What is the value of private domain users?

The article explores in depth the measurement and improvement of private domain user value, as well as the challenges and solutions that companies encounter in private domain operations. Through actual case analysis, the article reveals the three key indicators of private domain user value: sales value, marketing value, and service value, and provides practical strategies and methods to optimize private domain operations.

Since measuring the value of private domain users is so important, why do many companies not do this? What difficulties do they encounter?

In the process of private domain operations, enterprises face several key difficulties, and solving these difficulties is crucial to realizing the enhancement of private domain user value.

Yang Xin, former member manager of Guoquan Food Club, analyzed this based on his experience and industry experience. First of all, the cognitive problem of store managers is an important challenge. Store managers must understand the concept of value synchronization from the perspective of business logic, that is, the output obtained after investing in employee costs and marketing costs.

Value synchronization is the first thing that needs to be established and promoted within the team. This is also one of the four key words in global operations.

Secondly, the cost-effectiveness of digital investment is also a difficult issue. Enterprises need to clarify the difference between the measurement of private domain value and public domain value and resolve the difference between the two. The short-term value of private domain operations may not be as quickly apparent as that of public domain operations. It takes a medium- to long-term process to gradually generate incremental value. At the same time, although public domain investment can bring short-term performance improvement, its growth potential may be limited and there is an obvious ceiling.

However, despite these difficulties, some companies are still exploring indicators to measure user value, and we have also summarized three major indicators to measure the value of private domain users.

The discussion on this content comes from the white paper "Measuring and Improving the Value of Private Domain Users" written by Jianshi in collaboration with partners such as Xiaoetong, 233 Brand Private Domain, and Youzan New Retail. It may serve as a reference for companies to measure and improve the value of private domain users.

In addition, Jianshi’s latest white paper “Solving Global Problems” was officially released. The new white paper focuses on actual combat and cases, including seven key links in the global domain.

1. “Sales value” oriented

The most intuitive way to measure the value of private domain users is sales value, which is also a basic goal for most brands to establish private domain projects.

In the process of "sales value"-oriented, the value of private domain users is usually reflected in the following aspects:

1) Private domain increases GMV value.

This is the most common value manifestation of private domain users in enterprises, that is, it directly contributes to the GMV of the enterprise, which is also a point that many enterprises are very concerned about. The commonly used formula for sales GMV value is: User * ARPU = GMV

The User here refers to the [effective purchasing user] in the private domain, and the ARPU value is the [per capita contribution of purchasing users in the entire domain within the period]. Calculating the sales value of private domain users in this way is one of the more reasonable ways.

Correspondingly, to increase the number of users, it is necessary to improve the quality of users during recruitment and maintain effective user activity in the future; and to increase the ARPU value, it is necessary to continuously improve the quality of service and marketing, while linking with various sales channels to drive customer orders and consumption frequency.

2) The value of directing traffic from private domains to stores.

Take the case of "Baodao Glasses" for example. When determining the private domain positioning of Baodao Glasses, since the focus of their operations is on teenagers and their parents, they do not pay too much attention to direct transactions or conversions within the community. Instead, they focus more on reminding teenagers to go to the store to check their eyesight.

The logic behind this strategy is that the vision of teenagers changes relatively quickly, and may change every three months on average. Therefore, Baodao Glasses reminds teenagers to go to the store to check their vision in a timely manner through private domain communities, which is very attractive to users.

At the same time, they also consider that when teenagers visit the store, they may be accompanied by their parents or elders, who may try on reading glasses, while young parents may try on sunglasses or contact lenses, etc. This may lead to the possibility of consecutive orders and repeat purchases.

Through this operation, the number of customers visiting Baodao Glasses stores increased by 7 times year-on-year, the repurchase rate increased from 17% to 60%, and word-of-mouth referrals accounted for 40% of the total performance.

The potential reference is: behind every user is a social network. The private domain is not just about operating a single user, but also about reaching his social network through the user.

