Online consumer finance product customer acquisition and operation methodology

After the beginning of spring, the weather is gradually getting warmer and the annoying new coronavirus is gradually fading away. In the winter that has just passed, we experienced what may be the most special Spring Festival in the past hundred years. Shopping malls were closed, restaurants ceased to operate, and the whole nation stayed at home on the days when we used to visit relatives and friends. Some areas even put up slogans such as "Visit relatives and friends this year, visit graves next year." After the "longest" Spring Festival holiday in history, various parts of the country have recently begun to resume work in an orderly manner. However, under the epidemic, all walks of life have undoubtedly been affected to varying degrees, and consumer finance is no exception.

According to the business development model, the product forms of consumer finance can be roughly divided into offline and online. This winter, industries such as housing rental, offline education, fitness, and medical beauty have suffered heavy losses. As a result, offline consumer finance business, especially consumer finance business based on these scenarios, has also been greatly affected.

Relatively speaking, online consumer finance business also faces unfavorable factors such as weakening customer repayment ability and sudden increase in risk pressure. But in the long run, its ability to resist unexpected risks is still relatively strong. It can be expected that after the epidemic, consumer finance companies that originally focused on offline operations will have to re-examine their business models, and shifting to or partially shifting to online will be the general trend. So, what is the situation like on the online track?

Opening the financial rankings on the APPStore, there are as many as 49 loan apps in the Top100, accounting for 49%, and this proportion is as high as 52% in the Top150 (data as of March 4). A few months ago, this proportion was less than 30%, and the financial rankings were still dominated by mobile banks at that time.

In the APPStore financial list, a total of 8 products from 6 consumer finance companies were shortlisted in the Top 150, namely Mashang Consumer Finance, China Merchants Bank Financial Services, Home Credit Finance, China Post Consumer Finance, Haier Consumer Finance and Zhongyuan Consumer Finance. Whether it is the ranking, the number of companies on the list or the number of products on the list, it can be seen that consumer finance companies still account for a relatively small proportion of the overall consumer credit market.

As a licensed regular force, consumer finance companies undoubtedly possess the biggest advantage in finance: the license advantage. But on the other hand, the license advantage cannot directly help it gain much advantage in the online market, which is already a red ocean. After all, users’ minds cannot directly understand the meaning of the license. On the contrary, consumer finance companies are mostly derived from banks and are inherently lacking in Internet genes. Both their organizational structure and talent structure are far from what is required by Internet products. This puts it at a disadvantage in the research and development, promotion and operation of online products.

So, how should online consumer finance products acquire customers and operate? What kind of organizational structure should consumer finance companies establish for their own online products?

(This article only focuses on the online products operated by consumer finance institutions. Since channel cooperation products such as loan assistance and joint loans are subject to many factors such as the partner’s entry, traffic, and operating resources, this article will not discuss them for the time being.)

1. Product forms of online consumer finance products

The product matrix of Internet consumer finance is generally composed of APP, mini-programs (WeChat mini-programs, Toutiao mini-programs, etc.), WeChat public accounts, Alipay life accounts, and H5 full processes.

• APP : APP is the most important carrier of the product matrix. It carries all the functions of the product, has completely independent operation and risk control, is the primary starting point of operational activities and the largest user traffic pool.
• Mini Programs : As lightweight products that can be used anytime, mini programs are very suitable for tool-type products such as consumer finance. However, they can also have problems such as weak stickiness and difficulty finding the entry point.
• WeChat Official Account : WeChat Official Account has the lowest threshold for communicating with users in the product matrix. It is a product inventory that is within the reach of users. It can basically replace the notification function of SMS at present, and its arrival rate and open rate are much higher than SMS. In the case of immature APP, making good use of WeChat is the magic weapon for the rise of products.
• Alipay Life Account : Alipay Life Account is based on Alipay’s huge traffic and strong financial attributes. If keyword ranking optimization is done well, it can attract a large amount of free natural traffic and is an important supplement to the product matrix.
• H5 full process : H5 full process is the light cavalry that helps products step out of their own platforms. It is the only product in the matrix with cross-platform attributes. It can implant products across platforms at major traffic terminals. At the same time, the current Web technology can already achieve an APP-like friendly experience throughout the entire H5 process. This lightweight product is widely used in customer acquisition and is indispensable.

