How can crowd brands increase their business?

This article focuses on crowd brands and analyzes the differences between category brands and crowd brands through case studies, the category quadrants that cannot be infinitely extended in theory, how to extend limited categories to the extreme, and how crowd brands can create unlimited business growth.

In the previous issue, we mentioned that category brands focus on being the first in the category, while crowd brands focus on being a one-stop shop.

His logic is to operate the brand traffic pool as a private domain. In the constantly new traffic pool, he can gain insight into user needs, co-create with users, and launch new products to meet users' one-stop shopping needs.

What is the difference behind this? Let's sort it out first.

1. The difference between category brands and crowd brands

For more companies, they are eager to cover the entire population market, but they do not have sufficient capabilities to provide corresponding products/services.

The helplessness of missing an opportunity is like a kid playing the game of "grabbing snacks in mid-air" in a shopping mall in Chaoyang District. He sees a pool of snacks that could be his, but because his arm span is not long enough, he can only successfully grab three or five bags.

However, there are also some special industries that can focus on providing a product or service to cover as many consumers as possible. This is the most typical category brand, such as health beds.

In 2016, smart health beds have become popular in Europe and the United States, with a penetration rate of over 35%. However, in China, only 2% of consumers know about and have used such products.

That year, I had the honor to investigate a smart health bed company in Jiaxing, Zhejiang, Qisheng Technology. This company, known as the world's largest smart health bed manufacturer, sold more than 500,000 beds that year, with a market value of more than 20 billion yuan, covering more than 35% of the US market and ranking first for 10 consecutive years.

The smart health bed was previously called an adjustable bed. Its principle is the same as that of a hospital hand-cranked lifting bed, with the head and foot of the bed being adjustable. Qisheng Technology was the first to transform it from medical use to home use, and made many optimizations to the details of its use.

The general iterations include changing manual to electric, and changing ordinary mattresses to memory foam; then, adding a backup power supply, changing the original wired control to remote control, and making the motor equipment smaller, so that the product appearance and user experience can satisfy users.

This type of bed covers a wide range of people, including young people who care about the quality of life, middle-aged people who pay attention to health preservation, and elderly people with some chronic diseases, all of whom have certain needs.

According to the person in charge of Qisheng Technology, the wife of the company's German partner died quietly one night due to a sudden heart attack. Sadly, her husband was completely unaware of it until he woke up in the morning and was about to kiss her.

Nowadays, heart disease is becoming more common at younger ages, and the global aging population is accelerating, which is troubling every user. It has become a need to clearly understand the physical condition of oneself and one's loved ones in real time. If even oneself does not know the physical condition, who else can understand it? In fact, the bed can do it.

In 2012, Qisheng Technology began to monitor the user's health through smart health beds, including heart rate, pulse and other physical indicators. If any indicator is abnormal, the smart health bed will automatically adjust the user's sleeping position.

If someone snores, the smart health bed will automatically raise or lower the head of the bed to ensure smooth breathing. If adjusting the sleeping position is ineffective, the smart health bed will wake the user up; if the situation is more serious, the smart health bed will also notify the previously preset emergency contacts or call 120.

This is like the smart bracelets worn by young people, where operations and data are transferred to the mobile phone application. It is connected via a local area network, making the entire operation, monitoring and health big data visualization more convenient.

Of course, if we hope that such a large single product can cover as many people as possible, the quality and experience of the product itself are the foundation.

In the manufacturing process of a smart health bed, the core components need a bed frame, a mattress, a lifting plate, and a motor. These cannot be produced by a single factory.

It happens that in Jiaxing, Zhejiang, there are bed frame factories, mattress factories, and lifting board factories. These manufacturers not only serve the production of smart health bed accessories, but they are also upstream suppliers of other home furnishing companies, providing customized product components to companies.

As for the motor, which is the most important part of smart healthcare beds, OKIN is Qisheng Technology's upstream supplier. OKIN is a German-funded enterprise and an important member of PM, the creator of linear actuators. Its exquisite craftsmanship, globally unified raw material standards and quality standards, advanced production lines and quality testing equipment are all recognized by the industry.

Of course, the motors it produces are also the smallest and best quality among their peers.

