Using “neighborhood committees” to achieve differentiated competition, how does NIO’s brand community create value?

Undoubtedly, in the increasingly competitive field of new car-making forces, NIO is definitely an unavoidable topic. After studying Zeekr in the last issue, an enthusiastic reader immediately asked me to write about NIO in the background. In this article, we will analyze how NIO's brand community creates value.

Let’s first take a look at NIO’s recent performance, which can be described as mixed:

According to official data, NIO delivered 19,329 new cars in August, up 81% year-on-year. Although August's sales fell slightly from the record high of 20,462 in July, it is still an excellent performance.

However, from January to August 2023, NIO delivered a total of 94,352 new cars. Nearly two-thirds of this year has passed. Compared with the 245,000 sales target set by Li Bin at the beginning of the year, only about 38.5% has been achieved. The main reason is that the sales in Q1 and Q2 were mediocre. 23,520 units were delivered in Q2, a year-on-year decrease of 6.1% and a month-on-month decrease of 24.2%. The latest financial report released a few days ago showed that the operating profit in Q2 was a loss of 6.074 billion yuan, and the operating profit in the first half of the year was a loss of 11.186 billion yuan.

So, this article will analyze in depth from the perspective of marketing and operations why NIO can set new historical highs and what challenges and crises it faces at the same time.

Key points :

NIO’s “User Relations” team, which is responsible for owner operations, is evaluated based on user satisfaction, and is not directly responsible for converting new customers.

• The new customers brought by "Ripple" are the natural result of the car owners' operations, not the purpose. Taking conversion as the purpose will make it difficult to build trust and reputation.
• The "User Relations" department is like a neighborhood committee, connecting car owners and various departments within the car company.

NIO has built a decentralized brand community, which not only creates value for users, but also provides a platform for the value that may be generated between users.

• NIO already has many community activities that have formed a model of "brand setting the stage, users performing", and car owners have a strong sense of ownership.
• NIO’s brand community uses cars to make friends. The value of the network of contacts formed may exceed the value of the car itself. The accumulated user relationships will also become NIO’s most core asset.

The "water" in the pool in the ripple model is limited. If you want new "water" to be injected into it continuously, you still have to rely on the traditional funnel model.

• The aggregation effect is the biggest growth point for the linkage between public and private domains in the future. In addition to further optimizing the ratio of front-end delivery, it is more important to focus on the middle-end link and do a good job in operating leads or potential customers.
• NIO can find new value in performance advertising. It is no longer limited to simply collecting forms. Instead, it plans and starts before collecting forms, uses public domain content as a carrier to reach users to achieve a grass-planting effect, and then cooperates with private domain tools to gradually deepen potential customers' intention to buy a car. Ultimately, the public and private domains form positive feedback with each other, greatly improving the effect of the entire chain.

PART1 How does the “Ripple Model” help NIO build a moat?

There has always been a legend in the industry that NIO has built its empire with "user operations". For this unconventional skill, both traditional car companies and new car-making forces have overtly or covertly wanted to learn a little bit about it. However, many years have passed, and people still know the results of NIO's user operations but not the reasons behind them.

Therefore, in order to gain a deeper understanding of NIO’s unique skills, Growth Black Box interviewed Shen Hong, Assistant Vice President of User Relations at NIO.

1.1 “Ripples” are a result, not a goal

The "ripple model" may sound a bit old-fashioned, but the essence of NIO's user operations must start with the "ripple model". For many years, NIO has been adhering to the principle of "old customers bring new customers", using service to drive word of mouth, and then using reputation to promote sales. There are also reports that 70% of NIO's sales once came from old customers bringing new customers.

Such a high fission index, let’s not talk about how NIO achieved it, just how it was calculated is enough to arouse our great curiosity.

However, to our surprise, the "user relations" team led by Shen Hong was not directly responsible for the indicator of converting new customers . To be precise, what they cared about first was whether they had served the existing car owners well.

This is somewhat similar to the after-sales process of traditional car companies, but not exactly the same. Since NIO is a direct sales model, it has no dealers in the past and does not plan to have dealers in the foreseeable future. From an inherent perspective, it determines that its relationship with users is closer and more direct than the traditional dealer model, so it is easier to obtain user experience.