2. Dilemma in customer acquisition and operation of online consumer finance products

1. The cost of acquiring customers has risen, and the cost of withdrawing funds has risen to thousands of yuan

Along with consumer finance apps dominating the APPStore financial charts, there are also rapid increases in customer acquisition costs and industry pain points such as large traffic losses and difficult operations. The main ways to acquire customers for Internet products are brand investment and performance investment. Brand placement is commonly seen in the naming of variety shows, film and television events, targeted elevator advertising, subway and bus outdoor advertising, etc. Brand placement often accounts for a lower proportion in customer acquisition than performance placement because the immediate conversion effect is difficult to accurately measure, the project amount is usually large, and the pressure on placement decisions is high.

On the effect side, current online traffic is mainly concentrated in Tencent, Toutiao and top vertical platforms. In terms of effective delivery, although the front-end conversion effect is visible, more and more people have a negative attitude towards whether "precise delivery" can really save marketing costs after practice.

In a crowded market, fierce competition among a number of institutions for the same customer base has led to rising traffic prices, while the quality of the customer base has rapidly declined after rounds of screening. At the same time, the low-frequency product attributes and relatively strict approval rate of credit loan products result in their customer acquisition costs being several times higher than other types of products.

In the field of consumer finance, an activation cost of 300-500 yuan is already a good level to obtain volume, and a withdrawal cost of more than 1,000 yuan is not uncommon.

Disproportionate to the high customer acquisition cost is the pitifully low LTV (Life time value) per user. Except for a few leading companies whose LTV can reach 500 yuan+, the LTV of most mid- and tail-end consumer finance institutions is less than 100 yuan, or even negative. Although LTV is not the only indicator to measure the quality of a product in the current context of institutions scrambling for territory, and being able to acquire more high-quality customers is the core of competition, the financial pressure brought by the high customer acquisition costs is self-evident.

2. It’s difficult to acquire customers, and operations are not easy either

Among the consumer finance companies currently operating in China, the vast majority have a banking background. While they were born with a silver spoon in their mouth, they have inevitably inherited some genetic defects. Funding and risk control are the advantages of consumer finance companies, while scenarios and operations are common weaknesses.

When financial people do marketing, they talk about finance and do finance. They often think that finance is "special" and ignore its nature as a service industry. They often present financial professional terms to users without modification, ignoring that the cost of understanding has become a stumbling block that hinders user operations.

3. “Outsourcing” is another internal factor that makes operations difficult

In the banking system, "outsourcing" is an important component, and it is widely present in customer service teams and technical teams. The personnel of "outsourcing" and "manufacturers" have immediate combat effectiveness and rich experience in the industry, and are ready to fight. The bank can quickly add or reduce staff according to project needs without occupying its own establishment. Such a configuration is also common in bank-affiliated consumer finance companies.

The outsourcing system was certainly effective in the past when technology was used as "technical support", but in the online track where technology drives products, it has become an obstacle to product development. What online products require is the ultimate user experience and rapid iteration. Although the "outsourced" technology and product teams have no problems in technology and capabilities, they are constrained by employment and partnership relationships, and often use project completion as an assessment indicator, lacking a sense of "ownership" of the product. Optimization and rapid response beyond the project delivery level are out of the question, and operational activities that need to meet marketing deadlines are often abandoned because the technology cannot be supported in time.

3. Ways to break through in customer acquisition and operation of online consumer finance products

Faced with the ever-increasing cost of customer acquisition and the difficulty of user operations, consumer finance institutions, Tencent and ByteDance, which control traffic, and advertising agencies are racking their brains. Consumer finance institutions have set up precise customer acquisition teams and user operation teams. Against the backdrop of declining profit margins, they have lowered their assessments, paid more attention to withdrawal costs and back-end ROI, and pursued stable and high-quality customer acquisition.

Tencent and ByteDance have begun to actively embrace advertisers, listen more to the needs of the industry, and launch new delivery strategies such as joint modeling, pre-risk screening, dynamic population packages, and two-stage bidding. Advertising agencies have set up or expanded performance teams, hoping to use performance advertising to drive new growth at a time when brand advertising is weak.

The joint efforts of the three parties can certainly improve the effectiveness and quality of consumer finance customer acquisition, but if everyone benefits, it is the same as if no one benefits. These efforts are necessary but not sufficient conditions for consumer finance institutions. More accurate population packages, joint modeling, pre-risk screening, strengthening communication with the media and agents, and attracting users with better creativity... Doing these is just completing the required actions, you are doing it, and others are doing it too.

