Advanced Operations: How to use 4P theory to achieve growth?

As we all know, operations are divided into product operations, user operations, event operations, and content operations. With the disappearance of C-end dividends in recent years, operations in the B direction have become more and more important, such as business operations and marketing operations.

In large enterprises, there will be some subdivisions. For example, Alibaba Taobao and Tmall have vertical category operations, merchant operations, KA operations, and event operations; there will also be horizontal membership operations, module product operations, data operations, etc. Whatever, the professional division in the industry field is more of an industry indicator, which can help everyone maintain professional sensitivity.

An old operation driver from Alibaba once said: What is operation? ——Solve all user problems.

From this essential point of view, operations can be compared with the marketing field, operations are a part of it, and compared with other functions such as marketing and public relations, it is a more pragmatic position.

Returning to the thinking of first principles, Internet operations and marketing are actually essentially in line with the three points of CCDV theory: target market creation, communication, and value delivery.

Especially in terms of communication and value delivery, everything in the digitized online environment can be recorded and tracked, making these two points even more extreme.

If we can think about operations from these more abstract levels, the divisions mentioned above are more about tactics and hard skills.

After thinking these points through, I tried to combine some marketing ideas in my operations work and consolidate some practical methodologies for operations work.

For example, people who work in marketing should be very clear about the 4P theory: product, price, channel, and promotion. With the help of marketing guidance in these four areas, how can they grow into a high-level operator ?

1. Promotion - main and secondary data indicators and production ratio

Promotion is the third item in the 4P theory. It is also the most important part of operations, so let’s talk about it first.

In traditional retail promotion, only big brands have the budget to invest in advertising, etc.; individual merchants generally distribute flyers, do door-to-door sales, etc.

For Internet products, the forms of promotion are relatively richer, and we can call everything related to dissemination promotion.

Depending on the purpose of promotion, we can do user fission, new customer acquisition, creative marketing events, distribution, festival activities, etc. Some are for bringing phased results, such as new user growth indicators and transaction volume; some are for building long-term user mind and branding the product; of course, the above two directions correspond to performance advertising and brand advertising in marketing respectively.

So for us, when planning a promotion campaign, how should we break it down and implement it step by step?

How to distinguish what is “superficial” and consistent with the strategic plan? Which ones are implemented “online” in various business directions? What are the specific implementations “on the point”? It should be something that we need to implement after abstracting upwards and breaking down downwards based on the activity goals.

1. Main and secondary indicators, the development and connection of things

First, focus on the following: clarify the long-term direction and generate core main indicators; break down the phased implementation and clarify the secondary indicators for each stage.

To illustrate, most people who work in operations have probably done activities to attract new customers, so everyone can definitely think that the main indicator must be the number of new customers attracted; then what are the secondary indicators? Most people's misunderstanding is the new customer acquisition ratio, that is, the proportion of new customers.

This is a misunderstanding because:

Once you start taking various actions to attract new customers, your new customer ratio will definitely increase. Moreover, as new customers increase, this ratio will definitely increase on the basis that the existing user pool is not too bad. It does not reveal the real situation and is a vanity indicator.

The correct stage-by-stage sub-indicators should be: the first order is retention rate, and the second order is new customer retention rate.

At this point, I believe that people with operational experience will suddenly realize that the first step to look at retention rate is mainly to see the original foundation of the product and the stickiness mechanism set for users. This belongs to the basics. At this stage, some targeted optimization of new user paths can be done - how to leverage the second and third purchases of new users, and whether some analysis should be done in the key action of attracting new users with the first gift package. For example, some large category coupons can be given based on the consumption portrait of new users, and push reach can be made with hook products.

After completing the three purchases, you can use some light membership mechanisms to create a natural stickiness action, because at this time users have basically developed a certain level of trust in your product. So naturally, we come to the second-order sub-indicator - new customer retention rate.

At this time, the focus should be on testing the retention rate of new customers, then selecting some new users with good retention rates, doing some basic path and portrait analysis, and precipitating the core and replicable key points.

Then, the third-order sub-indicators can be used as the third-order sub-indicators according to the specific implementation measurement standards of this keypoint.

In addition, from the perspective of longer-term main indicators, after the number of new customers has steadily increased, we can start paying attention to another indicator: the new customer sharing rate.

After talking about this indicator, everyone should suddenly realize that the most powerful marketing is word-of-mouth marketing.

When your new customers recognize your product and share it with their friends, it means that your new customers have become loyal users. Once this indicator is good, you can happily call your investors and prepare to expand the scale and make another big deal.

The AIDMA rule in traditional marketing theory has become the AIEAS rule. The last S stands for share, which is a complete consumer psychological path.

