the "number one person in the company" and the "core manager" will face. However, how can past experiences and strategies be combined with the current surging "private domain"? Is there anything I need to pay attention to? Or is there anything that can help us build a new model? This was the starting point for Jianshi to make an appointment to have a detailed discussion with Shi Mingliang.

enjoy:

In the past two years, a large number of new brands have been added and emerged in China, including domestic entrepreneurial brands, foreign niche brands, etc. If you look closely, most of the operators behind them are outstanding people who are familiar with some public domain traffic , such as brand managers from Procter & Gamble, "former waiters" of e-commerce platforms, and TP operators who have been operating for major brands for many years.

What they are doing is to grab the traffic from the public domain pool as soon as possible, and then achieve good sales conversion through private domain scenarios. This strategy was already being adopted by some traffic-sensitive entrepreneurs five years ago. What’s interesting is why it wasn’t until last year, in 2019, that the concept of private domain became a hot word mentioned by almost everyone in the industry?

I think the main driving force is that brands are increasingly aware of the fact that the "taxes" on public domain platforms are getting higher and higher (taxes are just a metaphor, just like when entrepreneurs talk about the "Apple tax"). For example, during the upcoming 618 promotion, or the annual Double 11 promotion, a click on many consumer product keywords costs more than 10 yuan. If you take into account a 10% conversion rate, a purchasing user will need to spend more than 100 yuan, and the money must and can only be earned back through repeat purchases, provided that the user continues to be placed and reaches the customer again. The overall operating cost is getting closer and closer to sales, so there is revenue but no profit.

But the private domain helps us solve these problems. It not only effectively increases the usage rate of e-commerce activity coupons and increases the conversion rate by 5 times, but private domain users will also become the initial fans of various internally incubated Douyin vertical accounts. Today we can talk in detail about the combination of "public domain + private domain" strategies and business models that have been accumulated since five years ago, as well as their evolution. Treat it as an industry exchange.

Public domain + private domain "STEP 4+3+1" business model

Not long ago, during the epidemic in February, I summarized the three stages of brand growth, core operational capabilities, and key points of organizational construction at home, and by the way, proposed a "STEP 4+3+1" model of brand's full-area growth management system.

If we look at it from the end to the beginning, all "number one people in the company" and "core managers" have or will soon face the need for global growth. This is just like the fact that war is not just a competition in any single field such as information, heavy weapons, and capital, but a systematic "complex" competition across people, goods, and markets inside and outside the organization.

“4” represents the four major business elements, namely:

1. Business strategy: selection of categories and tracks, definition of strategic groups, brand strategy and visual specifications, establishment of product system and new product development system, and implementation of business model;

2. Traffic generation: Obtain accurate traffic by digging inward (founders, employees, retail staff) and seeking outward (seed users, content seeding, scene fan acquisition, resource replacement, platform support, and advertising targeting);

3. Digital sales harvesting: Through five major strategies (operation, pricing, promotion, merchandise, and distribution), realize the monetization and semi-monetization of products and services at the point of sale after traffic generation, and obtain penetration-oriented user recruitment;

4. Private domain closed loop: through customer acquisition, retention, activation fission, and cycle management, we can achieve in-depth and quantitative operations with users at the core;

"3" refers to the three major operational capabilities, namely user operation, data operation, and content operation.

The last “1” is the construction of a growth-oriented organization, which includes user thinking, decentralization, de-experience and refined operations.

Based on my past experience as a brand and platform provider, for most consumer product companies, the battle between “public domain + private domain” is really a long road.

Just take the public domain as an example, such as advertising traffic, content seeding, and e-commerce blockbuster creation. We have not yet fully understood the core driving forces, platform algorithms, and underlying logic of each public domain battlefield represented by each platform. For example, platforms such as Xiaohongshu and Douyin all know that content seeding is important, but there is still room for improvement in the refinement of content creation and distribution.