In October 2019, Qisheng Technology was listed on the Shanghai Stock Exchange, known as the "first stock of smart electric beds". Its issue price was 44.66 yuan per share, and it hit the daily limit on the first day.

However, through its prospectus, it was discovered that bed frame factories, mattress factories, lifting board factories and even the German company OKIN all belong to Qisheng Technology.

This also reflects a problem. This model of entering the target market with a single product category requires all resources to be concentrated on creating products. Once your product has problems, the trust of the entire market will drop sharply; once your product is replaced by another brand-new product, your performance will also decline sharply.

This is a big game.

The counterpart of category brand is crowd brand, which can be understood as "multiple categories for a single crowd". The brand provides various products and services needed by a certain group of people.

This is a bit like Meituan Dianping we talked about before, which anchors the platform to people who come to eat, drink and have fun. If they need takeout, it will launch takeout services online, and if they need a taxi, it will provide a taxi function.

But for this small Internet giant, the population covered by Meituan Dianping is not small enough.

bebebus, a domestic maternal and infant brand founded in 2019, focuses on a more precise target group.

Shen Ling, co-founder and CEO of bebebus, once said that the company's early user base was focused on young mothers between the ages of 25 and 30, providing them with various differentiated products for parent-child, travel and other usage scenarios.

What's more interesting is that bebebus also targets high-end users among young mothers between the ages of 25 and 30. This brand is not as cheap as other domestic brands. Bebebus's baby crib costs 4,180 yuan and its baby stroller costs 4,980 yuan, which is 2-3 times the price of its peers.

In 2019, the brand launched its first baby stroller. Within a month of its launch, half of its users entered the store through searches on Tmall; within three months, sales exceeded 10 million yuan.

During the 618 shopping festival in 2020, bebebus baby strollers’ sales on Tmall exceeded 10 million, ranking first in sales of baby strollers.

During the 618 event in 2021, bebebus’ highest single-day sales on Tmall reached nearly 40 million, and total sales during the event reached nearly 100 million. Throughout the first half of the year, its omni-channel sales have exceeded the nearly 200 million revenue for the whole year of 2020.

What explorations has bebebus made around such a small circle? In summary, it is to use the high-end pricing system as an index to guide differentiated products with high quality and high experience.

The cognitive gene of domestic brands: lack of high-end products. This is not just for maternal and infant brands, but also for cars, home appliances, mobile phones, cosmetics, and even tea cups.

But in the past two years, the rise of domestic brands is changing this fact.

First, the market share of Chinese brands is increasing. According to statistics from the Alibaba Research Institute, 72% of the online market share in 2019 was occupied by Chinese brands.

Secondly, the attention paid to domestic brands has increased. In 2021, consumers' attention to domestic products generally reached three times that of foreign products.

This provides a mass base for emerging domestic maternal and infant brands to occupy the high-priced vacancy that is still absent. But the question is, why is it the maternal and infant brand Bebebus that can sell a baby stroller for 4,980 yuan?

Back 30 years ago, the business world had a similar question: why could Starbucks sell a cup of coffee for $5?

In the early 1990s, Starbucks' leaders had a vision to sell coffee for $5 a cup.

This vision was absurd in the industry at the time. The average price of a cup of coffee on the market was 50 cents. $5 was unthinkable and absolutely impossible!

So how do they do it? The answer is the packaging principle.

First you take out a box and then write a high price on it. In Starbucks' case, they wrote a price of $5 on the cup. The same principle applies to the cup and the box.

Once you have a box and a high price on it, you start to think, what do we need to put in this box to make that price worthwhile for the customer?

This process will open your mind and force you to think big. This method will break your incremental mental model.

They used packaging to completely differentiate themselves from their competitors. They realized that in order to get people to happily spend $5 on a cup of coffee, they needed to create a completely different consumer experience and offer something better and beyond the norm.

To make the $5 worth it, they decorated the cafe very comfortably and elegantly, with leather sofas and a roaring fireplace, and they offer dozens of high-quality coffees for you to choose from, which are prepared in just minutes after you order.

So now people are lining up to buy it, the price is $5, and everyone seems to like it. Customers think in their minds that it's worth every penny.

The packaging principle is the way of thinking that all corporate "chief pricing officers" and product managers should possess.