To summarize the above content:

On the one hand, through the changes in this phased data indicator, you must distinguish the changes in indicators at each stage and closely follow the user's psychological path, so that you can truly gain users;

On the other hand, the main and secondary indicators help us to always be clear about our long-term and short-term goals respectively.

Always remember that users always vote with their feet. Only data reflects their true will. For example, through data analysis, you may find that you have done nothing wrong, but your competitors have more favorable prices. However, if you discover the problem through data at the first time, it is not a problem.

2. The gameplay format is not important, the investment-to-production ratio is more important

From the perspective of the communication path, there are two models: to C and to B. The important thing about to B is to choose the delivery channel, such as having its own store resources to let the store staff do the scanning code communication and publicity, or to deliver on advertising platforms such as Douyin and WeChat; to C relies on the sharing of existing users and the design of sharing links, that is, user fission.

Here we will focus on to C promotion, so the first thing that everyone will think of is promotion planning, creative marketing, membership marketing, etc.

Choose the appropriate promotion plan according to different purposes:

• If you want to generate GMV and profits in the short term, it is more appropriate to plan a big promotion event;
• If you want to attract new users and activate users, you can plan some membership operations activities;
• To enhance product brand quality, a highly disseminable event marketing is more appropriate.

We often see a lot of talk about fission operational strategies, how to design fission paths, and how to polish copywriting. In fact, these are more of tools and means, and the market is now relatively mature in this area of ​​gameplay, which belongs to the face part.

What is more important is the inside, that is, the efficiency of promotion. For example, using a fission case of sharing coupons, how to improve the efficiency of a fission activity.

One is the user's efficiency, and the other is the platform's ROI, which obviously represent the user's perspective and the official perspective respectively.

First, let’s look at the official ROI. The cost items are the coupon cost and the delivery cost; the revenue items are the GMV and new customer value brought by the coupon (approximately equal to the platform’s new customer acquisition cost). The sum of the two is the official ROI.

Because the cost of a coupon is fixed, we will use the coupon as the smallest granularity to calculate ROI.

Assuming that the cost of a coupon is a, the cost of placing a coupon through natural channels is temporarily ignored. The GMV of revenue depends on the coupon threshold and the average order value of users b. The value of new customers depends on the number of people invited to receive the coupon c, the proportion of new customers in sharing d, and the cost of attracting new customers e.

Overall production ratio = (b + cde) / a

The uncertainty indicators here include c and d. In addition, e may be lower in this kind of wool-grabbing activity, so the overall ROI is controllable, or there is a minimum threshold, which basically depends on the conversion rate brought by the coupons. This can be referred to the historical coupon redemption data.

The proportion of new customers is more affected by the rules, such as whether each person is limited to one invitation, etc. This value may deviate greatly from the proportion of new customers under daily natural traffic conditions.

In addition, in this scenario, new customers can be taken over by existing business lines such as new customer gift packages, which will further improve the conversion of new customers.

In addition, there is an invisible benefit in the revenue item, that is, when the invitee returns to visit but the inviter does not get the coupon, this is the activation value. It can be basically judged by looking at the fission coefficient of the inviter (that is, how many people each person can attract to return to visit) and the increase in transactions as the DAU of the market increases.

Next, let’s talk about user ROI. This is an angle that few people talk about, but it is actually the key factor in whether your users choose to play with you when they vote with their feet. They are your seed users and the baton of subsequent fission.

For to C promotion methods, users are your advertising channels, and the user's ROI, the cost item is the consumption of social currency, and the income item is the amount of money saved from coupons. Although these two indicators are difficult to quantify, by referring to the user sharing rate and the user's fission coefficient, you can basically determine which users buy into this gameplay and which users are bought into by their friends.

On the other hand, this calculation formula can guide us to optimize the solution, such as reducing costs. Can we make some "altruistic" designs, for example, friends can also get a coupon, and the coupon itself is hardcore enough and can hit the products that users need.

To summarize the above content (it’s really old fashioned… I draw a key point every three steps to strengthen my memory), when we do a promotion activity, superficial things, friendly interactive links, and pleasing visual design are important, but the inner things determine whether users will play with us and how long we can play. There are several roles in your plan, and you need to look at the ROI of each perspective separately. Of course, there must be ROI for the main line, but “good for everyone” is the real good.

2. Channels: Users as channels and targeted channels

After talking about promotion, let’s talk about “channels”.

Ye Guofu of MINISO said that users are channels, which seems to be correct in the online environment. After all, thousands of users can be used by me because of fission.

But the reason why Mr. Ye can summarize it simply is that MINISO itself is a big brand with recognition and mind in the category industry.

Firstly, the existing user base is large enough, and secondly, with the brand awareness, there are many potential users, so there is nothing wrong with this statement. However, for most small and medium-sized platforms or enterprises, there is no leverage for integrating product and effect. Considering the time cost, it is an efficient way to go through market expansion and channel placement in the early stage.

