After Xiaomi officially released the first generation of mobile phones at that time, the sales performance was very impressive, how did this happen? In this article, the author tries to borrow the AARRR model for analysis, let's take a look.
Continuing from the above, Xiaomi has been established for 1 and a half years, on August 16, 2011, the first generation of Xiaomi mobile phones were officially released, and the final price was 1999 yuan. You must know that the average price of domestic mobile phones at that time was only 700 yuan. Mr. Lei wrote in the book that he was afraid that his mobile phone would not sell.
But I didn't expect that Rebus was the biggest Versailles. I have only seen the national supermarket grabbing salt during the SARS period before, and I have never seen Xiaomi release the national online grabbing of mobile phones. Mr. Lei was even crowned with the title of "Hunger Marketing Master". In fact, Lei is always a little wronged, he has 300,000 MIUI users, 300,000 mobile phones in stock, 100% conversion, which is already the most optimistic estimate.
Who would have expected a dream start, within 22 hours, all 300,000 mobile phones were ordered, and the first generation of Xiaomi finally sold a total of 7.9 million units.
This is a miracle for a small startup with no experience in the hardware industry and has only been around for less than two years.
What's behind the miracle? We're trying to use the AARRR model to solve it.
Step 1: Customer acquisition.
It's not as tough as it was when MIUI was released, with 300,000 MIUI users witnessing a full year of Xiaomi's relentless weekly iterations. At that time, Luo Zhenyu had not proposed the concept of "friend of time", but Mi Fan must have felt that the Xiaomi team was "friend of time", the system was free, and he would change it if he knew his mistakes. This friend can get along.
Step 2: Activate.
How to let users place an order and get the phone as soon as possible when they want to buy a Xiaomi mobile phone?
Here to add a background information, in 2011, the mobile Internet has not yet taken off, everyone to buy 3C products is far less convenient than now. At that time, I had to go to offline dealer stores to buy a mobile phone, such as the business hall of China Mobile Unicom, and I remember that my first Nokia mobile phone when I was in college was bought in the business hall of China Unicom in my hometown. These middlemen not only make the difference, but also lengthen the product delivery path.
Xiaomi did not choose a distributor, but built its own official website exclusive e-commerce, front store and back factory e-commerce model, which was the shortest path for products to reach users at that time.
Step 3: Retention.
The phone is sold, how to let the user keep it, continue to use it? The next time I change the phone, I still think about you? After all, the Nokia in my hand is not useless! It is durable and long-lasting. In his spare time, he can play with snakes, and he can defend himself by walking alone at night.
Whether Xiaomi phones are good or not, let's go back to the question mentioned in the first article.
Q: What does a mobile phone consist of?
A: Hardware + software.
After 2 years of continuous iteration, MIUI is believed to have beaten a number of mobile phone manufacturers. What about the hardware? It depends on who the vendor is.
Mr. Lei wrote in the book that Xiaomi is positioned to be the best mobile phone in the world, and the supply chain is directly benchmarked against Apple. But Xiaomi, as a layman, really underestimated how difficult it is to get a supplier. I can't help but think of a joke by Luo Yonghao circulating on the Internet: Lao Luo found a supplier with millions and said that he wanted to make a mobile phone. The other party was stunned and asked: Do you want to make a mobile phone? or a mobile phone case?
Many of the top mobile phone providers don't just spend money to get it. In the book, some details of Mr. Lei's handling of major key supply chains are written. For example, when dealing with Sharp's mobile phone screen, Mr. Lei risked the Fukushima nuclear leak after the 2011 earthquake in Japan, visited Sharp's Osaka headquarters, and finally impressed the other party with sincerity and reached cooperation.
There is also an order for 150,000 pieces of Qualcomm's most advanced dual-core 1.2G processor, but I didn't expect that just a few months later, Qualcomm launched a more advanced dual-core 1.5G processor. The 150,000 chips, worth $6 million, are obsolete before they are installed. But in the end, Xiaomi ordered the latest Qualcomm chips. The author deliberately checked on the Internet, and since then, Xiaomi has often debuted Qualcomm Snapdragon chips, and even in July 2015, Wang Xiang, president of Qualcomm Greater China, joined Xiaomi, which shows that the cooperative relationship between Xiaomi and Qualcomm is particularly deep.
Another example is the strategic cooperation between Xiaomi Mi 13 and Leica cameras, which provides users with an excellent photography experience.
Through the blessing of the top supply chain, continuous product design innovation, coupled with the pursuit of the ultimate user experience, Xiaomi has a strong product power in mobile phones at the same price.
