Ma Feifei, Director of Laiyifen Omni-Channel Member Center, had a dialogue with WARC, explaining how this snack consumer brand transformed from a retailer into a life ecological platform and expanded through the building of multi-party relationships; and, as a non-entrepreneurial fast Consumer brands, how Laiyifen builds its own private domain matrix with self-construction + borrowing from third parties, and becomes a representative brand against the wind during the economic downturn with long-term service thinking.
WARC: According to the user characteristics of snack products, how is Laiyifen's complex membership ecology constructed?
Ma Feifei: Laiyifen has just celebrated its 22nd anniversary. It currently has nearly 4,000 stores and 77 million users across all channels. As a snack brand, from brand positioning to brand mentality, and then to the cognitive construction level based on consumers, we have established a full life cycle user operation system of Laiyifen in the process of interacting with consumers, in which we design Our overall membership benefits management, loyalty management, life cycle operations, consumption experience upgrades, and user NPS (Net Promoter Score) that we will focus on in 2022.
For Laiyifen, user operations are actually top-down from the top-level system design of the brand to the creation of the system, and finally focus on our existing resources to talk about the "people and goods market" and see what can be given to our members What kind of benefits and services.
Based on the brand positioning of "fresh snacks", Laiyifen's target customers are very focused, that is, exquisite mothers and white-collar workers. East China, Shanghai and Jiangsu are our core mature markets; post-95s and post-00s are the future we want to develop The target potential customer group, in order to promote the transformation of the brand rejuvenation.
Then, for such a customer group, Laiyifen's membership system has been designed in layers.
The first layer is a membership growth model based on the V1 to V8 membership growth value , which obtains points through user consumption and interactive behaviors, basically covering more than 40 million ecological members in the private domain.
The second layer is the paid membership model . For members with high loyalty and high contribution, we started to build a black gold member club in 2019. Users need to spend 99 yuan to become a black gold member. Up to now, the number of members is about 2 million.
The third layer is the exclusive membership model , which is a pyramid crowd of about a few thousand people, that is, invitation-only members in the exclusive club. They will enjoy some differentiated services, such as exclusive one-on-one online customer service, and may participate in Laiyifen's brand communication, product co-creation, and joint activities in the future.
At the same time, Laiyifen has gradually developed from a retail brand to an ecological life platform enterprise in the process of platform development, so B-side merchant members must also be considered in the entire membership system.
In 2021, Laiyifen will start planning merchant membership, and merchant members can enjoy Laiyifen's internal membership products, tools and functions, SCRM services, etc. If the C-end black gold member buys the product of the merchant, he can also enjoy the discount of the merchant's member, including the use of points. These are opened up.
WARC: From the financial report, we also saw Laiyifen’s growth against the trend during the Shanghai epidemic. Let’s review it. What is the reason behind this?
Ma Feifei: On the one hand, our growth against the trend comes from the early deployment of community group buying business, including the group leader bringing goods; on the other hand, based on the logistics system built by Laiyifen and the delivery method of SF Express, our logistics front warehouse is guaranteed. , Community group buying and timely delivery performance have not been greatly affected. In terms of contract fulfillment, we have integrated the third-party food delivery and third-party rider systems into our own App online business, using the capabilities of third parties to help us fulfill contracts, instead of relying entirely on online third-party e-commerce.
In the first half of the year, the pressure from the Taobao brand, including the impact of the epidemic, was still relatively large. Many layouts in the early stage of Laiyifen were made relatively deep, and enough flexibility was left in the process, regardless of the flexibility of contract performance or supply. The flexibility of the chain plan, and even the community groups, community takeaways and community delivery services in the new retail that are planned in advance, are all designed to solve some uncertainties in the future.
In the long-term strategic development process of the company, the consensus reached by the founders of Laiyifen and the company's top management is how to develop the second curve based on the original first growth curve, and how to build the company from a strategic perspective. moat.
During the past two years of competition with friends, Laiyifen has used some core digital capabilities to compete against others, rather than simply through advertising or marketing (you will find that Laiyifen has not done much at this level. ). We put our internal strength on digitalization, supply chain transformation, logistics self-construction, and product quality upgrades. These are the core advantages we have summarized.
First, products and supply chains. We have connected more than 200 factories upstream to guarantee products and supply chains; in the process of fulfilling the contract, we will also start the Kunpeng supply chain project in 2020, which is the pre-plan of our supply chain. Therefore, Laiyifen reduces losses in the entire supply chain from sales planning, sales forecasting, accurate forecasting of delivery and replenishment, and marketing plan management. According to the type of store and user needs, we also accurately allocate the product type and shelf life of each store; in the research and control of quality in the process of product upgrading, we built our own food research institute to make some low-fat, low-sugar product research. Products must be the most important part of a retail enterprise, and a good product can speak for itself.