So, how to break through?

Here, based on the author’s more than three years of experience in the consumer finance industry, I would like to provide several suggestions that can be implemented for your reference only.

1. Close integration of advertising and operational activities

The Little Blue Cup has been advertising extensively on Focus Media, not only relying on handsome Zhang Zhen and Tang Weimei to attract users, but more importantly, its fission activity: the first one is free, and each friend who recommends one can get one cup.

Regardless of whether it is brand launch or performance launch, financial products should not be promoted with supporting marketing activities planned just for the sake of launch. Instead, they should be promoted by matching effective media combinations with operational activities based on clear customer acquisition quantity and quality requirements and clear marketing nodes.

For example: Based on the principle that financial institutions are more beneficial to their annual financial statements if they issue loans in the first half of the year, plan your own brand's user festival in the first half of the year (e.g., China UnionPay Fan Festival, 6.6 Sesame Credit Day). One week before this node begins, both brand and performance advertising should start to be promoted centered on this node, and make reservations for traffic in advance on the day of the festival to ensure a large amount of exposure in a short period of time to drive APP user growth. This kind of investment is effective and combines product quality and effect, which not only increases the asset scale in the first half of the year, but also makes users feel that the platform is active, has a sense of participation, benefits, and a sense of belonging at the user operation level.

Let us think about a question. When we talk about reducing customer acquisition costs, is it possible that our thinking is limited?

The customer acquisition cost does not necessarily have to be paid entirely to the traffic party. If it can be combined with operational activities for promotion, such as the "30-day interest-free" offer of 360 Finance during its rise and the "compensation for first application rejection" of China UnionPay, part of the customer acquisition cost can be spent on the users.

The advantage of doing this is that ads with operational activities can attract more users' attention and can obviously increase the click-through rate and conversion rate of ads. If the conversion rate is increased by 10% on the front end, the cost of acquiring customers later may be reduced by a large amount. It is certainly important to study creative forms of advertising and joint modeling, but if you can combine operational activities to promote products, it will obviously be more effective, more cost-effective, and the user experience will be better.

When we have hundreds of millions of dollars to spend on customer acquisition, why should we stand in front of the users and force them to believe that our products are great?

Let me give you another example. In order to acquire customers more conveniently across all scenarios, various consumer finance institutions have launched H5 landing pages and even H5 full-process products, attracting traffic to major traffic platforms such as TikTok, Toutiao, and iQiyi. Some even have excellent display locations, but these H5s often lack operational activities to support them, especially operational activities that are integrated with the characteristics of the platforms they are on.

Take iQiyi as an example. Although both are loans, Youqianhua’s slogan is “Activate the credit limit to get an iQiyi membership for free”, while most consumer finance products have the same slogan: “Maximum credit limit of 200,000 yuan”, “Loan approval in as fast as 3 minutes”... The difference in attractiveness of the materials is obvious. Even without pre-risk screening and joint modeling, iQiyi's loyal users, or highly sticky users, will most likely tend to click on the product that offers iQiyi membership.

Will this detail also affect the quality of customer acquisition on the same platform? Worth thinking about.

2. Build an operations support team to flexibly support marketing activities

Establish an agile and flexible operation support team, including marketing planners, product managers, UI designers, and front-end developers. Able to quickly launch operational activities based on marketing hotspots and product promotion rhythm, and continuously optimize and iterate based on the results of the activities.

For example, during the epidemic, masks were scarce, and the team I was in quickly planned a charity event called "Free Distribution of Masks for Public Welfare". Thanks to the flexible operation support team, this activity took only 2 weeks from planning to development and launch. The five-day event distributed 40,000 medical surgical masks for free, which were delivered to 8,000 households in more than 20 provinces across the country. The event attracted a total of 750,000 participants, 230,000 reposts, and over 8.65 million page views. The two WeChat tweets about the event on the WeChat public account were read more than 100,000 times, and the number of new WeChat fans increased by 450,000.

