In this article, I want to talk about a list released by Tencent Smart Retail: the T+ Brand Private Domain Value List. Why pay attention to this list? On one hand, I was honored to be invited as a recommending expert for this list; more importantly, I want to discuss the model behind this private domain list: the Four-Force Growth Model. When it comes to private domain, many people immediately think of WeChat and Tencent, because the basic logic of private domain is social interaction, and most people's social relationships are on WeChat. They feel that Tencent is professional and a regular army in private domain. Therefore, their Four-Force Growth Model for private domain is worth paying attention to. So, I specifically communicated with Tencent colleagues to learn and have them introduce this model in the simplest language. Tencent colleagues said that the Four-Force Growth Model is a universal model summarized and abstracted from the past four years of Tencent Smart Retail's exploration of digital transformation practices with nearly a thousand retail enterprises, through serving and supporting a large number of customers in private domain. It allows us to clearly understand that to do private domain well, you must start with these four forces: organizational strength, product strength, product capability, and operational strength. Next, I will share with you the introduction of these four forces by Tencent colleagues, hoping it will inspire you. ****Organizational Strength First, let's talk about organizational strength. The problems enterprises encounter in private domain may ultimately be organizational problems. Doing private domain will definitely change some of the original processes of an enterprise, redistribute some original interests, especially in store operations, online, offline, regional, etc. The distribution is complex. These are essentially issues of organizational strength. If any point is not handled well, private domain cannot be done well. I asked Tencent colleagues, how can we improve organizational strength? For example, the "Annual Four-Force Benchmark" enterprise in this list, Lin Qingxuan. Lin Qingxuan decided to start private domain due to the COVID-19 pandemic in 2020. In the first few days of the pandemic, the performance of Lin Qingxuan's 300+ stores and 1,700+ beauty advisors was: zero. Lin Qingxuan's founder, Sun Laichun, said he was starting to collapse at that time. Employees were also worried: if the company couldn't continue, would they still get paid next month? What to do? Do private domain. Let beauty advisors sell through their Moments. What was the final result? Take Wuhan, the hardest-hit area, for example. In February 2020, revenue still grew 70% compared to the same period in 2019. Not bad. But at the beginning, their private domain sales results were not good. Why? It turned out that the content they posted in Moments was official promotional posters provided by the marketing department, very exquisite, but ineffective. Customers were numb to these ads. So Lin Qingxuan adjusted its strategy. Sun Laichun directly led, with several executives plus 2 people from the marketing department, 4 designers, and 2 copywriters, to establish a content factory. They produced content shared to Moments every day. Later, they found that the fresh, down-to-earth content made by frontline stores was more popular with customers. (Comparison of content before and after) Finally, Lin Qingxuan selected 10 frontline store managers nationwide to join and provide daily content for all beauty advisors across the country. This is how Lin Qingxuan started private domain, with the top leader directly involved, leading executives and coordinating departments. So where is Lin Qingxuan's organizational strength reflected? It is reflected in the founder Sun Laichun personally leading, which is what we commonly call making private domain a "top leader project." This avoids the constraints of departmental interests and personnel allocation, allowing for highly concentrated resources to fight big battles. Brands on this list, such as Lancôme and Chow Tai Fook, are also either led by senior executives like CEO or CMO, or by independent teams. Of course, every enterprise is different. Not every boss can personally participate. What to do then? In our past years of practice, we have summarized 4 private domain organizational structure models. In addition to Lin Qingxuan's top leader project and independent team model, there are 3 other models. 1. Marketing department-led model: The advantage is that it can combine the company's publicity resources to effectively spread the word, but the subsequent sales conversion capability is not strong and needs to be strengthened. 2. Offline business-led model: The advantage is that it can combine offline resources for marketing and build good Moments and community marketing, but the disadvantage is short-term interest orientation, driven by offline interests. 3. E-commerce-led model: The advantage is rapid digitalization, combining e-commerce platforms and other nodes for good operations, but the disadvantage is insufficient coordination with offline. So, you can refer to and learn from these 4 models based on your enterprise's positioning and business needs, leveraging their strengths and compensating for weaknesses, ultimately improving organizational strength and doing private domain well. Understood. Indeed, many private domain problems enterprises encounter may be organizational problems. To do private domain well, you need to coordinate with departments such as marketing, sales, supply chain, offline stores, and e-commerce, and distribute interests well. This requires organizational coordination of various resources. Otherwise, in the process of private domain, if you encounter resistance and keep compromising, and the organization keeps adjusting, you will end up far from your original intention of doing private domain. ****Product Strength Once the organization is set up, let's start doing private domain. When you truly start, the first thing you might think about is: what to sell? If you mainly sell a