For example, if you use a top-down mindset to create content, or if you choose influencers based on the total number of fans and superficial interactions, or if you treat content as emotional and creative digital marketing, but don’t know that you can promote content with scientific and rational quantitative planning. Therefore, the capabilities required of brands and operating partners will become increasingly higher. But there are also many opportunities, because this is an era where every individual can burst out with energy. This has made the traditional business model of using centralized resources to sweep away everything and increase monopoly penetration no longer effective, and it has been replaced by a "decentralized" diversified growth system.

Therefore, on the omni-channel platform, consumers will have higher requirements for brands or product/service providers. Users not only have a simple purchasing mindset, but also focus on the interaction of life interests and cultural circles, and then conduct equal and continuous interactions to achieve transactions and long-term emotional accumulation. Now is the era when "people" in the people-goods market have become more important than ever and occupy a central position. Whether it is possible to carry out systematic operations in the entire domain of "public domain + private domain" based on the element of "people" is the strategic focus of success or failure.

Advantages of private domain operations

It takes a lot of investment to operate a private domain well, but compared with the public domain, the operational advantages of the private domain are reflected in:

1. Marginal costs are reduced

When doing business, you must have marginal thinking (Margin). Don’t be afraid of large one-time investment, as long as this investment can be continuously diluted in subsequent operations, or even reach a state where the margin approaches zero. But what is taboo is that after achieving scale, a certain income is still needed to correspond to a large investment, and the relative proportion of the investment is still increasing. For example, pure production business. Under the premise of being suitable for private domain business attributes, the sedimentation and in-depth operation of private domain people can indeed help companies reduce the corresponding recruitment and conversion costs marginally while obtaining purchasing income from private domain users.

2. A relatively large proportion of the expenses can be postponed

In addition to system construction, personnel costs, initial customer acquisition traffic, etc., there are many expenses that can be spent based on results, such as fission rebates; because the private domain system has a complete closed-loop link, from attracting new customers, to retention and activation, to marketing fission, etc., as well as live broadcast gameplay, personal accounts, and group operations. At the same time, groups can be divided into seed groups, long-term deep groups, and flash groups. In terms of conversion dimension, it ranges from mini program mall to user data operation and so on.

Private domain is not a free lunch

As far as the private domain is concerned, there are still many peers who believe that growth in the private domain is zero cost, which leads many people to follow blindly. The most direct problems we face are problems in the operation system, such as how to operate private domains, how to retain customers, how to optimize technology, and how to build organizational structure. Because for brands, many things are done across organizations and departments, including e-commerce, live streaming, and content, and many departments are involved, so it is difficult to promote it.

At present, many brands still have a deviation in their understanding of private domains. Many brands still focus on the growth of public domain traffic, but at the same time they also know that private domains must be taken seriously in the future. However, from a budget perspective, they believe that operating private domains to achieve growth is zero cost, so they do not reserve too much budget for private domains. The fundamental reason is that there is a problem with cognition - people mistakenly believe that it is just a group system and relies on manual operations.

Three user values ​​of public domain + private domain gameplay

The ultimate result of a complete "public domain + private domain" global growth is the continuous increase in the multiple of a consumer's lifetime value "divided by the average customer acquisition cost". This is a good business with sustainable growth. So I think there are three user values ​​under the public domain + private domain gameplay:

The first one is “user lifetime value”, which can more effectively drive consumers to repurchase and then consolidate the interaction between brands and consumers. Lifetime value is divided into two dimensions: one is to achieve repurchase of more categories, and the other is to achieve cross-brand purchases after entering the private domain.

The second one is “the value of user recommendations”, which is to recommend more people through fission. For example, when I first created a private group for seed users, I achieved a substantial increase in the purchasing population through the fission method of “recommending 3 people to purchase, and the recommender will get a free order”, and drove the new flagship store to achieve sales of one million per week from zero base. This is essentially a "buy three get one free" campaign, but it has driven real user recommendations by changing consumers' anchoring psychology;

The third one is “user’s media value”, such as obtaining users’ key information through mini programs, and then conducting secondary delivery in batches. It not only allows your media to be delivered to the people who are interested in and interact with you, but also accumulates a threshold of purchasing interest through targeted and multi-frequency reach to the same group of people, while ensuring the authenticity of the people to whom the media is delivered. This is the breakthrough point for integrating brand and effect in media placement.