Second, digital capabilities. In 2019, Laiyifen integrated the online and offline marketing and digitalization of China and Taiwan, including the unification of the member's omni-channel order system, so as to ensure all users' awareness of our brand, service, experience and experience in the omni-channel. Equity is consistent. So we have made online and offline membership links, including orders, marketing plans and event management, and marketing expense allocation. We also designed this in the three-tier marketing organization from headquarters to subsidiaries to stores. This ensures the upgrade of our entire marketing effect and end-user service experience. We use digital capabilities to build a user-satisfaction-oriented corporate culture and values, and protect user services and experience through digitalization beyond products.
Third, the long-term business strategy of transforming from a brand retailer to a lifestyle platform. In the past two years, some fast-selling brands in new retail, including some online celebrity brands, have actually developed very fast. Especially before the epidemic, the hot spots in the entire capital market revolved around D2C brands or online celebrity brands.
But why didn't Laiyifen pursue such a hot spot? Because its idea is long-term operation, gradually transforming from a brand retailer to a life ecological platform. In this process, we will definitely build a platform that links multilateral relationships, integrate upstream suppliers, resources and partners into an open collaboration platform like Yifen, and then provide resource services to C-end consumers.
We are actually linking the B-side and the C-side, so in this process, we have always considered co-creation and co-construction, making it bigger and stronger, rather than squeezing a certain piece too much.
If the platform wants to grow bigger, it must rely on multilateral relations. Unilateral relationships can give brands opportunities in the short-term 0-1 process, but to go further, we need more partners to help us grow together and build an ecology. This is where we are different from many other brands. We use a platform to build a business. This is what Laiyifen has concluded from the founder's strategic thinking.
WARC: From the perspective of platform construction, how does Laiyifen connect merchants to the platform and what help does it provide for merchants?
Ma Feifei: From investment promotion, merchant policy support, merchant operation plan and SOP (standard operating procedure) teaching, to merchant operation, there is a pre-protection period provided by Laiyifen in the whole process. Later, there will be a part of merchants’ commission, but the commission is not our focus at present. Laiyifen has always been in the cultivation of merchants, including the management process of merchant stratification and classification.
Laiyifen is an online and offline omni-channel sales model, which includes chain stores, community group buying applets, third-party e-commerce and our self-operated e-commerce. Most third-party merchants exist in Laiyifen's cloud store applets and apps; Laiyifen's offline stores are still mainly operated by our own snack brands, and third-party products appear in the form of SKUs.
Laiyifen has built a relatively mature business service and contract fulfillment method through the following three types of business cooperation:
The first is to lay out the core businesses of eating, drinking and entertainment around the overall needs of consumers, such as daily necessities such as rice, noodles, oil, drinks, and health care products, and fulfill contracts and provide services through online delivery and pick-up at the store;
The second is the cross-border e-commerce that we will access in 2021. In the "Yi International" section of the Laiyifen cloud store applet and app, it covers cross-border cosmetics, maternal and child health care, and fast-moving consumer products. The online B2C e-commerce transaction method, but the delivery action is completed by the cross-border e-commerce supplier in our background;
The third is the virtual service, that is, the "community life" section, which currently has more than 60 merchants with 400 to 500 SKUs, similar to Meituan's local life business. Consumers can purchase coffee vouchers, catering vouchers, concert tickets, etc. in this section, to meet consumers' local life in-store and home-based services with tickets as the main carrier, and code issuance and verification are all done by Yiyi A service that provides performance and services to users.
A very important thing that Yifen will do in 2023 is to truly connect merchants' members to Yifen's membership system, and continue to provide merchants with traffic support and SCRM (socialized customer relationship management) and other services. In addition, in addition to providing business members and users with educational operations, we will also help merchants use Laiyifen's resources and new media platforms to spread their good things from the perspective of content marketing. We will also help merchants to build their own brand advantages on the Laiyifen platform, build brand intelligence, and build merchants' own private domains.
To put it another way, Laiyifen, as a platform today, is a merchant backend similar to Qianniu in Tmall, helping merchants to do user operations, provide traffic support, and provide data functions and product planning. Our operation team will also help merchants operate their own members based on the capabilities accumulated in the operation of C-end members. This is one of our ideas.
WARC: Ecology is a hot word in marketing. For example, Haier is in the home appliance industry. Is Laiyifen’s ecology a leader in its industry? How can the ecology bring a new round of growth to the brand under the changing market situation?