For example, for this year's Tokyo Olympics, the planning team can connect with resources in advance and plan a series of marketing activities, including points guessing activities, Olympic specialty product flash sales in the installment mall, cheering for the Chinese team (such as customizing the Olympic cheerleading old and new rankings, and the top ten will receive Tokyo Olympic tickets, etc.), and new users can activate the quota to get Tencent Sports/PP Sports Olympic live broadcast privilege packages, etc. The purpose of doing this is not to take advantage of the hot spots, but to ensure that the marketing of the product keeps up with the rhythm and attract users with the right theme, right activities and right materials at the right time.

3. Build brand characteristics and promote word-of-mouth communication

Why do people think IKEA is cheap? Because ice cream in IKEA restaurants is only 1 yuan, hot dogs are only 3 yuan, small side tables are only 39 yuan, and glasses are only 3.9 yuan... IKEA cleverly sells some popular items at affordable prices, creating an atmosphere of "I am very cheap."

In fact, people who are familiar with IKEA know that large items such as IKEA's sofas, coffee tables, and beds are not cheap compared with products of the same quality and category. However, users already think that IKEA is cheap, so these expensive products are interpreted by users as "expensive for a reason."

Another example is that when China Merchants Bank’s mobile life app was first promoted, it did not have the current “national bank APP” effect.

At that time, in addition to points being an effective weapon of China Merchants Bank, the operation of the Palm Life APP focused on two activities: one was to give valuable gifts to old customers who brought in new customers, and the other was "perfect": launching a hot-selling product in each issue, allowing users to purchase it interest-free for ten installments at a price lower than the market price. This strategy has greatly enhanced users' impression of the affordability of mobile life apps and has become an important driving force behind the rise of China Merchants Bank's credit cards.

The same principle applies to consumer finance products. Although it is impossible for every product to be cheaper than on JD.com and Tmall, it is still feasible to concentrate efforts on creating a few popular products. Find a suitable supplier, negotiate a better policy, moderately subsidize the customer acquisition cost on the product side, supplemented by a 12 or even 24-month interest-free policy, and use low-priced/affordable products to attract users to naturally gather, share and grow.

In this conversion chain, the mall becomes a magnet to attract users, rather than a useless thing that exists only to expand the scene. You should know that although consumer finance deals with financial products, finance is ultimately a service industry , and users of consumer finance can also be called financial consumers. Since they are consumers, it is necessary to have psychological insights into users. If you do things in accordance with users' psychology, you will get twice the result with half the effort.

4. Really use your points

Here we have to mention the most famous bookstore in Japan: Tsutaya Bookstore. Founded in 1983, Tsutaya Bookstore has now become a cultural refueling station for young people in Japan. It started as a physical bookstore and still maintains strong competitiveness in the Internet age.

In an exclusive interview with the media, Muneaki Masuda, the founder of Tsutaya Bookstore, said that one of his secrets is the refined management of users and the user points system. As of June 2017, Tsutaya's T-Card points card has over 60 million active users across Japan (accounting for approximately 47% of Japan's total population). Users can use their points to make purchases at nearly 670,000 stores of 108 companies in Japan, including Tsutaya Books, including convenience stores, shopping malls, and gas stations. The points are like the Japanese yen issued by Masuda Muneaki himself, and users are firmly attracted and bound to them.

Points are a double-edged sword. If used properly, they can improve user stickiness. If used improperly, they will only increase operating costs and become useless.

There are generally two ways to obtain consumer finance user points: through APP consumption, loans, and completing designated actions using the APP. The former contributes actual profits to the product, while the latter contributes activity and stickiness to the product.

Points can be consumed in ways that redeem physical goods, virtual cards such as audio and video memberships, performance tickets, coffee coupons, taxi tickets, or brand-related cultural and creative products. Points can also be combined with the product itself to redeem interest-free points, reduce early repayment fees, or even increase the credit limit. In combination with membership levels, dynamic benefits limited to different levels can be launched on a monthly basis for members of different levels, which can further boost activity on the basis of fixed membership benefits.

Points are equivalent to the "currency" issued within your own product system. The exchange ratio with real currency must be properly controlled. Do not issue them without restraint when they are just launched, and then lower the exchange ratio to save costs after over-issuance, which will cause "inflation". Points are one of the few effective means for low-frequency products such as loans to maintain emotional connection with users. The generation of points increases with the user's usage time and trust in the platform. Do not let users feel that it is "not worth it."

5. User operations require routines, and routines that respect user intelligence

Everyone may have had this feeling when ordering takeout: the store clearly has a 40-15 off promotion, but no matter how hard you try, you can never get exactly 40, or even just a little bit over 40. Either it's 39 yuan and you're almost itching to pay, or it's 48 yuan, which is much more than 40 yuan but you can still only get 15 yuan off.

