Marketing promotion: Luckin Coffee’s traffic pool thinking!

Luckin Coffee ’s new product, the Lucky Snacks, has been added to its Million-Dollar brand. What is the purpose of Luckin’s marketing strategy? What kind of effects will it bring?

Friends who often consume at Luckin Coffee should have discovered that on March 11, Luckin Coffee launched the "Chasing for the Millionaires" event, and added products such as lucky snacks to the store.

Since the news reported in December last year that Luckin Coffee had a loss of 857 million yuan, Luckin Coffee has not stopped its subsidies. Instead, it is now using subsidies even more vigorously to promote consumption.

The specific activity is that if you consume 7 items per week, you will become a millionaire and can share 4 million yuan equally; the top 5,000 consumers per week will directly receive 200 yuan, a total of 1 million yuan.

The editor has secretly done a calculation in his mind. If the first 5,000 customers counted by 21:15 on Sunday night consume 20 items, I can use my 18%, 28%, and 38% discount coffee coupons to buy 20 cups of coffee for less than 2,000 yuan. And even if I can't drink 20 cups of coffee a week, I can buy some lucky snacks (or use my 58% discount coupons) and stockpile them and eat them slowly later. When I think about it this way, it suddenly seems like a great deal!

Later I found that everyone around me seemed to think the same way. Many light meals and salads were sold out before noon every day, and even many lucky snacks began to sell out.

It seems that Luckin's event has really greatly enhanced users' desire to buy. I think this is also why the store started to supply lucky snacks when launching the "Chasing for a Million Big Names" event. This kind of snack can be stored for a long time, and it should also be convenient for users to increase the purchase quantity.

Thinking of this, I can’t help but admire Luckin Coffee’s marketing, it’s really amazing!

In terms of speed, Luckin Coffee is the fastest unicorn generated in China. In terms of valuation, the company completed two rounds of financing in less than a year, with a valuation of US$2.2 billion, and was highly sought after by capital.

Luckin Coffee’s achievements are not simply the result of burning money. To be honest, you can criticize Luckin Coffee, but don’t miss out on its business innovation.

Traffic pool thinking

Traffic thinking and traffic pool thinking are two concepts.

• Traffic thinking refers to obtaining traffic and realizing traffic monetization;
• The traffic pool thinking is to obtain traffic, and then obtain more traffic through the continued operation of the traffic.

Therefore, the biggest difference between traffic thinking and traffic pool thinking is the subsequent behavior after traffic acquisition. The latter emphasizes more on how to use a group of users to find more new users.

——Yang Fei, "Flow Pool"

As the CMO of Luckin Coffee, Yang Fei, who is also the operator of Luckin Coffee's marketing strategy, published a book "Traffic Pool" in early 2018. In this book, Yang Fei explained a lot of marketing knowledge through detailed cases:

1. How start-ups can quickly build their brands, how they advertise, and how they can achieve brand and effect integration.
2. How to achieve marketing fission at the lowest cost and let old users help you continue to bring in new users.
3. How to do the lively WeChat marketing to bring real results?
4. Event marketing, how can we make traffic burst instantly and store conversions, rather than being a flash in the pan.
5. How to create a good landing page and make it the primary productive force for high conversion.
6. How to avoid cheating traps in digital advertising and save money.
7. Is cross-border traffic cooperation reliable? How to achieve a win-win and effective result?

Next, I will use the example of Luckin Coffee to explain the traffic pool thinking to you.

Brand Marketing

Luckin Coffee is called " little blue cup " by netizens, and its color has become a "visual hammer". The highly saturated blue is the brand color of Luckin Coffee. There are two reasons for this choice.

• First, as the three primary colors with the shortest wavelength, blue has a strong impact on the naked eye and can quickly form an eye-catching visual hammer, making the luckin coffee brand and the image of the "little blue cup" form a strong association in the minds of the audience, greatly reducing the memory cost. In addition to the large-scale use of single color, the antler logo graphic adopts a flat animal image design to help consumers further deepen their understanding of the new brand. The visual appetite of blue and the exaggeration and vitality of the antlers also subtly convey the brand tone of " professional, fresh and fashionable " to consumers.
• Secondly, it can form a sharp contrast with the "Starbucks green" that is well known to the public, and it also matches the "boutique blue" trend of the world's third coffee wave, strongly creating a new symbol in the coffee market.