After all, if there are no fish in the fish pond itself, it is impossible to attract fish from the neighboring pond through high-quality fish feed.

Therefore, the idea of ​​user as channel is to C idea; and targeted delivery channel is to B idea.

1. Users are channels, and seed users are the center of the circle

In fact, we have already introduced some prerequisites for this method as a channel before. Let me continue to introduce some key points for making good use of this strategy.

Users are channels. One way is to bring in word-of-mouth from users through the product’s high-quality detail design, and the other way is to allow existing users to bring in new users through mechanism and gameplay design.

Here we focus on the latter:

The first purpose of building a channel is to bring in new users and new transactions.

What kind of users we hope to bring in must be related to seed users. For example, in 2018, I did an s2b2c project. The seed users were company employees. In the following nearly three months, half of the top 100 users in terms of transaction volume were company colleagues and their relatives.

Don’t underestimate the influence of seed users!

If the gameplay mechanism is a baton, the seed users are the territory that you initially define, and the center of the circle that you will subsequently define and expand.

Select seed users based on your target direction and those who have good communication capabilities. Then design different gameplay plans, or adjust different rules, look at the overall effect of reaching new users and bringing in transactions, select a plan that better matches the product and population, and then replicate it across your entire user pool.

2. Don’t force yourself to go too far; to B channels are more efficient

Before you find your perfect "seed user", the B2B channel may be a lesson you cannot avoid.

For example, a local catering merchant can place ads on platform-type channels such as Meituan, information flow-type channels such as Douyin, and local public account media channels. Before placing ads, he may consider the target user matching degree, the conversion rate of the scene, and whether it can generate brand premium.

Today's DMP systems, such as advertising platforms, are very mature and have sound commercialization mechanisms. This digital advertising method is accurate and has controllable ROI.

However, as an operator, you can actually develop broader thinking and find your own matching channels. Among them, content channels are a way of operation with great room for maneuver. Of course, it is not the same as opening an official account on Weibo, Douyin, etc. and strongly implanting advertisements in front of users every day. This method will definitely reduce user favorability very easily.

We say that the advantage of content is that it removes the commercial feel of the product itself through packaging such as text or video, thereby lowering the user's psychological defenses. Therefore, content channels are more suitable for a roundabout way of saving the country.

For example, if you are a platform related to the beauty industry, then you can open a public account or a Douyin account, produce exquisite content on topics related to women's skin care, and regularly establish an IP-based interaction, which will be more popular with users than directly attacking the official account.

Of course, we will not elaborate here on how to build a good content channel. What is important is that as an operator who understands your products and users best, you should use reverse thinking to find matching channels, serve your users well, and believe that the channels can be maximized for your use.

3. Product - Product is brand

The Internet marketing concept is: product is brand, and operation is market. Everything is digitized, and everything is centered on conversion rate.

The obvious line of our products is to replace traditional hypermarkets, social venues, etc., and the hidden line is data intelligence and network collaboration.

Products are the battlefield for Internet operations. We can accumulate user data through product design and more conveniently link upstream and downstream industries, users, etc. through informatization. This is the differentiated advantage of Internet products over traditional industries.

Therefore, the most important long-term direction is to leverage these advantages and achieve precise matching and user interaction through product design, thereby obtaining social premium, IP premium, and brand premium.

First, let’s look at the social premium. How can we leverage the social premium through product design?

In the past two years, we have been saying that social e-commerce and social entertainment products have entered a period of explosive growth.

Because the online environment naturally amplifies the social environment and makes it ubiquitous, it has become the infrastructure of online life. Group buying, distribution, sharing for free, etc. are all typical ways to take advantage of social premium.

Taking e-commerce as an example, Pinduoduo is a typical example of social networking.

A core functional point to obtain social premium is sharing. Our past experience shows that the core of sharing design is to benefit both others and oneself.

In 2018, the general manager of MissFresh South China shared a piece of data. When the benefits between the sharer and the person being shared are 1:1, the conversion effect of social communication is the best.

Whether it is group buying or distribution, these are all tools. Our core is to find the balance point of interest distribution and the subtle psychological guidance of users.

Let’s look at brand premium. In the virtual battlefield of Internet products, it seems that we have to have higher requirements on product design to obtain brand premium.

Creating festival activities can be regarded as the most classic action on the Internet to build user minds and create brand value.

The earliest Tmall Double 11 has continued to receive a premium until today because everyone assumes that the things bought during Double 11 are the cheapest.

For example, Vipshop’s brand mind, special sales and clearance sales, categories include women’s clothing, shoes and bags, etc. From the perspective of marketing positioning theory, this user psychological positioning is to help establish user preferences, build psychological accounts, and make advance payments on trust.