product or service, you may not encounter this problem, but many people can sell many products, with numerous products under their umbrella, and various interest distribution issues with franchisees and channel partners. At this time, what you should sell in private domain is a question worth thinking about. Does the Four-Force Model have a solution? Yes. In the Four-Force Model, there is a very important force: product strength. Tencent colleagues continued. What is product strength? Product strength is your ability to match and price the products you sell in private domain. Especially when your products are sold online, offline, and through multiple channels, how you differentiate is your product strength capability. For example, Pop Mart, the "Annual Industry Benchmark" in this list. Its private domain mini-program generated 898 million yuan in revenue in 2021, a year-on-year increase of 92.6%. How did they do it? A very important point is that Pop Mart chose to release some hot new products on its mini-program. For example, the MEGA Collection Space Molly × SpongeBob co-branded model released in June 2021, limited to 3,000 pieces, sold through a lottery system, attracted over 1 million participants. Another example: when "SKULL PANDA Ancient Forest Castle Series" was first released, 60,000 items sold out within 1 second. Hot new products are usually limited in quantity, targeted at hardcore fans and collectors. Private domain, which is highly social, is where this group is most concentrated and most suitable. Moreover, because the quantity is small, a lottery method is usually adopted. For example, the above-mentioned 3,000 pieces attracted 1 million participants. This viral attribute of sharing with friends is also particularly suitable for private domain. So Pop Mart chose to release hot new products on its private domain mini-program. After talking about Pop Mart, let's talk about Chow Tai Fook, the "Annual Leap Benchmark" on this list. Let's talk about how Chow Tai Fook expanded its product categories for private domain live streaming. After all, a live stream has limited time. You have to decide which products to promote and which not. At the beginning, Chow Tai Fook mainly promoted low-priced products. Because in past public domain live streaming, few products sold above 3,000 or 5,000 yuan. But based on the trust gained from long-term private domain operations and customer service, private domain live streaming unleashed huge potential. For example, they launched 3 loose diamonds priced at approximately 6,000 yuan, 8,000 yuan, and 15,000 yuan. Initially, Chow Tai Fook thought products over 10,000 yuan were just for show, and the main sellers should be the 6,000 yuan ones. Later, they found they were wrong; the 15,000 yuan ones sold best. So Chow Tai Fook adjusted the recommended products in live streaming, from flash sale items at the hundred-yuan level to jewelry under 2,000 yuan, from special offers at 6,000-8,000 yuan to high-priced single diamonds and loose diamonds around 30,000-50,000 yuan. Occasionally, they would launch "national trend" new products for a specific live stream. What was the result? Take a live stream on March 25, 2021, for example. The live stream ultimately achieved sales of over 60 million yuan across all channels, with nearly 8.5 million interactions and nearly 1.2 million views. This is the advice of our Four-Force Model on product strength. ****Product Capability After product strength, let's talk about product capability. What is product capability? Product capability refers to the user's direct experience. For example, whether the user's browsing experience on the mini-program is smooth directly determines whether the user will return and share with friends. If you compare the mini-program to opening a physical store, product capability represents whether the store facilities are complete, whether the layout is reasonable, and whether the user's shopping experience is comfortable and meets habits or mental expectations. So product capability tests your mini-program's page load time, security, compatibility, conversion rate, retention rate, etc. You can even say that product capability is the hardware foundation for efficient private domain operations. For example, McDonald's, the "Annual Industry Benchmark" on this list. What are McDonald's private domain achievements? As of August 2021, McDonald's China had nearly 200 million total members. Its mini-program daily visits exceeded that of a medium-sized internet company, and orders from the mini-program accounted for about 70% of total transactions. So how does McDonald's do private domain? McDonald's calls private domain "creating a user journey." What does that mean? It means McDonald's wants the entire private domain construction to focus on improving user experience. This poses a significant challenge to the IT infrastructure of an enterprise with 200 million members. Any small flaw, any delay, any discomfort in the product may be magnified 200 million times. How does McDonald's improve user experience? Let me give a few examples. For example, in 2020, McDonald's integrated 9 mini-programs, including i McDonald's Dessert Station, McDonald's Games, i McDonald's Wallet Balance, and i McDonald's Ordering, into the current McDonald's mini-program. That is, before 2020, as a user, you might be required to use multiple mini-programs to operate, such as one for ordering, another for delivery. This was definitely cumbersome and troublesome. After integration, all these functions are realized in one mini-program, which is definitely more convenient. Another example: McDonald's also set up coupons in a "thousand people, thousand coupons" format. So as an urban white-collar or petty bourgeois group, you might receive beverage or coffee coupons. As a busy office worker, you might receive breakfast coupons. Another example: McDonald's updated various motion effects in the mini-program's interaction animations. When a customer wants to add a McSpicy Chicken Burger, they see the burger fall into the shopping bag along a parabolic trajectory, even showing gravity effects during the