Ma Feifei: I think the main reason is that under the uncertain circumstances of the current epidemic situation, relying on a single brand to fight alone cannot effectively coordinate resources. We must learn from each other's advantages and integrate everyone's resources, so as to jointly expand the ecology in a healthy and healthy direction.
Laiyifen's membership system is now also community-based and oriented towards growth points, rather than the previous consumption-oriented system that only included levels 1-5. Consumption orientation will allow user value mining to remain at the consumption level, but in fact in the process of doing ecology, we found that in addition to consumption value, users also have behavioral value such as content dissemination and fission sharing.
Then, relying solely on the consumption-oriented growth level in the past can no longer match the development of Laiyifen Ecology. In this ecosystem, we comprehensively evaluate the growth value of users, dig into the ARPU (average revenue per user) value, and introduce more third-party resources and superior services. It can be seen that in addition to Laiyifen’s internal discounts, points, and products, Laiyifen’s membership benefits also include many third-party services, such as taxis, catering, phone top-ups, and even some in-store fulfillment and car washing services. All to build the lifestyle of the user's family life.
WARC: What kind of channel is Laiyifen's private domain mainly constructed?
Ma Feifei: We use private domain tools to reach and serve consumers. The private domain of Laiyifen is a matrix with store + App + mini program as the core, and membership rights and membership services are also mainly reflected in these three places. The final service is provided through the App, such as members receiving and enjoying offline purchases, points, gift certificates and other benefits through the App.
The store and the app are connected, so consumers can get timely reminders through the app, such as order points credited to the account, points received after receiving coupons on the app and going to the store for verification, and users can also check the membership level in the app in time upgrade. Correspondingly, the store system can also help members check in time.
All of this is due to the online and offline member communication we made in 2019, including all member businesses, as well as consumer data, portraits, tags, transactions, and performance, all of which have been opened up in the background system, and then we can be very timely Synchronize on the store side, App side, and applet side.
Laiyifen takes stores as the core, expands out-of-store sales through Apps and small programs, and reversely empowers stores to do membership operations, and finally transforms all consumers and users of stores into private domain Apps. Matrix and loop modes.
Currently, Laiyifen's out-of-store sales contribute 25% to 30% of its performance. Our goal is to achieve a 5:5 ratio between in-store and out-of-store sales. Out-of-store sales are what other companies refer to as retail channels. We call them “community shopping” channels, which include small program e-commerce, app e-commerce, and private domain businesses with other third-party e-commerce companies such as group buying and third-party delivery. .
WARC: Many traditional companies will have an asset-light consideration when doing digital transformation, including being more inclined to online channel sales, focusing on e-commerce, and so on. Then combined with Laiyifen's sales model with more than 4,000 offline stores as the core, how do you underestimate the idea of asset operation?
Ma Feifei: Which development strategy an enterprise chooses must be based on its internal resources and what kind of enterprise it wants to develop into in the future. The strategic direction determines the course .
Laiyifen has always wanted to build a life ecological platform centered on family consumption. The development in the past few years, including the development during the epidemic and the post-epidemic era, has verified that our strategy is correct.
The core capabilities of building a platform must be self-built, such as supply chain, digitization, and store operations. Today, our business is actually doing digital transformation on the basis of the original traditional stores, and empowering the growth of the overall performance of the stores with online increments.
Many companies may not have historical burden or foundation, so they will directly do brand thinking online, rely on third-party e-commerce to do transactions, and quickly complete the 0~1 process. This is also the way some new retail and new consumer products are used now, which is different from the way old retailers do business, and the underlying logic of doing business between the two is also different.
Laiyifen must be based on the idea of focusing on store retail business to do online and offline transformation and improve capabilities. Stores are a very important source of business growth for Laiyifen. If Laiyifen is a new start-up brand today, maybe our approach will be the same as that of many fast-moving consumer goods for new channel models. The great thing about Internet celebrity brands is that they can quickly concentrate funds to occupy consumers' minds, but the proportion of marketing and marketing expenses is also very high. Laiyifen is not like this. It focuses on building long-term brand management through consumer service, contract fulfillment, R&D, automation and other modules to build service relationships between consumers, stores and the entire contact point.
Our sales links are built in all links from upstream, midstream to downstream, and the participating roles include suppliers, distributors, and franchisees. One of the most important things we will do in 2022 is to allow franchisees to participate in brand management and building through the transfer of direct sales to franchisees, so as to better serve consumers together. However, our business philosophy must still focus on upgrading the category of snack brands, and building multilateral relationships through an ecological platform, and we still need to provide services with our 4,000 stores as the core capability.
WARC: Laiyifen puts a considerable amount of energy and investment in self-construction, so are all digital systems self-built?