3) Private domains assist stores in increasing their value.

In addition to attracting customers to the store, private domain value is also common in assisting store growth. Let’s take “Super Hair Care” as an example to illustrate that it is mainly reflected in the following aspects:

— Data-driven location decisions: The data resources generated by private domain users, such as location information, visit frequency, and behavior patterns, provide brands with a basis for scientific decision-making. Through the behavioral data and feedback of private domain users, Super Hair Care can accurately identify the geographic location and consumption habits of the target customer group, so as to make decisions that are more in line with market demand when selecting new store locations.

— Improved sales per square meter: The word-of-mouth communication capabilities of private domain users can help brands quickly establish brand awareness in specific areas and help improve the sales per square meter of stores. By optimizing store layout and service processes, smaller stores can also provide efficient services, reducing operating costs.

— Shorten the store payback period: Private domains promote the integration of online and offline, using online behavioral data to guide offline site selection, layout and operations, and achieve effective conversion of traffic. At the same time, the high loyalty and high repurchase rate of private domain users help stores quickly recover their costs.

4) The sales value of public and private domain linkage.

The linkage between public and private domains, such as directing users from the private domain to e-commerce platforms for transactions, is also one of the angles to measure the value of private domain users.

Many brands may still use traditional advertising methods for promotions and welfare rewards at key points. But for many consumers, a warm shopping guide reminds us that there will be a big promotion or sale at a certain time, and provides a convenient way to scan the QR code to buy directly, which is undoubtedly more warm and easy to accept.

2. Develop marketing value

In addition to sales, the marketing value of private domain users is also a direction that brands should focus on. In the process of "marketing value", the value of private domain users is usually reflected in the following aspects:

1) Increase brand exposure and word-of-mouth marketing

Users are the most authentic consumers, and the content and UGC contributed by consumers are the best amplifiers for brands.

When these consumers share their true feelings in private communities and other public platforms, the effect is usually far better than advertising. Therefore, brands can try to cultivate and motivate these key opinion consumers in the private domain and make them powerful brand communicators. Through case studies, we found that private domain KOC has the following key values ​​and functions:

KOCs act as active members in private communities. By sharing usage experiences, answering consumer questions, and participating in community discussions, KOCs effectively enhance the community's activity and cohesion. Their loyalty and enthusiasm for the brand can infect and drive other consumers.

KOC's real product experience and recommendations build a highly trusted word-of-mouth communication, which is extremely valuable in private domain marketing. Their personal experience and evaluation can often resonate with users, effectively improving product trust and purchase conversion rate.

KOC also cooperates with brands to participate in content co-creation. For example, they participate in product testing, provide ideas, and make tutorials. The dissemination of these co-created contents in the private domain not only increases the brand's affinity and persuasiveness, but also provides companies with a more stable and lasting competitive advantage. At the same time, the close connection between KOC and brands makes them a bridge of communication between consumers and brands, and they can promptly provide brands with feedback on problems and suggestions in product use, helping brands optimize their products and services.

Therefore, in private domain operations, brands and enterprises should recognize the unique value of private domain KOCs and adopt corresponding strategies to cooperate with them to achieve the multiple goals of brand communication, product promotion and user loyalty enhancement.

2) New product test field and cold start promotion

Usually, private domain communities are mainly composed of old customers and fans. Old customers are usually very familiar with products and ingredients. Brands can invite them to share their opinions and experiences in the community to obtain valuable feedback and make improvements in a timely manner. Brands can also directly promote new products through old customers and fans and give full play to their value.

Therefore, it is very effective to verify and promote new products in private domain communities. For example, Jie Rou not only successfully launched its product events through private domains, but more importantly, private domains have become an important channel for collecting user feedback and behavior data, which are crucial for product improvement and innovation.

Jie Rou's private domain strategy goes beyond traditional marketing methods. It is regarded as the company's test field for testing new marketing strategies and product logic. Through private domain, Jie Rou can avoid direct price competition with large platforms and focus on in-depth communication with users and product co-creation. This strategy has enabled Jie Rou to maintain its leading position in the fast-moving consumer goods industry and has also brought long-term strategic benefits to the company.

