Hello, welcome to “Tencent Products 18” produced by Tencent University.
In the last lesson, we discussed how to find the right position for a product in the face of new markets and opportunities. Based on the right position, the product can enter the market from an appropriate angle and gain an advantage in the competition.
In addition to being liked and recognized by users, there is also a very important question that we need to think about, that is, “how to make money.” People generally call “how to make money” commercialization. Today we will talk about the topic of commercialization of products. Sensitivity
to business logic is a necessary quality
for product managers. First, I want to ask you two questions. Is only a free product a good product? Is there a contradiction between business value and user value?
The answer is no. Products require a lot of resources to invest, and it is difficult to rely solely on the “blood transfusion” of capital for a long time. Only commercialization can enable products to have the ability of self-hematopoiesis and make the development of products sustainable. Successful commercialization can also promote the better development of products.
For example
, the very popular paid learning, due to the introduction of the payment model, not only helps users to screen learning content efficiently, reduces the cost of selection, but also encourages knowledge sharers to produce more high-quality content.
We have observed that some new people who make user products tend to neglect the understanding of business logic and always feel that their goal is to serve users, so they do not care about business value. But in our view, understanding the business logic of the business is equally important for product managers on the user side. If
product managers can understand the business logic of the business, they can have a more global vision, a deeper understanding of the value of their work in the business chain, and from the beginning of product design, they can take into account the possible business model, take into account the market and cost, and create a product ecosystem that can continuously create user value. In today’s increasingly competitive world, enterprises will have higher and higher requirements for the business sensitivity of product managers. The premise of
commercialization is that products can provide value
to users. Tencent’s business philosophy is “everything is based on user value”, and we believe that commercialization is no exception. Only by providing users with valuable goods or services, can there be the possibility of commercialization, because only when there is value recognition can there be users, only when there are users can there be transactions, and only when there are transactions can there be income, otherwise the perfect business design is only on paper.
If there are still doubts about the value of the product, it is suggested not to jump to commercialization first, otherwise it is likely to make a business that makes a profit and runs away, and ruin the reputation of itself and the organization. What are the modes
of
commercialization? We understand the significance of commercial value to products. Next, let’s see what are the modes of commercialization of products. In the mid-
19th century, news of the discovery of gold came from California, USA. Many people saw this as a once-in-a-lifetime opportunity to make a fortune and rushed to California. Gold dreams are beautiful, many people have such dreams, and more and more people flock to them. For a time, California is full of gold diggers, and gold is naturally more and more difficult to find. Then a young man had a brainwave. He thought that it was too difficult to pan for gold. Why don’t I sell water to the gold diggers instead? As a result, many gold diggers returned empty-handed, while the young man who sold water accumulated a lot of wealth.
From this short story, we can see the two different commercialization models of “panning for gold” and “selling water.”. With the passage of time, products and service objects are varied and product models are different, but the core essence remains unchanged. We can produce and sell products and services to users, just like the “gold rush” above; It can also provide some tools or services for practitioners in some hot industries at a certain time, just like the young man who “sells water”, so as to optimize and improve the productivity of these practitioners.
Therefore, according to the different sales and service objects, we can roughly divide the commercialization model into two categories:
the first category is that users directly purchase products or product services, such as opening QQ music membership services, or purchasing skin props of King Glory games. It is the individual user (Customer) of the user’s direct service that charges. We call this mode C-end charging, also referred to as ToC mode.
The second category is to help other subjects complete their products and services through the output of capabilities or resources, and to obtain part of their revenue, such as advertising services such as portals, search, information flow, etc., so that businesses can get brand exposure and new users, such as providing the basic capabilities of cloud computing. So that businesses can build their own services more efficiently and stably. This kind of product or service is usually charged for enterprises or organizations (Business), so we call this model B-end charging, also referred to as ToB model.