Ma Feifei: From 2020 to 2021, because everyone is doing private domains, we have also introduced third-party services to help us with some functions of the SCRM of some enterprises and micro-enterprises, but internally use some functions and functions in the member platform. For the integration of member data, what the third party does is only the optimization of some pre-playing aspects, such as push, marketing touch, etc.
From 2022 to 2023, we will rely on the foundation of the marketing platform to make omni-channel members one ID (one ID) for online and offline users, because there are indeed some users that we have not yet fully served and accessed, such as third-party mobile phones. Therefore, in 2023, we will focus on breaking through this matter, and make links and conversions in the user's omni-channel contacts, so as to improve the efficiency of Laiyifen's precision marketing, and finally let users feel the difference of Laiyifen Services, interesting content and delicious food triggered based on the user's personal needs.
Our digital capabilities are mainly based on Chairman Laiyifen's relatively early layout of the entire information operation. Some companies have only one information department or information center, but Laiyifen has an independent technology company to empower the parent brand, sub-brands and merchant brands.
WARC: On the whole, what stage do you think the digital transformation of Chinese enterprises has come to?
Ma Feifei: I think digital transformation and reform, especially for many consumer brands, has reached a deep water zone, but the implementation effect of digital projects is uneven. There are two main reasons:
First, many companies lack top-down system sorting and goal consensus for digitalization. In fact, some companies do not have the integration problems of complex systems in the past to solve. They can directly find third-party service providers, and they can quickly build a CDP data labeling system in Qiwei's private domain. We chose the most difficult path - the self-built model. Now the self-built part of our marketing platform 1.0 has been completed, but in the upgrade process of member labels, marketing scenario demand mining and One ID, we will indeed introduce some Third-party capabilities, because some mature companies that do CDP delivery and implementation already have relatively standardized products, but we still ask third parties to customize based on the actual business needs of the company.
Second, the labeling system has not yet fully reached the application stage. At present, the most used tags are still in the "people" part, so the tags related to "goods" are the focus of our next stage. We will unify it with the labels of people and stores, including product preferences, personalized recommendations, precise analysis, precise marketing, and precise push. In addition, we will also select appropriate tweets based on consumers’ interests on content marketing and content platforms. For example, some people like humorous tweets + products, while others like popular science content. We will reach consumers one-to-one through the distribution of the content marketing center, and use our self-built consumer service capabilities, such as Qiwei’s point-to-point reach, self-developed single-store CRM shopping guide tool, store one-to-one One service, App push channel, 5G text message or AI outbound call, etc., make channel push according to the channel preference, content and commodity preference that have been tagged.
WARC: During the period of economic downturn caused by inflation and other reasons, what thinking or measures does Laiyifen have in terms of pricing?
Ma Feifei: I would like to share the thinking behind it first. First, brand power, how much consumers are willing to pay for their needs and preferences, that is, the brand premium space depends on consumers' own awareness of the brand; second, product power, which comes from the satisfaction of scenarios and needs , we calculate the comprehensive cost after removing all commodity costs, traffic delivery, personnel costs, outsourcing fees, platform commissions and delivery of goods. As long as the commodity price and pallet are not damaged, and there is room for growth in sales channels, we will support users individual needs.
We found that post-95~00s have a very high conversion rate on cost-effective products, such as live streaming on Douyin. Sometimes they don't care about the price and buy what they find useful at the moment; sometimes they are extremely concerned about the price, and they may not buy it when they find that the price of the product they like has been adjusted.
Consumer needs are changing, and consumption characteristics are not constant. What we have to do is to focus on user needs and insights, and judge whether the long-term investment in this user can get the feedback it deserves.
Phased price reduction promotions or price increase conversions of products correspond to short-term effects. We focus more on the increase in ARPU value brought about by the life cycle of 1 to 3 years, including single customer operating costs and conversion revenue, and finally to single customer Profit model level.
In the past two years, the pressure on the brand side has been relatively high. We found that many companies have raised product prices, but Laiyifen has not done so. We insist on the quality supply of fresh snacks and services such as community group buying. Consumers are not so sensitive to prices in special times. Brands can earn a single business by raising prices, but long-term brand loyalty and long-term conversion rates will definitely be affected.
Laiyifen has always adhered to the long-term brand strategy, and will not touch the "hook" of price at certain special moments, and focus more on service, long-term operation and brand maintenance. After Yifen’s strategic transformation in 2022, it insisted on the integration of pallets and prices. After a comprehensive calculation, it was found that the frequency of consumption had increased, and the size and ARPU value of black gold members had also nearly doubled. This also proves that the brand stickiness of Laiyifen is high, and it has witnessed the effect of our insistence on long-termism in terms of brand power, product power and user service.