Expanding into China? Know Private Domain Traffic!

Three years to become the country’s leading domestic brand of cosmetics.

1.7M followers and 2.2M likes to date.

More than 100 million RMB turnover in 1 hour 28 minutes.

No, it’s not a scam, it’s the numbers from a Chinese domestic brand, “Perfect Diary”.

How did this gentle, fairytale-like 3-year-old startup brand climb up to be a number one powerhouse in just 3 years? Without a doubt, its private domain traffic tactics had a hand in it.

Private domain traffic is a recent but fast-growing trend in the Chinese marketing, advertising, and e-commerce industries. Since a few years back, Chinese companies began fearing its customer base increase was nearing its limit and began tapping into existing customers. CRM or customer relationship management is a system by which companies stay connected to their customers, update their processes, and improve overall profitability.

To determine which customers to target and keep, companies turn to CLV. CLV, also known as customer lifetime value, is an estimate of the total money to be made from a customer from their first purchase to the last transaction at a business. In other words, it’s my profitability to Perfect Diary from my first eyeshadow palette purchase on my 13^th birthday to the last lipstick I buy when I’m 80 before I decide I’m too old for the brand. Private domain traffic has become one of the hot trends used to meet this objective.

Understanding Private Domain Traffic

In China, there are several large traffic pools that have large flows of users including Taobao, a similar platform to Amazon, Baidu, an alternative to Google, a Weibo, a similar platform to Twitter, WeChat, a messenger app like Facebook, and so forth. Brands can obtain what is known as private domain traffic (private-controlled flow, private channel traffic) from these platforms through private chats and group chats where users with similar buying habits or interests are grouped together. Private-controlled flow refer to the acquired users that can be directly contacted, at any time, and without frequency limits by the brand.

The most common form of private domains include personal WeChat, WeChat groups, or company applications and are considered as the merchant’s “private assets”. Unlike many US and European brands that rely on traditional channels such as phone numbers, emails, and house addresses to reach their customers, brands in the Chinese market are increasingly moving in the direction of social media and mobile applications.

How It Works

Many brands like Perfect Diary invite their customers to add WeChat KOCs like Xiao WanZi and join company WeChat groups during their first purchases. Unlike KOLs, or key opinion leaders, who are often sponsored celebrities and web celebrities, KOCs, or key opinion consumers are usually sponsored amateur bloggers. For example, Xiao WanZi plays the role of a regular girl with similar buyer habits, a “friend” who you can “trust” to recommend products and influence you to buy. Her account is updated every few days with her love of new makeup products. She might even add you to a group chat of other users like yourself.

WeChat groups rely on moderators and promotions to stay relevant to their customers. Customers are invited to join company-organized WeChat groups have moderators operating these groups. Xiao WanZi oversees creating excitement and offering daily promotional events, coupons, lottery chances, and live broadcasts to motivate users to continuously purchase.

The purpose of the private domain is to continuously sell even after the customer has left the store or website. Often, it takes a trigger or a catalyst to push a customer to purchase a product. So, the purpose of a private domain is to keep reminding the customer of that motivation to trigger sequential purchases. The brand continues to stay relevant in the mind of the customer which increases the chances of a returning customer. Stay tuned to learned more about how you too can utilize private domain traffic to become the next big thing!