NIO currently has 400,000 car owners and several million general users. Shen Hong said that making these users satisfied is the team's work goal. "User satisfaction" sounds a bit difficult to quantify, but it is actually the only assessment indicator for NIO's old customer operations.

However, unlike traditional car companies' phone tracking, NIO has borrowed more Internet methods. For example, after each contact with a user, a "casual review" page will be pushed to the terminal, and hundreds of thousands or even millions of feedbacks will be received every month. This will not disturb users too much, but also get more authentic reviews.

In addition to collecting feedback after interacting with users, NIO's satisfaction monitoring and tracking system also includes channels such as complaint hotlines, APP-exclusive service groups, and private undercover visits, so as to provide feedback on every question, suggestion, and complaint raised by users and achieve a closed loop of service.

In fact, although satisfaction is a bit subjective, it has become the most tangible driving force of Weilai's "ripple model". There is a "trick" in the value level, that is, to clearly distinguish between purpose and result.

"We regard the users brought by Lianyi as a natural result of operation, and we must not regard it as a purpose. The purpose must be to satisfy users." Shen Hong said that many car companies have not achieved the ideal state in user operation. In addition to insufficient investment, another key reason is that they have not formed a long-term concept in value. "If you hold the mentality of converting a certain amount of output from an activity from the beginning, it is difficult to establish a mass base, not to mention long-term user trust and community atmosphere."

In this way, we can understand why Weilai’s user operation does not use NPS as an evaluation indicator, but can still achieve good NPS conversion, which is somewhat like "an unexpected success".

In addition, NIO has never completely broken away from or abandoned the traditional “funnel model” for acquiring customers (this will be discussed in PART 3), but the funnel has the characteristics of short investment, quick results, clear goals, etc., and the operation level is relatively mature, so it is difficult for competitors to distance themselves. Therefore, the successful practice of the “ripple model” has naturally become NIO’s moat.

1.2 A “community committee” that serves user satisfaction

Starting from user feedback and working backwards through the chain, we can see what the operating users are actually operating.

About seven or eight years ago, when NIO was first established, the idea of ​​user operation had already sprouted with the launch of the brand. At that time, the work related to users was divided into two main directions - user experience and user community, which is also the prototype of the main functional scope of user relations today.

"In theory, our 'user relations' department is parallel to other departments in the company, but in fact, we are more like a team standing behind all departments of NIO." According to Shen Hong, the user relations department will build a bridge between other departments and users. These departments include but are not limited to brands, models, hardware, software, algorithms, energy, after-sales, quality control, etc.

From the perspective of user satisfaction, the user relations department plays the role of a "neighborhood committee" to some extent. Based in the base camp of the NIO APP, it collects any feedback from users: product issues are distributed to the product department, back-end issues are distributed to the quality team, and software issues are distributed to the software department... After the product manager, experience manager, and algorithm engineer have solved the problems, the user relations department will feed back the results to the users.

In this process, NIO's direct sales model played a very important role, the most obvious point being efficiency .

The dealer model adopted by traditional car companies usually does not allow for direct communication with users. If there is a need to understand user feelings, it is necessary to use questionnaire tools or organize focus groups ( Focus Group, also known as group interviews, is a qualitative research method commonly used in social science research ). From survey design to delivery to collection and output report, it takes at least two or three months. In addition, if it is a multinational car company, it will also go through the steps of multinational reporting, and the time cycle will be longer. After this communication, even if the OEM has made a good improvement plan, the response to user needs is already very lagging.

With the support of its own model advantages, NIO has shortened the process to "instant communication" and "instant feedback". Thanks to big data and mobile Internet, users can upload their opinions anytime and anywhere through NIO's APP or the in-vehicle artificial intelligence robot NOMI. Shen Hong gave an example, saying that when NIO releases a new product, a new iteration of a software, or a new policy, user feedback from the APP will come in like a tide on the day of the release. What the user relations department needs to do is to classify and label the feedback as quickly as possible, and then assign it to the corresponding responsible department.

It is worth mentioning that when encountering a major release, NIO will also hold a live broadcast that night to give users an opportunity to ask questions directly, and also facilitate engineers, product managers, etc. to directly answer and explain. In addition, every weekend, NIO will also organize face-to-face Q&A activities, which are also within the scope of responsibility of the user relations department.