Take out a baby stroller and write a price of 4980 yuan on it. So, what kind of creativity needs to be packed into this baby stroller to make this price worthwhile for customers?

First of all, bebebus needs to think clearly about what customers need?

Currently, the maternal and infant market is undergoing a generational change in the consumer population, with young parents born in the 1990s and 1995s becoming the main consumers.

The growth environment of this group of people is very different from that of the previous generation:

First, GDP has increased almost 40 times since 1900, and their views on money and consumption have become rational and advanced.

Second, the Internet has become another real-time growth environment for this group of people, and the traditional offline information asymmetry has almost disappeared.

Third, with the average education level of undergraduate students, the purchasing decisions of highly educated young people are more individual and rational.

Fourth, born in an era of rapid globalization and vigorous national strength, we are more confident in traditional culture and domestic products.

In summary, this group of people can afford high-end products and are not so impressed by the previous low-end stereotypes of domestic brands. When making purchases, they not only look at the impressive appearance, but also calmly compare the quality.

The more such market groups there are, the smaller the impact of external marketing and rhetoric will be, and the more conducive it will be to the development of brands that focus on making ingenious products.

Based on the needs of this group of people, bebebus began to throw ideas into the box.

The first step is to break the industry inertia of the stroller manufacturing industry.

The survey shows that when purchasing maternal and infant products, families with mothers and babies attach 74.8% and 39.5% importance to product quality and materials respectively, while only 33.0% attach importance to price.

This means that most families with mothers and babies would rather spend more money to buy high-quality mother and baby products with guaranteed quality.

But what is the traditional practice in this industry? Almost the same as in traditional furniture, home appliances and other industries.

In fact, the profits of the manufacturing industry have been so low that it is hard for us to imagine. This is the direct result of the price war started by e-commerce. Products have no bargaining power, and manufacturers can only continue to reduce costs, so that domestic brands are moving towards the low end.

This is actually overdrawing China's manufacturing.

When a new brand emerges and people are eager to buy good accessories, they may not be available in China because there is no such demand. The industry has formed an inertia of "not making good products but making them cheap". Over time, naturally, they don't know how to make good products.

Most companies rely on inertia to survive, even if this inertia will lead the company into the abyss.

This inertia of Made in China has slowly led manufacturing companies into a quagmire of overcapacity. As soon as a company makes money, it buys factories and equipment. Two months later, when the factory next door buys newer equipment, the new equipment they just bought is already outdated.

After breaking the rigid price limit, bebebus has made new breakthroughs in product quality. For example, to improve the safety of the stroller, bebebus did not choose the traditional three or two tube solution in the industry, but chose to use a large injection molded backrest.

In terms of design implementation, due to the limitations of traditional supply chain solutions, bebebus also chooses to cooperate with high-quality supply chains in the industry and even cross-border supply chains to complete it.

It is said that bebebus's strollers and child safety seats chose to jump out of the vertical supply chain of strollers and instead cooperate with the automotive-grade supply chain for production.

Based on the above insights into the industry, product needs, and experience considerations, bebebus has created seven scenario product lines for the young generation of high-end mothers aged 25-35:

• bebebus Travel (travel scenarios): baby strollers, safety seats, baby carriers, mother bags, baby strollers
• bebebus Feed (feeding scene): children's tableware, baby bibs, complementary food trays, children's dining chairs, milk bottles, milk powder boxes, constant temperature milk mixers, complementary food machines
• bebebus Care (cleaning scene): children's bathtub, children's washbasin, toilet, baby wipes, baby laundry detergent, shower gel, shampoo, lotion
• bebebus Home (home sleep): strollers, baby bedding, playpens, cradles, sleeping bags, nursing lamps
• bebebus Sport (outdoor sports): balance bikes, electric bikes, scooters, bicycles
• bebebus Toy (educational learning): beach toys, building block toys, educational toys
• bebebus Game (indoor games): strollers, twisting cars, crawling mats, playpens, slides

2. Category quadrants cannot be extended infinitely in theory

Can bebebus expand its product categories? If it wants, it can.

Just like Meituan Dianping, group buying, take-out, hotel and travel, power banks, taxi-hailing... Wang Xing said that one of the logics behind Meituan's taxi-hailing business is based on user demand. Users need to travel to go to restaurants and need to take a taxi.