fall. And so on. It can be said that McDonald's spares no effort in optimizing user experience on the infrastructure. Only in this way can you truly make users feel like they are on a pleasant journey when they come into contact with you. In short, product capability is the part users directly perceive, directly affecting their activities, browsing, and consumption experience in private domain, and to some extent determining whether users are willing to return. So, to improve product capability, there is a very important suggestion: you should experience, try, and improve user experience from the user's perspective. Even if there is a small flaw, a slight delay, or discomfort in the infrastructure, don't let it go. Be sure to find ways to improve. This is how to improve product capability. ****Operational Strength Next, let's talk about the last force in the Four-Force Growth Model: operational strength. What is operational strength? Tencent colleagues said, when you do private domain, you will definitely encounter questions like "Where is the traffic?", "How to effectively accumulate traffic as private domain assets?", "How to effectively drive private domain user conversion?" The ability to solve and optimize these problems is called operational strength. I said to Tencent colleagues, we have heard too many sharing sessions and learned too many "tactical" skills about private domain, such as what incentive methods to add to mini-programs to guide user sharing; what techniques to summarize in scripts to quickly make friends with users; and so on. These are useful, but they are still at the tactical level. Just like when you, as an expert in a certain field, give lectures to others, you talk about tactics: how to speak, how to control the rhythm, even how to control people. These may make the scene lively. But true industry veterans can see that your professionalism and underlying capabilities are insufficient, and that your foundation is not solid. So, regarding operational strength, besides these tactical aspects, is there a more fundamental logic and method? Tencent colleagues said yes. Take Huazhu Group, the "Annual Industry Benchmark" on this list, as an example. In the past two years, with the recurring pandemic, everyone can understand the significant impact on the tourism and hotel industry. But Huazhu Group, which operates over 7,000 hotels in China, has managed to grow against the trend. How did Huazhu do it? Do private domain. Within Huazhu, when they talk about private domain traffic, the "traffic" they refer to is the "retention" (留) in Chinese, meaning "stay." Why? Because Huazhu believes that only users who stay are true private domain users. If they don't stay, they are just passersby and cannot become your private domain. So how to retain users? Service. Even if I have 1,000 ways to get a user into Huazhu's private domain user pool, I only have one way to make them stay: service. How to serve? Huazhu uses the offline scenarios of its 7,000+ stores to provide differentiated services based on WeChat ecosystem touchpoints and tools, such as borrowing power banks, getting Wi-Fi passwords, issuing invoices, scanning codes to cast to screens, etc., thereby making users stay. How many users has Huazhu retained? Currently, Huazhu has accumulated 170 million Huazhu members. What value do these 170 million members bring to Huazhu? The direct sales ratio of Huazhu's hotels exceeds 85%. This greatly reduces the customer acquisition cost for Huazhu's hotels. Many other hotels rely heavily on OTA websites. More importantly, Huazhu's effective members contribute 6 nights of stay per year. Walk-in customers contribute 2 nights. OTA guests (subscribed from Ctrip, Tongcheng-Elong, etc.) contribute only 1.1 nights. What does this mean? It means Huazhu can fully control its hotels' pricing power and even profits. Why? Because many hotels rely heavily on OTA guests, but OTA takes a commission, typically 15%-25% of the average daily rate. And many hotels' profit margins are only 8%-12%. That is, OTA earns twice as much from each room as the hotel itself. But if you have these retained private domain users, you don't have to pay OTA this commission. Huazhu's member-to-OTA ratio is 6:1.1, which means Huazhu fully controls its hotels' profits rather than handing them over to OTA. This is how Huazhu Group improves operational strength by providing better services to users and retaining them. Final Words: Finally, Tencent colleagues said, private domain is a slow business. Because users buy not only because of discounts, but more because of the "friend relationship" trust, and eventually it becomes a habit. This is a long, slow process. But slow business has a bigger future. Just like the enterprises on this list, if you make a business layout around private domain for omni-channel operations, the certain gains will come as expected. After all, taking it slow allows you to go faster. Yes. Taking it slow allows you to go faster. Well said. There are no shortcuts in this world. When the era of big opportunities comes, it falls on those with strength, not opportunists. There has never been a good opportunity to "make a fortune quietly." There is only struggling upward step by step. Shortcuts are actually the longest detours. Stolen cleverness is actually fatal clumsiness. The same goes for private domain. These four forces—organizational strength, operational strength, product strength, and product capability—are the underlying capabilities for private domain. These are basic skills. Like practicing horse stance, standing on plum blossom piles, and fighting the bronze man formation, they are abilities you must practice daily and improve over the long term in private domain. Thank you to Tencent colleagues for sharing the Four-Force Model. It allows you to have a path to follow when you enter the private domain battlefield, knowing that you need to start from these four aspects. Finally, I wish you well on your private domain journey, with a solid horse stance and stable plum blossom piles. Best wishes. Source: Liu Run (ID: runliu-pub), Author: Liu Run Are you "watching" me?