NIO's user relations department can monitor the daily APP with precision down to the second and down to the person. Whether a user posts on the APP, asks questions in the service group, or visits a store or participates in an event offline, data will be tracked in a timely manner.

It is not difficult to infer that the opening rate and user activity of the NIO APP have also reached a high level. According to Shen Hong, the APP currently has more than 2 million active users, including not only car owners, but also potential users who have not yet become car owners. Because the APP is not only a tool with basic car control functions such as remote unlocking, turning on the air conditioner, finding a battery replacement station, charging, and reporting repairs, but also a community for car owners to share their lives.

Currently, the online community is based on the APP, and the offline community is based on NIO House. A mature user system has been built, including points redemption for gifts, NIO value, communities, etc. Users can also create and publish UGC content themselves, and participate in reading, interaction, commenting, and forwarding together, which is somewhat similar to the car owner's "circle of friends".

Among them, the design of points and NIO values ​​is controlled by the internal team, while the community comes more from the users' spontaneity and co-creation, such as interest communities, professional communities, regional communities, car clubs, etc. To date, NIO has 906 communities of various types, which is very prosperous.

So the question is, what is the significance of building such a prosperous brand community?

PART2 How does a decentralized brand community create value?

As mentioned earlier, NIO's user relations department is like a "neighborhood committee" with many and complicated matters to deal with, and the department head Shen Hong is the "neighborhood committee director". However, as more and more car owners come to the community and the user profiles become more and more diverse, Shen Hong finds that his role as "neighborhood committee director" is no longer just to help people convey information and solve problems, but he has actually reversed the roles of host and guest, and is invited to participate in community activities organized by car owners from time to time.

2.1 Brands set the stage, users perform

It is said that in the early years, when Li Bin was still conceiving the creation of Weilai, he planned to use "User Enterprise" as the registered name of the company, and to build the world's first company where users are the masters. In the final analysis, it is to achieve the ultimate user experience. Compared with the "user participation" proposed and practiced by Xiaomi, Weilai's idea is more in-depth, advocating "user ownership".

In December 2017, NIO launched the first NIO Day. In the six years since then, the annual NIO Day has gradually grown into NIO's most influential IP event. According to Shen Hong, at the beginning, Li Bin would release some new products and demonstrate some new technologies at NIO Day. The overall feeling was more like a new product launch conference or a year-end summary meeting, but gradually, with the enthusiastic and active participation of car owners, NIO Day has completely turned into an annual car owner gathering.

As the organizer, NIO's user relations and other related departments had never thought that NIO Day would be "bid for" by car owners in different cities, which was a bit like the Olympics. After the first three years of successful hosting in Beijing, Shanghai and Shenzhen, many car owners hoped to have the opportunity to participate in NIO Day in their own cities next time, so the NIO Day city application mechanism came into being.

The city application process is divided into two rounds, and the process is strict but interesting. For example, this year more than 10 cities signed up for the competition: in the first round, the NIO Day organizing committee first selected 3 candidate cities with the most suitable conditions. The jury members included several founders such as Li Bin and Qin Lihong, a user advisory group composed of 5 car owners, and 5 NIO employees; in the second round, these 3 cities will be displayed in the APP for all car owners to vote democratically.

Image source: NIO APP, NIO WeChat official account

During the entire voting process, members of the car clubs in the three candidate cities will canvass for votes through live broadcasts and even offline events, spontaneously and voluntarily investing a lot of energy.

After a fierce competition, Xi'an was chosen as the host city of this year with 46% of the votes on August 13. The Xi'an NIO Club did not end the "battle" because of this. "After the successful bid, they immediately discussed local tourism resources, such as allowing car owners who come to participate in NIO Day to visit the Terracotta Warriors and Shaanxi Provincial Museum for free, and organizing local user volunteers to entertain users from other places at that time." Shen Hong explained.

In fact, with NIO Day as an example, NIO has had more and more activities that have formed a model of "brand setting the stage, users performing the show" , allowing users to find resonance, connection, belonging, and interest value in the community built around the car. In the long brand growth period in the future, this user experience will continuously enhance the brand's power.

2.2 From planning communities to adapting to communities, amplifying the value of connections between users

Of course, such a community cannot be built overnight. The long-term investment of a large amount of manpower and material resources makes it difficult and dare not for other peers to learn. However, Shen Hong admitted that the community model that NIO has today is not entirely derived from the initial design plan.

