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Canadian Airways accumulated points indefinitely for failing to make a financial plan, which eventually resulted in insolvency and bankruptcy. Finally, it stripped Air Canada’s frequent flyer program into AeroPlan and operated independently.

But if points are used well, it is indeed a good way to increase user stickiness and promote user activity. Today we will talk about how to build a user points system.

Disclaimer: The following content is from learning and reading articles. I have not practiced it myself, so I study together.

Plan your point cost, don’t play yourself to death

For paid and non-paid products, such as Taobao and Qu Toutiao, the method of determining the point budget is different.

In general, for paid products, the method adopted is the fixed amount ratio method. Fixed amounts refer to sales, turnover or net profit.

For insurance purposes, a percentage of net profit is used as the cost of points conversion, for example:

An e-commerce platform has sales of 30 million yuan and a net profit of 10 million yuan. With a big wave from the boss, 10% is set aside as a point budget, so this year’s point exchange value is 1 million.

And yesFor non-paid products, the usual approach is to subsidize xxx yuan for active users. The definition of active users depends on the actual situation of the product. Do I need to clearly define the exchange rate between platform points and RMB? That is to say “how much is 1 point worth”?

In fact, many platforms do not have such a definition, the main reason is: we have to leave room for adjustment of the value of points to prevent the situation of cost out of control due to excessive acquisition of user points and excessive conversion of points.

Integration of points, how to define the value of points for user behavior

We all know the establishment of the points system. Essentially, as long as points are used to promote users to use our products according to our ideas, we will do some actions that we want them to complete.

So the points system is a very important part of the user incentive system. Together with its membership system, identity and honor system, it constitutes a user incentive system.

The point system is more from the point of view of material money. It takes advantage of the user’s greed and loss of aversion.

To obtain the points system, we must first determine what core and non-core behaviors the product has.

• Core behaviors: behaviors that have a direct impact on the product’s North Star indicators, such as e-commerce order placement, community product posting or reading behavior

• Non-core behaviors: behaviors that have an indirect impact on the product’s North Star indicators, such as registration, commenting, sharing and new behaviors
  

  Different behaviors naturally require different points. When assigning points to core and non-core behaviors, the main concerns are:

  • The acquisition of core behavior must have a clear formula, such as e-commerce APP, the order amount * 1, that is, 100 yuan points can be purchased to purchase 100 yuan points

  • Non-core behaviors are designed to earn points based on their importance and frequency of acquisition. For example, the registration behavior is very important, and it is a one-time behavior, which can give more points. And signing in such a mild and daily behavior can give you fewer points.

  • It is important to pay attention to whether the score ratio of core behavior and non-core behavior is reasonable. This can not be viewed in general, but also combined with the value of users to make judgments.
    

    For example, the e-commerce APP has a high frequency of consumption by high-value users, so its core behavior points: non-core behavior ratio may be 7: 3. For low-value users, the core behavior: the proportion of non-core behavior may be 3: 7.

    to allAfter giving points to your behavior, how to calculate whether it is reasonable? At this time, we need to measure the maximum amount of points that users at different levels can get each day.

    Take e-commerce APP as an example: we can pull the background order data to confirm the average annual order amount of low-value users and high-value users and the average number of new users.

    For example: low-value users place an average of 10 orders per year, valued at 2,000, and high-value users place 100 orders per year, which is 40,000; low-value users receive an average of 5 new people each year, and high-value users receive an average of 10 new points per year.

    The points that a single user at different levels can earn each year are as follows:

    

    According to statistics, we can know the total number of users at each level. Assuming low-value users 8000 and high-value users 2000, the total points earned by all users each year is 4266500000.

    

    

    While our budget is 1 million per year, the point value conversion ratio is: [point value conversion ratio] = 426650000/1000000 = 426.65

    Erasing fractions is 400: 1, which means that 400 points is equivalent to 1 yuan. If you think this ratio is not reasonable, you can adjust some values ​​of points according to this table.

    For example, if you must set the conversion ratio of points to 100: 1, the total amount of points cannot exceed 100000000, then the ratio of points adjustment is: [The ratio of points adjustment] is: 426650000/100000000 =4.2665

    You can use this ratio to adjust the points earned for each behavior.

    But in fact, there will be a problem here, because the total annual points we calculate are calculated based on the maximum amount of points obtained. This is actually a great exaggeration because, for example, check-ins, comments, and photos are not all Users do it every time.

    If possible, the most scientific approach is to use data analysis to confirm the number of check-ins, comments, and photos for low-value users and high-value users. [The total annual points of all users] calculated in this way is considered more reasonable.

    Point consumption, how to make users spend the points they have on hand

    Point consumption is the way users perceive the value of points. Generally speaking, it can be divided into two types: passive consumption and active consumption.

    

    Passive consumption refers to the need to give points a valid period. If the user has not used the points, the points will automatically be invalidated and cleared after a certain period of time. There are two general forms of passive consumption:

    • Zeroing at a fixed time refers to clearing all points earned at a fixed time. For example, on January 1 of the beginning of the year, all unused points in the previous year are cleared.