At that time, someone raised a question: there would be a problem with extending the people-centered quadrant, which is blind extension - people have too many needs, do you want to do them all?

Just like Amazon once made mobile phones, they also made search and Prime. Caijing also asked Wang Xing, users may also need to look at Taobao, why don’t you do Taobao?

For an Internet giant like Meituan, it is indeed not impossible, otherwise there would be no Meituan e-commerce now.

But Wang Xing believes that the extension of business quadrants is actually based on capabilities, just like the capabilities of online car-hailing and food delivery are very similar - they are more offline-oriented, with locations in various cities, using the Internet to improve experience and reduce costs.

In fact, theoretically speaking, although the boundaries of a company's product categories are centered around a specific group of people, they cannot be expanded indefinitely.

Ronald Coase, the founder of modern enterprise theory, gave four reasons to explain this statement from the perspective of organizational costs:

① The returns from entrepreneurial talent may be reduced.

When the scale of the enterprise expands, the entrepreneurial talent is limited. The larger the scale of the enterprise, the wider the spatial distribution of the entrepreneurial organization, the greater the possibility of entrepreneurial decision-making errors, and the lower the profit.

② Non-optimal use of production factors.

For example, when the scale of an enterprise expands to a certain extent, the middle and lower-level managers will focus a lot of energy on non-productive activities such as lobbying senior executives and building interpersonal networks in order to maximize their own effectiveness. This will directly lead to efficiency loss and may also cause senior executives of the enterprise to make wrong decisions due to the interference of distorted information.

③Increased waste of resources.

For example, the larger the scale of an enterprise, the more complex the interpersonal relationships within the enterprise, and the more serious the human and material resources consumed to coordinate interpersonal relationships.

④The supply prices of certain production factors rise.

Small businesses may have more advantages than large businesses in some aspects. For example, people may prefer to be the head of an independent small business rather than the head of certain departments in a large enterprise. Thus, as the scale of the enterprise expands, the supply price of management skills will increase.

3. How to maximize the expansion of limited product categories?

Babycare is one of the most extensive brands in the crowd. As a one-stop shopping brand for new mothers, it creates products around all the needs of mothers and babies, from waist stools to paper towels and snacks, with more than 30,000 SKUs.

How is babycare done? There are two key points:

The first is the ability to manage the entire product life cycle. Through product polishing and insight into demand, on the one hand, we can extend the product life cycle as much as possible; on the other hand, we can continuously explore the second growth curve, achieve the superposition of new products one after another, and overcome the discontinuity of brand growth.

The second is the ability to manage the user's entire life cycle. The brand's management of a single user's life cycle mainly focuses on the AIPL model, namely awareness, interest, purchase, and loyalty.

Babycare is also a brand that has created many hit products. When Babycare first entered the maternal and infant market, it became a hit product because of a waist stool.

At that time, Babycare also promoted that its waist stool product was based on the successful research of KANBEL MEDICAL CENTER, with ergonomic design innovation of baby products.

As a niche product, other brands in the industry did not devote too many resources to the promotion of waist stool products. Babycare seized this mental gap and used authoritative and professional institutions such as overseas medical centers as endorsements to quickly connect "Babycare" with "waist stool" in the minds of users.

From 2017 to 2020, Babycare's waist stool sales accounted for more than 20% of the entire category. This opened up a seemingly wide gap between the brands that followed, such as Hug Bear, Love Rabbit, and Goodbaby.

After the sales scale gradually increased, some people began to question the Campbell Medical Center, and even pointed out that many of the brand's product research and development did not come from the United States. However, this did not seem to affect the sales of Babycare's later products and the establishment of its brand image.

Isn’t there a saying that goes “Scale is the antidote to all problems”? Many problems will naturally disappear if you expand your scale.

Creating hot-selling products in the category, quickly completing the category track positioning, and establishing category awareness are one of Babycare's core capabilities. In the following years, the brand has successively created hot-selling products in the field of chewing products, maternal and child appliances, feeding products, and even fast-moving consumer goods such as paper towels and diapers.