When NIO participated in auto shows earlier, some car owners volunteered to go to the exhibition hall with NIO employees to explain the cars to users who came to visit. At first, NIO's operating staff thought it was incredible, but later they gradually realized that this was also a recognition of the brand in a sense.

Therefore, the tradition of car owners serving as volunteers to talk about cars has been retained and has become a feature. Nowadays, at every large auto show, other booths are filled with long-legged car models, while NIO's booth is filled with car owners who can't wait to share their experiences.

When we were doing theoretical research, we noticed that the research team of Chu Rongwei, associate professor of the School of Management at Fudan University, had proposed three perspectives on brand communities:

1. Journey perspective: It mainly means that consumer participation in brand communities is part of the consumer journey. At the same time, brand communities, as a place for interaction between consumers and brands, are also the carrier of the consumer journey.
2. Structural perspective: This mainly means that brands can intervene and guide the community to enhance activity and experience, but they must also follow the original structural attributes within the community to enable it to govern itself.
3. Relationship perspective: It mainly refers to the fact that people in the brand community, in addition to playing the economic role of consumers, also play social identities such as acquaintances, netizens, and like-minded people. Therefore, whether individuals are consuming, exchanging, socializing, or interacting in the brand community, they are creating value and seeking meaning together with the company.

Our research found that NIO originally started to build its own brand community from the perspective of journey. When designing the user experience, the operation team considered it as part of the user journey, so that the connection between users and NIO is not just buying and repairing cars. Therefore, NIO House and NIO APP were created to continuously build connections with the brand during the driving process after purchasing a car.

Gradually, the NIO operations team discovered that the brand community seemed to have its own structure and operating logic. It was no longer a space that required staff to plan and activate. In other words, the community became "de-branded" and "non-brand exclusive."

At this time, community culture will naturally grow from the interaction of community members, and the brand community will also have a structural perspective. Shen Hong gave an example, saying that some wealthy car owners have many luxury cars at home, and NIO is just one of his many cars, but he is willing to take his children to NIO House to participate in car friends gatherings on weekends, or go to the NIO exhibition hall to be a user volunteer for a day, or participate in NIO's public welfare activities such as "picking up garbage on the beach" and "giving warmth to children with cleft lip". Other cars may have powerful product functions, but they may not be able to provide him with such a community culture.

“NIO’s car owners will also spontaneously organize some cultural and artistic activities. For example, they held a lawn concert at Beijing’s Jinhai Lake two days ago. From organization to performance to reception of other car owners, everything was done by the car owners club themselves, and we, the NIO staff, were invited and became their guests.” Shen Hong said that when the brand community has real vitality, the community culture will be formed spontaneously, rather than being defined from top to bottom by the brand.

Then, in addition to the relationship between the brand and the user, the user and the user also began to have a relationship. From the perspective of relationships, Weilai's community is a place where people make friends through cars, and is endowed with value far beyond the car itself. Since the car owners have a wide range of professional backgrounds, many car owners have benefited from the network of personal connections built through the brand community. The community has also continued to grow and segment. There are more than 130 car clubs alone. Car owners make friends with each other, promote business, and even get married and start a family.

People who choose to buy Weilai have a profile in themselves - good economic income, good spending power, good quality of life, and willingness to try pure electric vehicles, which shows that they are more willing to accept new things. If such a group of people have a resource exchange platform with like-minded people, it will be of immeasurable significance to them, just like an MBA course, the content of the class is only a small part of its value, and everyone is more interested in the connections made outside of studying.

In NIO's App, there is a "Dianping" dedicated to NIO car owners. This is an innovative project incubated by the user relations team - the "Owner Welfare Partner" platform. In Shen Hong's words, this is also a result of going with the flow. Car owners who open restaurants, bars, beauty salons, and golf courses will all have their stores placed on this platform. So far, there are 6,000 car owner stores on the platform, covering as many as a dozen categories. If other car owners patronize, they will receive benefits customized by the boss, which may be a secret dish on a hidden menu, or it may be a pleasant conversation.