Step 4: Earnings.
What does Xiaomi rely on to make money? Does it rely on selling mobile phones? Xiaomi's main product is cost-effective, "touching people's hearts, and the price is kind." And Mr. Lei said in a public speech on the eve of Xiaomi's IPO that he promised: always insist that the comprehensive net profit margin of hardware does not exceed 5%.
If you don't make money by selling mobile phones, then what can you rely on? Moreover, Xiaomi's research and development is very expensive. R&D investment in 2021 reached 13.2 billion yuan.
Calculated with the simplest formula: Profit = Benefit - Cost. If you want to make money, open source and reduce expenditure should account for a total item.
First from the cost point of view, although Xiaomi's R&D cost is huge, as long as there are enough products sold, the R&D cost will be flattened, or even almost free, which is the marginal cost reduction. In the same way, why do you buy free shipping in Jiangsu, Zhejiang and Shanghai online, but the remote provinces in the west can't do free shipping? Because the online shopping in Jiangsu, Zhejiang and Shanghai is active enough, the logistics cost is allocated to a large number of goods, and the cost is negligible.
Secondly, Xiaomi's new media marketing and explosive products bring their own traffic, so that the cost of marketing and advertising has become extremely low, and the telemarketing model of the front store and the back factory has made the cost of sales and channels extremely low.
If you do a good job of throttling, how to open source?
Here, we need to seriously think about what kind of company Xiaomi is?
Mr. Lei said: Xiaomi is not a simple hardware company, but an innovation-driven Internet company.
Think of Xiaomi as an Internet company, that is familiar to all product managers, as we all know, the typical Internet business model will attract users and obtain profits, divided into two steps. Similarly, Xiaomi attracts users through mobile phones, and then provides users with various value-added services, such as advertising fees, games, reading, cloud services, and so on. The Internet monetization business provides the vast majority of Xiaomi's profits, and it continues to grow. In 2021, Xiaomi's internet revenue reached 28.2 billion yuan. You see, it's more than twice the cost of R&D.
Step 5: Referrals.
Since the first generation of Xiaomi, Xiaomi has continuously launched a number of popular mobile phone products. The Xiaomi Mi 2,3 sold more than 30 million units. In July 2013, the 799 yuan Redmi was launched, which was really a thunderbolt in the copycat market, with a total of 44.6 million units sold. In one fell swoop, the copycat machine was kicked out of the stage of history.
What is even more talked about by rice fans is that at the product launch conference of Xiaomi's 10th anniversary, Mr. Lei sincerely thanked the first batch of 184,600 users who bought Xiaomi 10 10 years ago. And, the 1999 yuan threshold-free red envelope coupon was returned to the Xiaomi Mall account of the first batch of users. It's 370 million. Mr. Lei won again.
It may be luck to be able to write a 10w+, and the article is 10w+, so what is reliable is strength!
Xiaomi has the strength to create popular products, and has even figured out a model for creating explosive products!
1) Identify user needs
Explosive products originate from the needs of the public, and it is necessary to find the common pain points of users, give satisfaction beyond expectations, and defeat the user's psychological defense line with the ultimate cost performance. Think about red rice, the copycat machine is not fragrant in an instant.
2) Products that exceed expectations
Simply cheap or easy to use, it is not beyond expectations, it must be excellent in all aspects, at least outstanding at home, it is possible to exceed expectations, so as to form a reputation.
It's all good, it's easy to end up with a mediocre performance, and you have a very "wow" aspect.
3) Surprise pricing
Let users feel that they are worth the money, and they will be willing to share and spread. As the old saying goes, "a small amount of profit is not small, and a large amount of profit is not a small profit".
4) Efficiency wins
From marketing and promotion, to product research and development, to sales and service, all links will minimize costs, improve enterprise operation efficiency, and improve capital turnover efficiency.
Since then, Xiaomi has perfectly evolved from the first round of MIUI's AARRR model to the second round of Xiaomi mobile phone AARRR model. However, a new question arises, after all, mobile phones are low-frequency consumer products, and have long become the smartphone market of the Red Sea, how to support Xiaomi's continuous growth? How did Xiaomi complete the listing in eight years and become one of the world's top 500 companies in nine years?
All questions are answered in Xiaomi's third round of AARRR model evolution.
Author: Xu Shrimp Shell, Senior Product Manager of Kingdee
This article was originally published by @徐虾壳 on Everyone is a Product Manager. Reproduction without the permission of the author is prohibited.
The title image is from Unsplash and is licensed under CC0.
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