This is also a positioning strategy of Luckin Coffee. Through opposing positioning , the opponent has a strong competitive orientation (not user demand orientation), which is a positioning that is significantly differentiated from the opponent. It is suitable for brands whose markets are relatively saturated and for latecomer startups.

The logic of this positioning must have a competitor that can be benchmarked, preferably the largest and most well-known competitor in the industry. This way, your opposition will have value, will be immediately felt by users, and will help you break out of homogeneous competition.

Luckin Coffee is challenging Starbucks. On the one hand, it is positioning itself in the same industry position as Starbucks. On the other hand, Luckin Coffee mainly targets white-collar workers. Its advantage is that it provides delivery service, which is different from Starbucks and can quickly attract a group of users with this demand.

When choosing spokespersons, in addition to paying attention to the star’s own traffic base, it is also important to make sure that the star’s temperament matches the brand’s. The literary and artistic labels of Tang Wei and Zhang Zhen are already well known to the public, which is consistent with Luckin Coffee's new workplace coffee positioning, making the coffee brand appear more advanced.

As soon as Luckin Coffee was launched on the market, its distinctive blue packaging was loved by many consumers, standing out from the monotonous traditional red and white coffee cups. On social media, luckin coffee is called "little blue cup" and "blue dad" by netizens, and drinking little blue cup coffee is becoming a new trend in cities.

1. Brand is the most stable traffic pool

Don’t think that only entertainment stars have so-called “fans”. In fact, many brands have made us become their fans invisibly through subtle infiltration. Even if we won’t admit it verbally, the brand’s occupation of our minds will play a role in actual consumption, making us not only think of the brand at the first moment, but also spontaneously recommend it.

There are many examples like this:

• When choosing a real estate agency, Lianjia comes to mind instantly.
• When I want to eat a hamburger, what comes to mind are KFC and McDonald's.
• When you want to buy home furnishings, you think of IKEA.
• When you want to eat hotpot, go to Haidilao.
• When you want to buy a mobile phone, Apple, Huawei or Xiaomi come to mind.

In a highly developed commercial society, we have actually become "fans" of this brand or that brand (the professional term for this phenomenon is brand mind share). The purchase action guided by the first-hand brand association and the urge to tell others are typical fan behaviors, which will bring stable traffic to the brand.

This is why we still need to build brands today when there is more and more performance advertising and the costs are visible.

Brand means traffic. Through attention and "fans", you can get a steady stream of traffic. In the short term, the cost of branding may be very high, but based on the persistent memory of the brand, word of mouth from “fans” and social attention from celebrity brands, branding costs will decrease marginally, or even return to zero. By then, even if the company reduces a large amount of brand advertising, it can still have a steady upward trend and become a successful, mature brand that has reached its harvest period.

This is also the reason why Luckin Coffee must build its brand, because brand is the most stable traffic pool.

2. How to achieve brand effect and unity

Use traffic pools to achieve "quick success" and "short-term benefits".

• "Hurry for success" means to quickly establish a brand, build awareness, enter the market, and gain traffic.
• "Short-term profit" means quickly converting traffic into sales while gaining traffic, bringing actual results.

Brand marketing should try its best to achieve the best sales effect in the last mile. It should not just lose money to gain publicity or have good reviews but no sales. Only when the marketing idea of ​​integrating product and effect is applied to the company's traffic layout and operation can it quickly break through and avoid waste. What domestic brands lack may not be positioning, but brand implementation.

No matter how good the brand positioning is, if there is no clear product support, accurate scene entry, and effective advertising, then this positioning is likely to be a castle in the air, unable to support front-line marketing, unable to bring traffic growth, and become "empty talk" that others cannot understand.

Therefore, it is imperative to create good brand contact points, whether it is App brand display, image QR codes, video patches, search bidding, word-of-mouth soft articles, or emerging DSPs, feeds, mini programs, WeChat public accounts, etc., all of which allow users to add a closed-loop action - ultimately clicking to purchase.

Scene marketing is the key to making something as mysterious as a brand quickly become grounded, bring in traffic, and produce results. If the brand is a pistol, the scene is pulling the trigger of the brand bullet.

Compared with the "social space" of traditional coffee brands, Luckin Coffee emphasizes meeting customers' needs in various scenarios in the mobile Internet era.