The goal slogan of this project is "Owner welfare partners, we are one family wherever we go", which shows that NIO's value concept in user operation is indeed not to promote repeat purchases, additional purchases or old customers bringing in new customers as a direct goal, but a community with user value should be more attractive and scarcer than a car. This also once again responds to and interprets the essence of the "Ripple Model". Old customers bringing in new customers is only its result at the commercial level, and the key to supporting its operation is the accumulation of user relationships, which will become NIO's most core asset in the future.

PART3 The stock with incremental growth is good, but not enough

Growth Black Box found through research from other channels that although a large part of NIO's sales conversions came from old customers bringing in new customers, the proportion of old customers bringing in new customers has not been growing steadily. Faced with such uncertainty and the increasingly fierce competition among new energy vehicle companies, NIO must seize the opportunity to acquire customers in the public domain and not let up .

3.1 Public domain placement is an inevitable basic operation

The mature brand community makes NIO's users very loyal, sticky, dynamic and cohesive. However, in order to make the mechanism of bringing in new customers appear pure, NIO no longer heavily subsidizes or offers discounts to new customers converted from old customers, but only gives away points worth 1,200 yuan. Therefore, the "water" in the pool of the ripple model is limited. If you want to continuously inject new "water" into it, you still need to rely on the traditional funnel model.

The above picture is the overall customer acquisition-conversion chain of NIO obtained by Growth Black Box from research in other channels. Let’s first talk about the marketing strategies and results at the front end in the picture.

Weilai's marketing budget is roughly divided into two parts: online and offline. Among them, the budget for online investment last year exceeded 1 billion yuan, with a total of 7 types of channels, covering almost all commonly used channels in the market.

1. Massive exposure type: mainly patch ads (front, middle, and back), mainly aimed at reaching as wide a range and circle as possible
2. Precision traffic type: mainly based on information flow advertising, mainly targeting the precise groups recommended by algorithms
3. Traffic interception type: SEM advertising (search engine marketing) or SEO optimization advertising is the main method to increase the exposure of marketing content through search engine rankings
4. Private domain conversion type: mainly social media advertising, interested users can leave information or consult
5. Brand reach: mainly based on brand advertising, focusing on building awareness and increasing recognition, not focusing on collecting leads
6. Scene coverage: mainly posters or scrolling electronic screen ads, distributed in areas with high traffic, not mainly aimed at collecting leads
7. Technology-driven growth: Using automated systems and data to deliver ads, which can improve purchasing efficiency

The channels are complete, but there must be differences in the importance of investment. According to Growth Black Box, vertical media accounted for the largest proportion of NIO's online marketing investment in 2022, at 18%, the WeChat ecosystem (Mini Programs, ADQ, Video Accounts, Moments, Soso, Scan, etc.) accounted for between 11% and 15%, ByteDance's information flow advertising (ByteDance Effect, Massive Engine, Massive Qianchuan, etc.) accounted for about 12%, and Douyin live broadcast accounted for 7-9%, and so on.

A lot of money was spent, but the conversion efficiency only reached the industry average, not very impressive. This also reflects that Weilai's advertising and customer acquisition have always followed traditional methods.

In fact, this is not just a problem faced by NIO. With the arrival of the stock market, performance advertising with CPL as the sole measurement standard is facing the dilemma of rising cost pressure and declining effective transactions in various consumer tracks.

3.2 Aggregation effect is the biggest growth point for the future linkage between public and private sectors

Therefore, in order to improve the cost-effectiveness of the invested money, in addition to further optimizing the allocation of front-end delivery, it is more important to focus on the middle-end link and do a good job in operating leads or potential customers.

Here we look at Weilai's customer acquisition-conversion link again. It should be emphasized that the user operation mentioned in the first two parts specifically refers to the operation of car owners, and the section responsible for Weilai's marketing department also includes the user operation link, that is, the rough leads of front-end customer acquisition are screened and processed into accurate leads through labeling, cultivation, retention and other operational methods, and then put into the traffic pool.

As we all know, for high-priced goods such as cars, except for vertical media, the direct conversion rate of performance advertising will not exceed 5%.

However, Growth Black Box learned from relevant experts that vertical media has basically reached its peak and there is not much room for improvement. Among the many channels for online traffic, there are still three channels that deserve further efforts: one is the Tencent ecosystem, because its relatively special ecological structure can help car companies optimize the potential customer operation link in the middle platform; the second is Douyin and TikTok, because it may have a bonus period of 2-3 years in the future, especially in overseas markets; the third is Xiaohongshu, because it has signs of preparing for commercial monetization.