From the user's perspective, this little trick may not be seen through, but in business terms, this kind of pricing war, psychological warfare, strategic war, and grasp of "degree" are the "routines" that user operations should spend more energy to study.

Improving the input-output ratio is often not achieved by adjusting the input resources on the books. Here is an actual case from my team:

In 2018, we designed a fission activity for old users to bring in new users. People often think that loan products are difficult to fission. Users do not want others to know when they borrow money, let alone send invitation links to friends. At the same time, loan products have high review thresholds and are difficult to invite. If the gifts are too cheap, they will not serve as an incentive, and if they are too expensive, the customer acquisition cost will be too high. Faced with such an industry pain point, the team did a few small things and achieved unexpected results.

First of all, we raise the threshold for invitation rewards to successful activation. That is, the invited user does not need to take out a loan and does not need to pay any actual cost. As long as the application for the quota is successful, the inviter can receive the reward. Although doing so may seem to increase the cost of acquiring customers, it is not the case.

After adjusting the reward threshold to the activation limit, the promotional points can be adjusted accordingly to "get the limit for free", "get up to 200,000 reserve funds", and "test your credit limit". The psychological pressure on the invitees is greatly reduced because they do not need to withdraw money. Although the withdrawal rate of invited users will be lower than that of normal users (the withdrawal rate of invitees in our old-to-new activities was 29% in 2018), the lower invitation threshold has brought in more users, and in terms of the absolute number of customers who have withdrawn money, there are more. At the same time, more credit users are obtained, which can be further converted through secondary marketing.

Secondly, when choosing the reward method, we chose gifts instead of cash. When selecting gifts, we consulted suppliers widely to find products with the most advantageous purchase prices, such as Beats headphones, a trendy brand that young people like. The basic model on JD.com costs 599 yuan. However, the channel price of this headset can actually be 450 yuan or even lower, which creates a healthy cognitive gap for users. The company actually paid 450 yuan, but users feel that they have received a gift worth 600 yuan when comparing it with the market price.

There are many products like this. Every month, based on the results of the previous month's activities, combined with the current month's hot spots, market hot new products and seasonal characteristics, we continuously optimize the gift structure to ensure that old users can continue to contribute.

In addition, monthly rankings and tiered reward settings are also good ways to optimize activities and save costs. Here we assume that the reward threshold is successfully inviting 1, 3, 5, or 10 people. The threshold of inviting one person is set to minimize the invitation threshold and attract more users to participate in the event.

At the same time, there is a certain risk of rejection in the application of loan products, and the approval results will be delayed. In order to get the reward for recommending 5 people, participating users must recommend at least a dozen people. Therefore, at the end of each month, a large number of users who recommend 9 people will get the prize for recommending 5 people. 9-5=4, and these 4 overflow customers are the "premium" earned. After one year of practice, the overflow rate of the activity's reward threshold exceeded 70%. Throughout the year, the user activation cost brought by the activity was less than 30 yuan, and the withdrawal cost was less than 100 yuan.

Since ancient times, true love cannot be retained, only "routines" can win people's hearts. This "10,000-word article" actually has only more than 7,000 words. But if you feel you have gained something after reading it, you won't mind the exaggerated title, right?

In 2019, the consumer finance industry experienced a continuous increase in demand, emerging risks, fierce market competition and low deep conversion rates on the customer acquisition side. Tencent Advertising shared this view at the 2020 Financial Industry Salon: In 2020, customer acquisition for online consumer finance products must shift from extensive thinking to refined delivery, from adjusting people and prices to page planning, from multi-channel cultivation to main channel cultivation, and from controlling costs to improving conversion rates.

In 2020, when the industry as a whole is anxious and hit by the epidemic, all consumer finance institutions are facing tremendous pressure in customer acquisition and operations. I hope this article can bring some thoughts to the anxious industry. The more difficult it is, the more we should not be afraid of difficulties.

Finally, I would like to share with you a sentence that I like very much: Pessimists are often right, and optimists are often successful . Let us encourage each other. In a difficult environment, it is a good time to rise from adversity and overtake others. I hope everyone can find their own way to acquire customers and operate.

Author: Before knowing

Source: Before Knowing (ID: pre-known)