Although internet marketing costs are no longer low, compared to traditional marketing, it can still save some costs. In traditional marketing, certain costs are high without yielding results, which is the main reason many traditional enterprises are dragged down. Simply listing them, the main cost consumptions are: 1. Personnel costs; 2. Venue costs; 3. New customer acquisition costs; 4. Channel costs. Personnel Costs: High-Priced Employees Brought by an Aging Society We know that in China, sales personnel are mostly compensated with low base salary plus high commission. Why is that? Because sales personnel often play the most important role in enterprises as the "blood transfusion" providers, but also the least important role, as they are often unrelated to the core competitiveness of the enterprise. In other words, the role of sales personnel in most enterprises is to bring in customers, and the enterprise shares the profits with them, so to a certain extent, the enterprise transfers risk to the sales personnel. And cheap base salaries for sales personnel have also driven the development of traditional enterprises. As China's aging population and inflation accelerate, the base salary for sales personnel has risen from over 2,000 yuan to over 5,000 yuan, because without sufficient base salary, sales personnel cannot even cover their daily living expenses. However, in contrast, the work efficiency of traditional sales is far less than before. For example, in the past, a community event might attract many people to buy, but now the cost of an event may be 2-3 times higher, yet sales are negligible. The high costs of traditional marketing have dragged many distributors into the abyss of bankruptcy. Venue Costs: Former Prime Locations Have Become Today's Displays Originally, there were two ways traditional shopping malls and stores cooperated: one was the rent system, and the other was the exclusive venue system. The former often involved high rent, while the latter often involved profit sharing and deductions as high as 30%. But when mall traffic was strong in the past, although merchants faced pressure and malls were dominant, at least everyone could make money. But today, going to a mall is desolate and bleak. You might say, just close the offline store and open a Taobao store or a WeChat store. But for those with physical presence, changing their business model of decades is extremely difficult. As a journalist commented, the original shops were assets, but today's shops may be liabilities. In fact, we can view the shop itself as building a Taobao store or a mall, where the decoration investment is a one-time cost. And the entire mall traffic can be seen as online traffic. We know that in e-commerce, the most expensive thing is traffic fees, and offline, even if you are willing to spend money, it's hard to get the previous traffic and conversion effects. New Customer Acquisition Costs: The Area Where Traditional Marketing Cannot Compare with Online Marketing We all know that the cost of getting repeat purchases from old customers is far lower than the difficulty of attracting a new customer. In traditional marketing, offline stores often do one-time business, relying on large traffic to make one-time sales, while raising prices and "slashing" customers hard to make profits. The biggest feature of internet platforms is their ability to aggregate user data, understand user preferences, and precisely push products based on their needs. For users who have purchased products, the platform records their shopping habits and regularly pushes coupons and other benefits, and when they browse products, it prioritizes products they are most likely to like, thus encouraging repeat purchases. If a customer hasn't been on the platform for a long time, the platform will push an email or a message to bring them back. So even if the cost of acquiring users online and offline is similar, the user data and guidance for second purchases in online marketing are incomparable to offline. Channel Costs: Under E-commerce's Vertical Pricing, Channel Levels Become a Burden The original business structure was pyramid-shaped: the enterprise gives to the general agent, the general agent gives to the distributor, and the distributor gives to the terminal. Each level needs to make money. But today, because e-commerce has occupied the pricing high ground and become a product price-checking platform, reducing channel intermediaries and reaching consumers directly has become the essence of internet marketing. Today, the channel costs of traditional marketing are not only due to many people sharing the profits, but more importantly, the channels have been divided by online platforms, whether they are aggregated e-commerce platforms or numerous self-media accounts. The value of original terminal stores and other channels has significantly declined, but they still participate in profit sharing, which is the reason why traditional businesses are difficult to change. In fact, all business difficulties essentially lie in costs. When costs rise rapidly, many originally viable business models will collapse. For entrepreneurs, increasing revenue, reducing costs, and earning the difference is the eternal theme of long-lasting enterprises. Source: Entrepreneur Yu Lu (ID: cyyl688)