Whether the business model of the product is ToC or ToB, there are some common points, they all need a good experience, they all need to think, what is the core value of the product? What are the pain points of customers? What customers and roles does the product serve and what problems does it solve? How was it solved? The
same product using ToC or ToB business model is not either one or the other, such as Jingdong Mall (JD. Com) to sell electrical appliances and department stores to users, which is the business model of ToC; At the same time, Jingdong also provides an open platform to share its users and traffic with third-party small and medium-sized merchants. It not only provides users with more choices of goods through more merchants to enhance user experience, but also collects commissions from new sales orders brought by third-party merchants to charge for ToB. The commercialization mode of
an enterprise or organization is not a single one. Take Tencent’s financial report as an example, membership services such as Tencent Video and QQ Music, as well as game services such as King Glory and Peace Elite, belong to C-end charges; Guangdian Tong effect advertising for advertisers, and enterprise services represented by Tencent Cloud, belong to B-end charges. Every enterprise and organization will choose its own business model
according to its own product characteristics. How can we find its own business model? We believe that product managers should go back to the product itself and explore possible payment models based on user scenarios. Here are three ideas.
First, commercialization should be combined with product characteristics
. As we said earlier, according to the different sales and service objects, the commercialization model can be divided into C-end charging and B-end charging. The Internet provides a complex and changeable environment for business models. According to the user payment scenario, there are three common business models for Internet products:
1. Direct sales. It refers to the commercialization of products or services through direct sales, such as e-commerce and content payment.
2. Value-added services. It gathers popularity through free basic functions, and then realizes commercialization by providing value-added services such as membership, privileges and game props for paying users. There is no charge for basic services: for example, there is no charge for QQ Music just to listen to songs, no charge for QQ and WeChat just to communicate, and no charge for King of Glory just to play games; but if users want to download higher-quality music in QQ Music, or wear more cool and handsome hero skins in King of Glory, they need to pay the corresponding fees, and users will be willing to pay for personalized needs.
3. Flow realization. Some products or services are difficult to commercialize directly, but they can be “monetized” through advertising, traffic distribution, and other means.
Similarly, these three models are not mutually exclusive, more and more game companies began to implant advertising in the game, through constant attempts and optimization, they will deeply integrate advertising and game links, bringing considerable advertising revenue. At the same time, they also found that through careful design of advertising display timing, embedded advertising will not affect the user’s game experience, to a certain extent, it can also improve retention and paid penetration, because non-paying users will gradually enter a “bottleneck period” after the “novice period” of the game, at this time, by watching advertisements to obtain game resources, it can effectively improve the game experience. For example, in some mobile games, when players fail to break through, they are provided with the opportunity to watch videos and get “free resurrection” to attract players to continue the game and extend the game time.
Second, commercialization should be combined with the stage
of product development. When we formulate commercialization plans for our products, we can repeatedly ask ourselves these questions:
1. What are my resources and capabilities?
2. What value can I offer?
3. Is the benefit I can get greater than opportunity cost?
Only when it can provide value matching with resources and capabilities, and the benefits are greater than opportunity cost, can we say that this is a sustainable ROI (return on investment) solution.
Why do you ask these questions? Because with the change of product development stage, product managers should dynamically evaluate their resource capabilities and value changes, and make corresponding adjustments in business model. In the initial stage of the product, the choice of commercialization mode should be more cautious, and it can be tested and verified on a small scale before gradually expanding. When there are variables in the upstream and downstream ecology of products or services, the ability and efficiency of one or several participants are improved, one party is replaced by others, or the business model is subverted due to the emergence
of new technologies, it is necessary to redistribute the benefits, and the business model is bound to have new considerations.
Third, commercialization should be combined with the development stage
of the market. When designing the commercialization model of the product, the development stage of the industry and the market should also be taken into account. It is necessary to design a matching commercialization model according to the user’s awareness of the product, the acceptance of payment, and the popularity of payment channels in the country and region. In the early days of the development of the Internet
in China, users’ understanding of the Internet was mainly freedom and free. At that time, the mainstream of the Internet was the “eyeball economy,” and there was no particularly good business model. In 2001, China Mobile launched the “Monternet” platform, and Internet companies cooperated with major operators to launch various SP & # x2F; CP value-added service models based on SMS, MMS and other information service fees, which brought rapid growth to China’s Internet industry.
With the popularity of smart phones, 4G networks and mobile payment, covering all aspects of people’s life and entertainment, a variety of products and services as well as new business models have sprung up, constantly changing people’s way of life and cognition.
With the improvement of people’s living standards and the increasing attention and improvement of intellectual property protection by the state, users’acceptance of high-quality genuine content payment has gradually been cultivated. According to Tencent’s first quarter earnings report in 2020, the number of Tencent video subscription accounts increased to 112 million, up 26% year-on-year, and the number of music paying users exceeded 43 million.