3. Private domain is the best touchpoint for providing service value

In addition to sales value and marketing value, service value is also a key indicator for measuring private domains. Service value is not only reflected in the reshaping of corporate workflows and the improvement of upstream and downstream service efficiency, but also in the improvement of user service efficiency.

In the process of "service value" orientation, the value of private domain is usually reflected in the following aspects:

1) Reshape enterprise service models and workflows

Many brands have reconstructed the service models and processes of the entire industry by serving private domain users.

Different from other travel service platforms, Ctrip uses WeChat for Business to establish a long-term and stable connection with users, seizes every opportunity to be "needed by users", and provides users with one-stop services, such as booking scenic spot tickets, arranging airport pick-ups, etc. At the two key moments when users are looking for guides and booking air tickets and hotels, it guides users to add private domain friends, and recommends suitable travel plans through in-depth communication and understanding of potential needs, thereby improving order conversion rates.

In addition, Ctrip also created travel groups to meet users' needs during travel and create more business opportunities. Finally, while reconstructing the service model of the entire industry, Ctrip also increased the order conversion rate by 8 times and the average customer price by more than 30% through private domain services.

2) Improve the service efficiency of the industrial chain

In the case of "Leed Lighting", private domain value plays an important role in improving supply chain management and industrial chain coordination.

Improve service efficiency and operational efficiency: The feedback and demands of private domain users can promote the collaborative work of upstream and downstream industrial chains. For example, through private domain user feedback, NVC Lighting has integrated more than 30 digital systems and tools that have the most direct impact on private domain operations on the enterprise WeChat platform. The use of such integrated tools not only improves the convenience of services, but also enhances the transparency and control of the supply chain.

Improve delivery efficiency: By establishing close connections with users through private channels, NVC Lighting can respond to user needs more quickly, shorten delivery cycles, and improve delivery efficiency.

Supply chain system optimization: Private domain users provide direct market feedback to NVC Lighting, and the large amount of data generated provides data-driven decision support for NVC Lighting, helping NVC Lighting make more scientific decisions in supply chain management and industrial chain collaboration.

Through these measures, NVC Lighting not only improved its supply chain management capabilities by utilizing private domain operations, but also promoted the synergy of the entire industrial chain, achieved more efficient resource allocation and faster market response, thereby maintaining a competitive advantage in the fierce market competition.

3) Improve service response speed and efficiency

User service in the private domain is the original intention of an enterprise to establish a private domain system. It is also the initial reason and main purpose for private domain users to enter the enterprise's private domain. High-quality user service is the reason why the enterprise's private domain can develop healthily and stably, and private domain users also feed back to the enterprise in terms of user service quality.

Improve service response speed: Private domain users can communicate with brands directly through private domain channels, such as corporate WeChat, social groups, etc. This enables brands to respond to user needs and issues more quickly, and even provide users with personalized services. For example, brands can provide customized services based on users' historical behavior and preferences.

Enhance user loyalty: Private domain users will be more loyal to the brand because they enjoy a better service experience, which will in turn have a positive impact on the conversion and repurchase of the company's private domain users.

Maximize user lifecycle value: Private domain user operations help maximize user value by providing continuous service and care throughout the user's life cycle.

Finally, it is worth noting that when it comes to the three major values ​​of sales, marketing and service, people from different industries and different private domain leading departments will have different views and preferences.

For example, in the beauty and retail industries, the focus is more on the overall sales value, but it is difficult for fast-moving consumer goods brands to monitor user sales across all channels. However, the user's UGC contribution to the brand is very important, so the private domain of fast-moving consumer goods may pay more attention to the marketing value brought by the private domain. In addition, the durable consumer goods industry does not have such a high repurchase rate, so what the private domain needs to do is to use better services to make users more sticky to the brand.