Generating brand premium needs to start from a more strategic positioning, and then be reflected in various tactical executions and various detail differentiations, which will accumulate in the user mind over a long period of time.

Of course, Internet companies also have simpler and more crude marketing strategies, investing heavily in this kind of user mind, such as Taobao, which has won the Spring Festival Gala bid for two consecutive years.

For offline companies, there is naturally a physical mental battlefield. Combining it with online productization will have a better weighted effect on brand accumulation.

IV. Price - Price Rules and Price Ranges

For traditional industries, pricing is more often deduced from upstream manufacturing costs and channel promotion costs in the industrial chain.

In the hands of Internet operators, because of the ability to digitize demand-side traffic, as long as there is a basic price red line range, pricing methods are more diverse, and pricing rules are more important than prices. Why did you come to this conclusion?

1. In the highly information-symmetrical environment of the Internet, making users feel that they are getting a bargain is often more important than actually getting a bargain.
2. There are many ways to play with prices. For example, coupons are a flexible pricing tool.

In terms of price, price rules and price ranges are more important for Internet products.

• The price rule is to form a user mindset by coordinating price changes and override various marketing activities. Only a stable user mindset can earn a premium for the product.
• The price range is mainly used to control costs and maintain a certain price stability.

Coupons, member discounts, group buying, member prices, etc. are all ways to play with the price level difference in the minds of users. This is the ultimate logic behind Pinduoduo's thinking, and sinking bonuses are just market advantages.

Traditional retail actually has many promotional methods. The current discounts and buy-one-get-one-free promotions are the brainchild of retail pioneers. After e-commerce and O2O services such as Meituan digitized this online system, group buying and bargaining were derived based on the record of social relationships in the digital environment, and coupons were derived based on the futuresization of goods.

However, the current marketing atmosphere has trained users to have the ability to "resist marketing." For example, what netizens criticized most about Double 11 is: first raise prices and then issue coupons to show goodwill, and then worry that some users are too smart to figure out the deal, so they make the gameplay extremely complicated.

Taking coupons as an example, how do we avoid the vicious cycle of pricing here? ——Price rules and price ranges.

In addition to maintaining the brand's pricing system, we also need to maintain the user's psychological pricing system.

What is the user's psychological price system?

That is, when I paid the cost, I really felt that I got a discount. This is reflected in the pricing rules, that is, unless there is a concentrated price reduction during a major promotion or the user has shared an invitation to receive a coupon, there will be no arbitrary price reduction.

When there is a demand to give benefits to users, it must be achieved by packaging it into an activity. What is protected here is the loss of users who have already purchased the product. It also creates a mental packaging that is "legitimate".

When prices increase, advance notice is needed to inform users of the specific time period of the price increase. Of course, this situation is relatively rare. On e-commerce platforms such as Taobao, many high-quality merchants will take care of these details when operating their stores.

This is reflected in the price range. Why do we need to maintain a price range? Because as our activities become more and more numerous and complex, our product operators who are good at handling goods may not be able to tell the specific price of the goods. The purpose of setting this price range is to control the bottom line so as not to affect the cost too much, and to maintain a certain price stability on the user side. This is also an overall closing rule.

For example, in order to compete with Pinduoduo, Juhuasuan focused on creating a "lowest price mentality" in 2019 and set a series of strict rules for merchants who signed up for Juhuasuan, in order to ensure the lowest prices during the Juhuasuan period.

On the merchant side, all operating lines within Alibaba have been greatly affected. Obviously, in order to maintain the water level difference of Juhuasuan's batch of goods, other modules, if the categories overlap, are likely to play a supporting role.

The above borrows the 4P theory of traditional marketing to summarize some of the thinking and hard skills that a high-level operator should have from the perspectives of product, price, channel, and promotion.

The Internet operation profession has a short history of development, so what has been accumulated are more methodological approaches such as means and tools, such as how to design fission activities and how to increase users, which is what we call skills. However, you may wish to learn more marketing knowledge, accumulate some knowledge on the path, and raise yourself to a higher level.

Just like why IP has become so popular in recent years, and even more powerful than a small and medium-sized enterprise, from the perspective of brand marketing, IP is actually a lightweight brand, and has better interactivity and authenticity based on the live broadcast format, so it can generate a user premium based on trust.

I also recommend that you think more about many other phenomena.

This article uses the 4P theory to learn how to perform a high-level full-stack operation. The next article plans to talk about how to cultivate users’ minds through operations.

Finally, if you feel that I have said something and have some thoughts, you may click "Reading" or forward it. You are also welcome to communicate in the background of the official account. I look forward to more exchanges.

Author: Tong Xin

Source: Tong Xin