The traffic value of the public domain + private domain is the in-depth exploration of the three major values: the purchase value, social value and media value of each user's life cycle. In the process of increasing the penetration rate, it reduces the customer acquisition cost and drives repeat purchases by facing consumers more directly. It has become a major tax avoidance method (platform traffic tax and commission tax) for business owners and brands. To make a vivid analogy, I think "the public domain is the staple food, and the private domain is the dessert", or in other words, "the public domain is the main business income, and the private domain is the tax avoidance/side business income".

But from the perspective of business owners and brands, my advice is that if there is not enough income from the main business and you only rely on private domain tax avoidance, the tax base will be very low and you will not be able to avoid much tax.

Initial operation of private domain is to establish emotional account

You will find that in good cases, the first step is always to think about user value, and the second step is to consider commercial value. If you benefit others first, you can benefit yourself, instead of considering how to lure users to pay after benefiting yourself first. Therefore, when you initially pull users into your private domain, you are definitely not trying to reap the benefits first, but rather to first understand what problems you can help users solve and what value you can provide.

For example, last year we managed a pet self-branding case: we acquired customers from other pet groups, offline dog walking, chatting, etc., and retained them in the private domain. In the initial stage, if the pet owners did not ask about the products, our operations staff would not recommend the products, but would comprehensively help users answer questions about raising pets. Only after a certain level of trust has been established will we make recommendations based on our multi-brand and cross-category products. When pet owners actively ask, we must also be restrained in our recommendations. Then, during the event, we will push targeted benefits and coupons, so that the conversion rate of the event will increase by more than 5 times compared to daily activities.

So the premise is to help him, and the initial stage must be the best time to establish an emotional bank account. Therefore, I think that the business types that are more suitable for private domains can be divided into four categories:

First, consumer products with high unit prices and long purchase decision-making links, such as maternal and child products;

Second, in education, for example, content diversion/initial fission of target groups, trial classes, trial user operations, full-price classes, student user operations, and further recommendation fission;

Third, businesses with strong UGC/culture/IP attributes, such as pets;

Fourth, it is necessary to have a business system/group that spans across categories or sub-brands and has a relatively consistent population that can lead to trade crosses. For example, many users of large-size maternal and infant products are mothers, but you may not know that the sales share of beauty products is no less than that of maternal and infant products. Whether it is public domain sales or private domain operations, the public domain forms the first touch, and the private domain takes over to establish deep relationships, forming an evolution from weak relationships to strong relationships. At the same time, what needs to be considered is whether you actually provide effective incremental value. For example, by creating a group, can users gain something, in terms of material, interests, emotions, etc., and can they obtain values ​​and things that cannot be obtained elsewhere. Instead, there is only the action of creating a group, no one manages it, and a lot of advertisements are pushed every day.

I used to work in user operations, creating at least one healthy food recipe every week. There were healthy and beautiful yogurt afternoon teas to help children improve their appetite, and there were also healthy weight loss recipes imported from abroad to help users who want to be hot moms reduce calorie intake while feeling full and nutritionally complete. It also encourages users to compete, explain, and even create new UGC recipes in private communities, which have the opportunity to be displayed on our brand's official account and flagship store. These practices of creating user value are the key to promoting low-cost and spontaneous growth of highly active users in private communities.

Simply put, the overall growth of public and private domains is the final battle of all businesses. The construction of a system that integrates four major business operating elements, three major operational capabilities, and a large organizational structure is a protracted battle that all the number one and core layers of an enterprise must face.

Author: See the truth

Source: Jianshi