Luckin Coffee opens 2,000 stores a year, achieving 100% coverage within 500 meters in the urban core areas of Beijing and Shanghai, and users can reach them in just 5 minutes on foot. And with the new retail model that combines dine-in + self-pickup + delivery, we can achieve full coverage of all consumption scenarios of users.

Under the requirement of "infinite scenarios", Luckin Coffee also launched light food categories horizontally. It not only enriches the consumer ecology and adds more consumption scenarios, but also improves the atmosphere of offline stores. What is more noteworthy is that Luckin Coffee attaches great importance to corporate users.

Some analysts say that corporate users are Luckin Coffee’s real target customers, not white-collar workers. This may be half true, because Luckin Coffee has unlimited scenarios, which must include both white-collar users and corporate users.

On December 18, Luckin Coffee opened its enterprise API (Application Programming Interface) to the public.

The open API platform enables real-time interaction of data between enterprises to meet needs such as points redemption, membership rights, employee benefits, and business gifts.

Fission Marketing

1. AARRR: From attracting new customers to expanding customer base

AARRR is an App operation growth model mentioned by growth hackers that has emerged in recent years. AARRR refers to: acquiring users (acquisition), increasing activity (activation), improving retention rate (retention), revenue acquisition and monetization (revenue), and self-propagation (refer).

It can be seen that in the AARRR model, acquiring users is the traffic entrance, increasing activity is the surprise moment, improving retention rate is the product value, revenue acquisition and monetization is the unit value, and self-propagation is to amplify the propagation effect.

1. Acquiring users - attracting new users

Although Luckin Coffee is a typical cup of new online retail coffee (ordered through the App, can be picked up or delivered, high-quality coffee), it is still difficult to promote because the first step in acquiring customers is to download the App. Think about it: Who would be willing to download an app of more than 10 megabytes just to have a cup of coffee?

Compared with traditional advertising methods such as brand exposure, saturation delivery, content marketing, and public relations events, Luckin Coffee, as a typical social beverage, uses most of its advertising costs as user subsidies to encourage old users to share with friends and attract new users. This is its core method of acquiring customers.

We all know that social traffic is the most important free traffic on the mobile Internet. Traffic is just a result. The most important thing is to properly utilize user relationships and relationship chains.

The reason why Tencent can maintain its position as one of the three Internet giants is not because of its monopoly on tool applications, but because it has opened up and bound user relationship chains through social products such as QQ and WeChat.

The greatest commercial value of this binding is that there is no need to inform users through traditional advertising and marketing models. Instead, users can follow their friends' preferences through sufficient "social teasing", such as "What is your friend doing? Do you want to join him?" and thus accept a new product (think about how many people started playing "Honor of Kings").

Luckin Coffee has done two things to attract new customers:

• First, emphasize sharing. That is, new users must be brought in through the sharing behavior of old users. This way, the cost is the lowest and the customer acquisition is the widest;
• The second point is post-payment rewards. The original advertising costs for attracting new customers in advance can be decomposed into the reward fees for recommendations from old users and the reward fees for new user registrations, that is: advertising cost = reward for attracting new users from old users + reward for new user registrations.

These two points are reflected in the fact that the first order for new users is free, and invite one get one , that is, old users can invite new users and each of them can get a cup. The postpaid reward here refers to an old user inviting a new user. After the new user places an order for the first product, the old user will receive a free coffee coupon.

1. Improving activity - WeChat fission

Fission red envelopes are a form of group fission, which is very common and easy to operate. After a user completes a consumption behavior, the received red envelope can be shared with friends. This red envelope can be shared multiple times or you can collect it yourself.

Whether from the perspective of benefits or the level of content showing off, this kind of fission red envelope is something that users are willing to share, allowing more people to spontaneously promote products and brands while getting discounts. Many apps such as Meituan and Ele.me use this type of fission red envelope.

Luckin Coffee uses discount coupons with rich benefits and a strong welfare policy (each time a purchase is shared, 20 people can receive it, and the discounts for old users range from 18% to 38% off. New users can get a free cup by entering their mobile phone number to download the APP, thereby attracting new users). After the invited new users place an order through their own link, old users can also get a free cup. This greatly increases the sharing rate, and some users will even set up groups specifically for sharing and receiving coupons.

This kind of random discount also adds fun, gives users an element of luck, and stimulates users' desire to try. This method is more suitable for quickly accumulating seed users in the early stage and forming word-of-mouth popularity in a relatively short period of time.