    • The relative time is cleared, which means that the points are cleared at the same time in the second year from the date of obtaining the points. For example, the points obtained on October 1, 2019 are 100, so in October 2020 On the 2nd, the points are cleared.
      

      Active consumption, which is usually a point mall, including physical goods and virtual goods. There will also be some operational activities, such as point sweepstakes or other points activities.

      So how do you define the value ratio between points and goods? In other words, How do you price items in the Points Mall?

      General merchandise has a cost. If it is produced in-house, then there is a production cost. If it is purchased outside, then there are procurement and logistics costs.

      The products we usually buy have a certain premium on these basis. The benefits of setting a premium are mainly to facilitate later discount activities and not to suffer heavy losses from scalpers.

      General merchandise stores will have a pricing formula: Commodity price = purchase cost * ratio of points to RMB * premium parameter A * premium parameter B * premium parameter C …

      The premium parameter A is the logistics cost, and the premium parameter B is the tax rate for financial calculation. If necessary, other premium parameters can be added.

      What about the premium parameters? For example, if you want to put on a laptop, the purchase cost is 3,000 yuan, and the logistics cost is 100 yuan per unit, then the logistics premium parameter is: logistics premium parameter = 100% + 100 / (3000 + 100) * 100% = 103%.

      The financial tax rate is assumed to be 5%, so the financial tax rate premium parameter is: Logistics premium parameter = 100 * (1 + 5%) = 105%

      Give a random premium parameter C = 150%, which is convenient for discounts later. Assume that the conversion ratio between points and RMB is 100: 1, then a computer with a cost of 3200 will be priced at 3000 * 103% * 105% * 150% / 0.01 = 486,675 points in the mall.

      With the above premium, when we are doing promotional activities, we can get up to 30% off computers with a value of 490,000 points, which is 343,000 points, which can just cover the purchase cost, logistics cost and tax payment cost.

      Integration maintenance to keep the normal operation of the credit system

      After the points system is set up and officially launched, this is not the end, but just the beginning.

      At the beginning, the points system was only based on our estimates of some data. During the operation process, some data indicators are needed to ensure the normal operation of the points system. These indicators are:

      • Maximum number of points that can be issued = points cost * points conversion ratio;

      • The actual number of points issued;

      • Point exchange rate;

      • User usage.
        

        The first two indicators can be used to judge how easy or difficult it is for users to obtain points and to control the amount of points issued. Do not exceed our budget.

        When the maximum number of points that can be issued

        When the maximum distributable points is much larger than the actual points, it means that it is too difficult for the user to obtain points, and then use the data to determine which behavior should be reduced.

        In addition, for each behavior that can earn points, it is also necessary to monitor in real time which behaviors earn the most points and which behaviors earn the least points based on the data.

        Because our purpose is to motivate users through points to do the behaviors we want them to complete, when we most want them to get less behavioral points, it means that our incentives for users are misplaced and we need to adjust accordingly. .

        The latter two indicators, the point exchange rate and user usage.

        Point exchange rate refers to how much points are issued and how many points are used, and how much is the user utilization rate.

        These two indicators reflect the user’s perception of points and the frequency of use of points, which can ultimately reflect the effect and operating status of points.

        The more points the user redeems, the more actions the user has completed, and the more we want the user to complete, the greater the promotion of the product.

        The more users use points, the higher the user ’s recognition of our points mall, and the redemption rewards we provide to users are what users need, and the points and points mall are more attractive to users.

        Summary

        To sum up briefly, if you want to build a points system, you can divide it into four steps:

        • The first step is to determine the budget of the points, which is generally drawn from the company’s marketing expenses or profits. The point system is the icing on the cake. If the product itself does not reach the PMF status, no matter how good the point system is, it is useless;

        • The second step is the source of the points. Comb the core and non-core behaviors of the product, divide users according to certain rules, and judge the proportion of core and non-core behaviors completed by users at different levels based on historical data, so as to adjust the points given to core and non-core behaviors Value;

        • The third step is where the points go. Users definitely need a place to get points, otherwise points will be useless. It’s like holding a banknote, but there is no place for consumption, just a pile of waste paper. The consumption of points is mainly divided into passive and active. Passive is mainly to set a valid period for the points to prevent the points from accumulating indefinitely and causing loss of control. Active consumption is to open an integratorCity or point activity, a place for users to consume;

        • The fourth step is point maintenance and evaluation. After the points system is launched, the points data must be viewed in real time in order to dynamically adjust the difficulty and amount of points for different behaviors to prevent misplaced incentives and out-of-control points. The evaluation of points can be judged according to the exchange rate of points and the usage rate of users. These two indicators are the best choices to judge users’ recognition of the points system.
          

          The above is the result of my study and reading the summary of the article. I have n’t had the opportunity to practice it myself, so there is a possibility of talking on paper. Welcome everyone to shoot bricks ~

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