In addition, taking the online game industry as an example, before 2005, with World of Warcraft as the representative, most of the online games in the market used the model of “charging by the length of time” to convert into the length of the game before playing. With the development of online payment channels, some online games begin to charge for free games, but charge for value-added services such as props, which is equivalent to using the income from a small number of paying users to subsidize the operating costs of most free game players. On the one hand, free of charge can attract more users; at the same time, charging for virtual props from players who are willing to pay will not be lower than original “one-size-fits-all” state, where all users are charged on time and for a long time. Now, the model of “free games + charging for virtual props” has replaced “charging for time” and become a more mainstream online game business model.
Commercialization should
not be at the expense of user experience. Simple and crude means may promote short-term revenue growth, but will cause irreversible loss to the long-term value of products. So we advocate that commercialization should be elegant.
Zhang Xiaolong used to
not allow “black five” advertisements in all Tencent products, and at the same time, he would control the total amount of advertisements to avoid interfering with users. For example, the WeChat team will control the total amount of advertisements in the circle of friends, so that users can only receive 1-2 advertisements in a certain period of time to avoid overexposure. What should be done to achieve elegance and restraint in
commercialization?
First of all, from the formal point of view, the business model should be naturally integrated with the product tonality. Good advertising is also good content, which is exactly what WeChat’s circle of friends does. From the formal point of view, the circle of friends advertisements, whether pictures or videos, are like the circle of friends sent by WeChat friends, and users can interact and comment like friends. This way couples the product form well, does not affect the coherence of user reading, and is also an innovation in the industry. From a stylistic point of view, the quality of the ads in Moments is relatively high, and they are very much in line with the tone of WeChat’s products. When the first three ads were launched, “Why do you see a BMW and I see a cola” became a popular topic among users.
When there is a contradiction between commercialization and user experience, commercialization should be carried out within the acceptable range of users, and the balance between the two should be sought as far as possible. The second suggestion for
commercialization to be elegant is to give users the right to choose.
Some products have pop-up advertisements without closing options, or automatically renew monthly users without prompting, which will allow users to accumulate more and more negative energy, ranging from Tucao to uninstalling products. A more balanced approach is to give users the right to choose, remind users in obvious places, and make it easy for users who do not need to cancel services.
Finally, commercialization should be combined with the personalized needs of users.
Products can make more refined business strategies by analyzing user behavior. Moments advertising has made a lot of efforts in this regard: the WeChat team will not only control the total amount of advertising, but also analyze the user’s characteristics and interest points, and push the advertising content that users are more interested in as much as possible. On this basis, it will also decide the strategy of pushing advertisements according to the behavioral characteristics of users in the circle of friends, aiming at those
users who will skip or click on advertisements and are not interested in them, so as to reduce the push of advertisements and avoid harassment to users who are sensitive to these advertisements.
Summing up
this lesson, we talked about the commercialization of products. Product managers should be sensitive to business logic, consider possible business models from the beginning of product design, and create a product ecosystem that can continuously create user value.
We can choose the appropriate commercialization mode by combining product characteristics, product development stage and market development stage.
Commercialization should not be at the expense of user experience. Simple and crude means may promote short-term revenue growth, but it will cause irreversible loss to the long-term value of products.
After class
, what elegant business models have you seen? Feel free to share with us in the comments section after class. This is the end of the
suspense notice
. We have finished learning the second step “comparison” of the product’s three-step method of “finding, comparing, and trying.”. It is said
in the Master Sun’s Art of War, “Therefore, those who are skillful in war can establish themselves in an invincible position without being defeated by the enemy.”. Sun Tzu taught us not to win first, but to be invincible first, which is the secret of victory for those who are good at fighting since ancient times, and also the essence of Sun Tzu’s thought. The last thing I want to give you is our guide to avoid pitfalls in this module. I hope you can apply what you have learned. Welcome to continue listening to “Tencent Products 18”. Congratulations, you have finished another lesson. If you feel that you have gained something, don’t forget to share it with more friends and grow together.
Receive the value-added services provided by the purchased products. Because it is a combination of 3 & # x2F; 11 | directly to the end use product or service. 4 & # x2F; 11 | type, that is, users need to purchase game point cards through newsstands and other channels, and make the point cards 7 & # x2F; 11 | recommendations: 8 & # x2F; 11 | invincible in the fierce product competition. Be invincible in the
fierce product competition.
