How to establish a user incentive mechanism? 4 strategies!

With the development of mobile Internet platforms, the competition for users has naturally become more fierce. The user operation ecosystem has also gradually been improved by refined strategies, both in terms of user stratification and user cycle. Every purposeful operational action has a complete visualization model and big data support. Every detail of yours on any app has been recorded and marketed. Let’s extend this topic and imagine: “What can I do to save you, my privacy?”

Regarding the big topic of user operation, what we want to share today is the " user incentive mechanism ". As the name suggests, we operators stimulate, inspire and guide user behavior through interest incentives, including user experience/user activity/user conversion/user retention and even user payment. In this process, users are asked to determine what kind of rewards they will receive based on their operations; while for operators, it is about how to establish an incentive mechanism and ensure that ROI>1 to achieve maximum value.

1. User incentive model, from internal value to external connection

The incentive entities here are the platform and consumers, and an incentive relationship needs to be created between the two. We distinguish three levels and try to look at each level independently, so that the entire bridge will naturally be connected. We define the three levels as: internal demand layer, internal and external connection layer, and external acceptance layer. Please see the following figure for details:

2. Internal demand layer, start setting based on platform requirements

In the process of building new retail, the establishment of user incentives will be adjusted with the development of the business, from the main line of attracting new customers, conversion, to repeat purchases and churn prevention. We list several core requirements:

1. Control CAC for new customers, ideal LTV/CAC ≥ 1

Attracting new customers in the early stage of business is the first step for us to apply incentives. As for the conversion of new customers themselves, we need to invest in a combination of new customer gift packages + flagship products + free shipping coupons to guide conversions and ensure the first order. LTV needs to be estimated after 3-4 weeks of feedback data. It can also be used as the target value of CAC to adjust the cost of gift packages and products. This stage is usually the critical period for the platform to attract seed users. Brand awareness is just beginning, and the cost of attracting new users is naturally the highest. Therefore, many platforms adopt a "burning money" strategy at this stage. LTV/CAC ≥ 1 is also a relatively ideal state.

2. Old customers bring in new customers/new customers bring in new customers to ensure LTV/CAC>1

In the process of attracting new customers, the incentive method we often use is to use cash to encourage old users A and new users B to actively attract more new users C. Not only can user C enjoy the new user gift package, but user A can also enjoy a commission. This is also what most platforms refer to as “friend recommendations”. At this stage, the business has a certain degree of recognition in the market. The combined cost of new user gift packages and commissions must be less than LTV to ensure that new users can generate value greater than cost, so that the business can be profitable.

3. Set incentive rules for repeat customers based on user characteristics

Issue repurchase coupons to old or high-frequency users after payment to encourage and stimulate repurchase. The key point is that we need to set incentive rules reasonably based on consumers' shopping frequency and preferences.

For example: For high-frequency fresh food users, we will return 1-2 15% off coupons with a threshold of 49 yuan after successful payment, and they are valid for two days; for users of personal care products, we will return 1-2 20% off coupons with a threshold of 89 yuan after successful payment, and they are valid for two weeks. If they are about to expire but have not been used, WeChat service notifications will proactively reach out to users to remind them to return the coupons for verification.

4. Life cycle is limited, so reasonable incentives should be given to lost users

It is inevitable for a platform to lose users. In addition to continuously bringing in new customers, it can also focus on incentivizing original core S-level users. This group of users still have strong and high-frequency shopping needs, but they are all "diverted" to competing platforms to enjoy new user benefits. At this time, the incentives need to start with VIPization to satisfy their sense of achievement and specialness on the platform. In simple terms: How do you take care of a wounded veteran!

For example: Invite someone to become our community leader, and everyone can participate in the management independently. They can get commissions and discount coupons for orders placed within the group. Invite someone to become a community promoter, and distribute flyers with exclusive QR codes within the community group or neighborhood, and they can also enjoy commission benefits. The utilization rate of this part of users can also be sufficient.

3. Behavior and score connect internal needs and external presentation

The platform has generated incentive needs from new and old customers, and it is necessary to set up mechanisms so that users can perceive and be willing to participate. We call this process the connection layer, which is our mechanism setting.