1. When traffic meets traffic——cross-border marketing

"Traffic mutual washing" means that when companies have found it difficult to expand and deeply explore traffic after multiple rounds of marketing activities, they exchange their own traffic according to the actual needs of the brand to maximize the value of both platforms.

Luckin Coffee combines this fission red envelope with IP to create an IP fission. The people who send out the red envelopes are no longer ordinary people, but the fighting Alita, the witch who comes out to make trouble on Christmas, etc. Through the fan effect or the festival effect, the fission effect is greatly increased. The same is true for offline cross-border events such as marathon + luckin coffee, Beijing Auto Show + luckin coffee, Tencent + luckin coffee, etc.

1. Inject the gene of spontaneous dissemination into the product - self-propagation

The so-called self-propagation refers to "the spontaneous and voluntary sharing and dissemination of people based on the attractiveness of products, marketing, people, events, etc.

The link of self-propagation is crucial in the current era of the rise of social networks. If users find the product fun, interesting, or motivated by profit, they will spontaneously share the product on social media. Then, by having old users find new users, the product can be spread further. Self-propagation means the traffic fission of the product.

In his book "Self-propagation: Injecting the Gene of Spontaneous Propagation into Products", Zhu Baining proposed the 486 model of self-propagation, namely the 4 prerequisites of self-propagation + the 8 tactics of product self-propagation + the 6 beginnings and endings of marketing self-propagation .

The "four prerequisites" of self-dissemination are the prerequisites that must be met for the implementation of self-dissemination, including " real needs ", " smooth experience ", " easy-to-remember name " and " strong organization ". If these basic conditions are not met, the wider the spread, the more counterproductive the effect will be, causing more harm to users.

Once the product itself and the corporate organizational structure meet the "four prerequisites", self-propagation can be implemented according to specific strategies. It is worth noting that we divide self-propagation into two categories: product self-propagation and marketing self-propagation .

• The former refers to improving the product business itself and implanting a self-propagation mechanism so that when users see and use the product, they can stimulate self-propagation behavior;
• The latter means that through clever planning, the product's print, video, H5 and other advertising works and various types of marketing activities become attractive to watch and participate in, triggering self-propagation.

The “8 tactics for product self-propagation” specifically include “main process”, “visualization”, “adding copywriting”, “personalization”, “planting easter eggs”, “exceeding expectations”, “sense of participation” and “grabbing hot spots” . These tactics are designed to fully tap into the product's potential and implant the gene of self-propagation into the product.

"6 Tips for Self-propagation of Marketing" summarizes 6 principles for making marketing activities attractive and self-propagating. The “6 alwayss” include “ always tapping the potential of the product ”, “ always understanding the essence of human nature ”, “ always mobilizing the wisdom of the masses ”, “ always introducing interaction from friends ”, “ always believing in the power of creativity ” and “ always stimulating secondary dissemination ”.

The design, positioning, and marketing of Luckin Coffee’s entire product are designed to achieve the effect of self-propagation! It meets the four prerequisites of self-propagation and perfectly uses these eight strategies. Whether it achieves the expected results will take time to test. Let us wait and see.

1. Looking ahead

We know that if you want to retain customers without heavy subsidies, first of all, your products must be of high quality and able to meet or even exceed user expectations. At the same time, you also need to continue to innovate to ensure that users continue to feel satisfied.

Therefore, in early 2019, Luckin Coffee launched the recruitment of the [Luckin Chief Flavor Officer], which also shows that Luckin Coffee attaches great importance to product research and development and wants to continuously provide users with surprises and even bring out hit products. For new retail, no matter how good your marketing is, if you want to survive in the long run, you still have to rely on solid products!

As someone like me who loves milk tea, I strongly hope that Luckin Coffee can launch a "luckin tea" series.

Of course, my idea is also based on facts. Luckin Coffee is willing to build its own APP despite the risk of difficulty in attracting new customers because it does not want data to leak out. After all, as a new retail coffee, it can choose locations more specifically with the support of big data in order to expand its stores. For new retail, having a supply chain system of your own is a powerful backend support. With this support, it will be easy for Luckin Coffee to make milk tea or other products!

In 2018, Luckin Coffee’s marketing impressed me. In 2019, I expect Luckin Coffee to amaze me again!

Source: 1, 2, 3