The reason why Weilai's marketing department is optimistic about Tencent's ecosystem is because of its relatively complete contact types, strong aggregation capabilities, and strong user stickiness . It is difficult to find a second ecosystem that can simultaneously have social networking among acquaintances, official accounts, short videos, long videos, live broadcasts, news media, mini programs, and payment systems.

In simple terms, the Tencent ecosystem with WeChat as its core can not only acquire customers from the public domain, but also retain them in the private domain. Within the same system, it has completed the action of connecting the public and private domains, minimizing the loss rate of leads in the process of transferring from the public domain to the private domain.

For most car companies, the real target customers are actually a very narrow group, so there is a great need for a system that can have a global influence and cover the population as comprehensively as possible.

"It can be said that all Chinese netizens will stay in the Tencent ecosystem." said an automotive industry operations expert. For businesses, almost every touchpoint in the above picture can be linked to users, such as Moments ads, corporate WeChat, search, public account messages, Tencent payment cards, etc. Users can easily find businesses and have conversations.

At a time when advertising is so popular, advertisers must realize that advertising is just a starting point. The real difficulty lies in how to develop trust and social relationships after establishing connections with users .

After all, not all potential customers are willing to enter the NIO APP to experience the community, so WeChat private domain plays a vital role. It makes the value of advertising not limited to one exposure, one click or one touch, but has a foothold to build a long-term social relationship chain .

Therefore, in the Tencent ecosystem, NIO can find new value in performance advertising. It is no longer limited to simply collecting forms. Instead, it plans and starts before collecting forms, uses public domain content as a carrier to reach users to achieve a grass-planting effect, and then cooperates with private domain tools to gradually deepen potential customers' intention to buy cars. Ultimately, the public and private domains form positive feedback with each other, greatly improving the effect of the entire chain.

It is worth mentioning that the video account has the characteristics of both public and private domains. The short video content that users see are recommended by big data according to algorithms, as well as those viewed or liked by WeChat friends. If the content put by car companies in the video account is viewed or liked by the friends of potential customers, it will undoubtedly deepen the favorability and intimacy of the car company in the minds of potential customers, and accelerate the process of transformation from public domain to private domain.

IV. Conclusion

NIO has come a long way from 0 to 1. Although it has not yet achieved profitability, there is no doubt that it has created a new business model and verified its rationality and superiority.

The entire consumer industry now has a clear trend towards service. Consumers' requirements for consumer goods are no longer just for material utility. Similarly, people who buy cars are no longer just looking for a means of transportation or to show their status. Instead, they want to use a car to find people in society who are in the same circle, have the same values, the same interests and hobbies, and even the same frequency as themselves.

Whether it is setting up a "neighborhood committee" to serve car owners in every detail, or building a stage for old and new users to dance together, we must admit that NIO has grasped and adapted to the changing trend of consumption concepts in the new era, and has done it to the extreme.

However, while adhering to its long-term direction, NIO must also pay close attention to its current situation.

NIO announced its Q3 guidance in its Q2 financial report, planning to deliver 55,000 to 57,000 new cars. Due to the good delivery performance in July and August, the pressure in September is not great. However, given the overall unsatisfactory financial report in the first half of the year, in order to achieve the annual target of 2023, an average of 30,000 units must be delivered in the remaining four months.

To this end, NIO has made some strategic adjustments. For example, in the second quarter, it officially announced a price reduction of 30,000 yuan for all its models and joined the price war; for example, it poached people from peers such as BBA at high prices to strengthen its front-line sales team; for example, the front-end investment and procurement are also working towards improving the conversion rate; for example, although the service and operation for car owners cannot directly bring about conversion, out of long-term considerations, NIO will not slack off.

Both new car manufacturers and new energy brands under traditional car companies are running at full speed, so the gap between smart electric vehicle hardware and assisted driving will not be too big in a few years. Therefore, after a short and concentrated price war, service, experience and even brand story will undoubtedly become the core competitiveness attached to the product.

Chief Writer: Huan Fangdai; Produced by: Growth Black Box Research Group

Source: Public Account: Growthbox (ID: growthbox2), cracking the black box of business growth.