1. Starting from user behavior, establish a reasonable mechanism to guide goal achievement

Looking at the user's operational behavior in detail: user visits, visit depth, visit time, product detail page, number of cart additions, number of shares, number of orders, and rate of favorable comments can all become the core parts of the mechanism. For us operators, data is easy to record, and for users, the number of stores is not high and the cost of participation is low.

For example: In our big promotion, we set task achievement gameplay for users. After completing 3 tasks, they can get a cash discount of 9.9 yuan. First, the user needs to browse 5 product pages within the same day; second, the user needs to share with 2 users for help; third, the user needs to place at least 1 order (the average order value is greater than 89 yuan). We also set the three-step operation behavior based on the average value of previous users, so the overall threshold will not be too high, and the cash incentive of 9.9 yuan is also quite obvious.

2. Starting from the data score, set the middle value of cooperation to guide the achievement of goals

The application of data points is more about some continuous incentive gameplay, such as sign-in, medals and points. We call this part periodic rewards. Usually the mechanism sets up a short-term and a long-term incentive plan, so that users do not need to wait too long to get part of the rewards, and after a long time they can get an ultimate easter egg. Manage user expectations well.

For example: we set up a sign-in gameplay, where users who sign in for 3 consecutive days will receive a 99-yuan threshold coupon with an 15% discount, and those who sign in for 7 consecutive days will receive a 168-yuan threshold coupon with an 80% discount. At the same time, in terms of points, each order can accumulate 100 points. If users place orders 1-2 times within a week, they can redeem coupons or qualify for big-ticket item flash sales. In the long run, the higher the points, the greater the physical goods and virtual rights that can be exchanged. The value of periodic rewards is also more obvious.

4. Simplify communication with users, focus on rights and interests rather than rules

1. Consumer task system incentives

The task system is to set up one or more tasks. After meeting the task objectives, you can obtain the designated reward plan. During daily operations, we will set up small gameplay such as user sharing, assistance, and adding cars. The threshold for user participation is low, so of course the rewards that can be obtained will not be too high. Usually, a series of tasks will be set up during major promotions or holidays. On the same day, 3-5 thresholds must be met at the same time, and each threshold is bound to the core operation indicators to boost the overall data health. Users can eventually get a higher amount of rewards.

2. Consumer authority system incentives

The user permission system is closely related to user stratification. The premise of setting it up is to divide the user packages according to the RFM model and give S-level users exclusive advanced permissions. For example: give S-level users exclusive QR codes to facilitate self-service customer acquisition and commissions; delegate the identity authority of the community leader to be responsible for group purchases in the community, and give commissions based on the number of orders.

3. Consumer rating system incentives

The level system is a very common incentive method in games. The higher the level, the greater the rights and interests, and the greater the sense of accomplishment between users. We judge the level based on points. Those with less than 1000 points are defined as beginner users, those with 1001-3000 points are defined as intermediate users, and those with more than 3001 points are defined as advanced users. The coupons, flash sale benefits, category benefits, and free shipping policies enjoyed by each level of users will be differentiated.

4. Consumer emotional system motivation

Sense of exclusivity (VIP exclusive discounts, VIP exclusive distribution system, VIP exclusive products); Sense of achievement (get the ultimate prize by signing in periodically, get physical prizes by helping multiple people, get cash rewards by completing N orders cumulatively); Sense of honor (unlock a specific promotion task system and get special gift package rewards; unlock and complete platform periodic tasks and get a medal of honor; be invited to participate in store Open Day)

After all the systems in the external receiving layer are connected, pay attention to a core point: the interest incentives must be obvious and prominent. Behind an incentive, it means that users need to complete certain thresholds before they can be rewarded. Rewards are the only driving force for users, so rewards need to be emphasized and communication needs to be repeated.

The user incentive mechanism is a double-edged sword. An accurate operational strategy can effectively improve the platform's business indicators. Secondly, the essence of user incentives is to speed up the consumption of user life cycles. Once users become fatigued, it will accelerate user loss. So let’s return to the essence of user operation: treat users well, with more emotion and less routine.

Author:Leon

Source: Leon Operation Notes (Leonnote123)