During this process, Babycare mostly explored the major pain points of small products. For example, for baby beds, they said that painted baby beds are not safe no matter how long they are left to dry, while for wet wipes, they polished the details such as thickness, durability, and resistance to breakage.

This also makes Babycare products more refined and improves the brand's premium ability. For example, the price of a single diaper is only 3.7 yuan, which is much higher than the market price. However, among the 4.4 billion yuan of diaper consumption on Tmall 88VIP, Babycare ranks in the top three.

The accumulation of these high-quality and high-priced popular products eventually resulted in Babycare's annual sales volume reaching 5 billion.

But looking back, Babycare entered the maternal and infant market through waist stools in 2014. It has been 10 years today, and its products are still among the top five best-selling baby belts on Tmall.

In addition, Babycare products are among the top 5 in Tmall's rankings of diapers, baby wipes, baby water cups, baby soft towels, teething biscuits, complementary noodles, and children's tableware.

How does Babycare extend the life cycle of its own products when the life cycle of most popular products is only one or two years or even a few months?

The explanation on the market is more inclined to the supply chain. Some media have reported that 50% of Babycare's SKUs with a life cycle of more than one year are outsourced to ODMs. Most of these factories are medium-sized suppliers, and Babycare will set aside a portion of its funds each year to invest in the production lines of these ODM factories to ensure quality control.

But for some fast-moving consumer goods, such as tissues and diapers, they need to build their own factories for production. Based on the "self-production + OEM" production model, Babycare can ensure the quality control and upstream costs of each popular product to achieve the long-term survival of the product.

But from the perspective of the foundation of business, whether users continue to pay for you is the key to the survival of all products.

All along, we have neglected the understanding and recognition of the market. Many managers have not really tried to understand the market, nor have they really cared about users.

The purpose of a brand is to attract and retain users. If a company cannot attract a certain number of users with purchasing power, it will not be able to survive. Users always have many choices to solve their own problems. What they actually buy is not the product, but the solution to the problem.

Only by working tirelessly to help users solve problems better, that is, by providing them with better functions, higher value and more convenient services, can brands survive and prosper.

To do this, brands must first understand what “better” means in the minds of users.

In other words, the reason behind a product’s long-term success is actually the understanding of the user, and the management of the product life cycle is actually the management of the user life cycle.

The brand's life cycle management of a single user is mainly focused on the AIPL model, namely awareness, interest, purchase and loyalty. We can break it down in detail:

From a cognitive perspective, Babycare mainly focuses on brand breakthrough marketing.

In addition to the earliest foreign brand genes sweeping Chinese mothers, BabyCare is still outstanding in social communication. For example, during Mother's Day last year, BabyCare established public welfare maternity and baby rooms in various shopping malls, hospitals, and railway stations, and launched the #Love2Square# topic on Weibo to call for the establishment of more maternity and baby rooms.

It is said that this topic triggered a discussion across the Internet at the time and was even forwarded by official media such as CCTV.com. This marketing event made hundreds of millions of users begin to recognize the Babycare brand.

From the perspective of interests, Babycare mainly focuses on content planting.

Guoji Data once counted the distribution of Babycare's social media-related content and found that its main distribution channels are on the three major platforms of Weibo, Douyin, and Xiaohongshu, and all of them are in the order of tens of thousands.

Data shows that the number of its associated Weibo accounts accounts for more than 50% of the total promotional content, while the number of Douyin-associated videos accounts for more than 30%, and the number of Xiaohongshu-associated notes accounts for more than 15%.

In terms of the proportion of platform interactions, Douyin has the highest interaction volume, followed by Xiaohongshu, accounting for 67% and 21% respectively. The activity of Weibo users is relatively low.

On Douyin, mother and baby KOLs such as @隔壁柯妈, @花生爸爸冰糖妈, @小石妈妈, @兔子妈妈说育儿, etc., all recommend Babycare products to their fans. In the comments under these short videos, the keywords that appear more frequently are: "It looks so good", "I'm tempted", "I've got it", "I really want to buy one"...

From the perspective of purchase and loyalty, more attention should be paid to Babycare’s community operations.

User loyalty is reflected in purchases, repeat purchases, cross-category purchases, recommendations to new users, etc. The foundation of these is the product itself, but the added bonus is also in user community operations.

Babycare's community is not just a centralized processing point for issuing coupons and promoting new products as people traditionally think. After accumulating more than 2.5 million members, the key to gaining user loyalty is to truly serve users and reflect their value.

For example, Babycare's popular brand video "For the Only You in This World" shows the real appearance of each other from the perspectives of mother and baby. These video clips are actually real stories collected by Babycare from community users, allowing users to participate in the brand's dissemination and create valuable content for the mother and baby community.

For example, a mother approached Babycare and said that her baby had been using a toy of the brand, which had even become one of the important roles in his growth, but now the toy was lost.

At that time, this product had been off the shelves for a long time and could not be purchased. Therefore, Babycare customer service staff found the raw materials and remade a product for the baby who lost the toy.

These services to users in the community are the key to truly achieving brand loyalty.

4. How can crowd brands create unlimited business growth?

Judging from the operations of bebebus and babycare, you will find that the key for crowd brands to gain incremental business ultimately comes down to one word - crowd operations.

Through the AIPL model, Babycare has gained user loyalty in the brand mind. But this is far from enough. All marketing should issue action instructions to get users to buy, repurchase, and even invite new users to buy together. This is the key to the survival of the brand.

Remember that the purpose of a brand is to attract and retain users. If you cannot attract a certain number of users with purchasing power, the company will not be able to survive.

When it comes to user marketing that requires action, the RFM model is a classic.

Karmaloop is a US fashion e-commerce giant that started operating in a basement in 1997. At its peak in 2013, its annual turnover exceeded US$127 million, ranking first in the industry and becoming the largest fashion brand distribution platform in the United States.

But during this period, founder Greg Salk made a very basic mistake and started a traffic war in order to achieve rapid growth.

Whether it is making TV programs or laying out new niche markets, it is all to occupy the traffic entrance. In addition, a lot of manpower and material resources are invested in Google Adwords, PR, offline stores, print media, etc.

However, the users brought by the extensive traffic were not accurate. In order to improve retention and promote monetization, Greg actually introduced discount promotions. The result was obvious: the high-value old users of the original platform were lost, and the new users attracted by high prices had weak purchasing power.

In the end, Karmaloop was sold to Comvest, a private equity firm, for $13 million, a price that was only its turnover in the past month.

After Comvest took over Karmaloop, it fired CEO Greg and brought in a powerful CMO, Drew Sanocki.

The first thing Du Lu did was to activate users and convert low-value users.

He believes that companies should not invest the same marketing costs in all users, but instead find the deviation factors that prevent ordinary users from becoming high-value users and invest the greatest effort to resolve the deviation.

So Dulu studied Karmaloop's transaction data for the past 10 years and analyzed it using the RFM model, which stands for Recency, Frequency, and Monetary.

Through these three data points, Dulu selected high-value users who made multiple purchases, spent a lot, and rarely returned products. This group of people only accounted for 1.3% of the visits, but contributed 43% of the revenue.

In summarizing the common behaviors of these high-value users, Dulu found that in 80% of cases, a user would place an order twice and would complete the second order within 30 days after the first order.

This means that most low-value users will not make repeat purchases within a 30-day period.

The solution is: if a user places an order and does not place a second order within the next 30 days, it is increasingly unlikely that they will become a high-value user. But if they place an order within 30 days (which is in line with ideal user behavior), then they have a great chance of becoming a high-value user.

In other words, Karmaloop needs to guide users to repurchase within 30 days in order to convert more and more high-value users.

At this time, Dulu came up with two plans:

The first is that if the user has the opportunity to complete a second purchase within 30 days, then promote high-profit products to him.

The second is that if the chance of users completing a second purchase within 30 days becomes smaller and smaller, then use larger discount information to stimulate users.

In daily operations, Dulu no longer issues coupons to users who consume within 30 days. When the period exceeds 30 days, different levels of discounts will be issued according to the interval period.

Specifically, within 30 days of the user's first consumption, the original-priced goods will be pushed to them as information interaction on a daily basis; if there is no repeat purchase after 30 days, a 10% discount coupon will be pushed to them; if there is no repeat purchase after 45 days, an 20% discount coupon will be pushed to them; if there is no repeat purchase after 60 days, a 30% discount coupon will be pushed to them.

Once the user makes a repeat purchase at a certain stage, the entire operating mechanism will return to the starting point.

With step-by-step communication and motivation, Karmaloop's high-value users began to grow gradually. What Dulu needs to do is to activate and retain them.

At this time, Dulu applied the lifecycle marketing strategy, which is to deliver the right information to the right people at the right time.

Step 1: For new users, guide them to make their first purchase.

After Duru took over Karmaloop, he learned that 90% of all Shopify stores with revenue exceeding $1 million relied on Instagram for marketing.

Therefore, he selected someone from the team to be responsible for the operation of platforms such as Instagram, and constantly sought cooperation opportunities with KOl, hoping to attract more new users to join.

In addition, he also found that there are many Internet celebrities called "haulers" on Youtube: they often shoot unboxing reviews of trendy brands and explain how to wear clothes. Naturally, the fans of these Internet celebrities must be Karmaloop's precise customers.

Therefore, Karmaloop signed a large number of haulers, gave them its signature products for evaluation, and jointly organized lucky draws and activities such as "Follow Instagram and leave a message to get a trendy brand for free."

When users register or subscribe to emails, the "Welcome Series Emails" will be immediately launched, which uses 5-7 emails to gradually build brand trust, convey Karmaloop's value, and promote some signature products.

After the welcome phase, many users are ready to shop. However, there is an "invisible killer" between building trust and final payment - the shopping cart abandonment rate. Data from 2016 shows that the average abandonment rate of global e-commerce is as high as 77%.

Therefore, Dulu set up a series of emails to recall abandoned cart users.

The second step is to keep users active through the VIP program.

For those active users, Karmaloop has proposed a VIP program. Once the user's consumption behavior is similar to that of high-value users, they will be classified as VIP.

VIPs can participate in corresponding specific marketing and even receive thank-you letters from the team.

Step 3: Recapture lost old users.

During the heyday of Greg's tenure as CEO, the users who supported Karmaloop's rapid development were actually the most valuable old users in Tru's eyes. Unfortunately, under Greg's traffic strategy, these old users continued to churn out, leading to Karmaloop's bankruptcy.

If Karmaloop can regain these old users, its growth will surely explode.

To this end, Dulu enabled A/B testing, dividing the lost old user group into many groups of 10,000 people and gradually testing different plans.

AB testing means creating two (A/B) or more (A/B/n) versions, allowing visitor groups (target populations) with the same (similar) composition to randomly access these versions in the same time dimension, collecting user experience data and business data from each group, and finally analyzing and evaluating the best version for formal adoption.

During testing, Karmaloop tried discounts ranging from 10% to 30%, cash back coupons for next purchase, gift cards, and even handwritten letters and phone calls from the CEO.

After many attempts, a large number of old users began to recognize the new Karmaloop and gradually returned to this trendy e-commerce platform.

The final goal is to increase revenue and achieve profitability.

Karmaloop's approach is mainly to increase the average order value. Data shows that 35% of Amazon's revenue comes from cross-selling. That is, when a user has just purchased product A, product B will be recommended to him through algorithm association.

This is one of many ways to increase the average order value. The most famous example is Walmart bundling beer with diapers.

One day in the 1990s, a cashier at a Wal-Mart supermarket was surprised to find that when customers checked out, there was always beer and diapers in their shopping carts. After investigation, it was found that these were all dads.

First, in terms of time, they buy diapers and drink beer more frequently on weekends than on weekdays; second, in terms of age, the children in the family are no more than two years old; third, they like to watch sports programs, and they watch them while drinking beer; finally, American sports programs are mostly concentrated on weekends.

Therefore, when a young mother needs to change her child's diaper on the weekend, she usually asks the dad who is watching the game to buy it. When the dad goes out to buy diapers, he will bring back a bottle of beer.

Later, Walmart would put diapers and beer together, and sales of both increased.

Using similar algorithms to recommend different products, Karmaloop’s revenue increased by 30% in less than three months, and the ROI of its customer lifecycle marketing activities reached 500%.

Finally, Comvest turned Karmaloop into a profitable company in the 10th month after taking over.

Author: Huang Xiaojun, WeChat public account: Public account: Jingyan Brand Laboratory (ID: JingyanLab)