Hello, thank you for your attention, this is our 213th original article.
Since August last year, we have systematically focused on the probability logic of the stock game, and have successively launched 1 study note, 3 logical interpretations, and 4 square **, which took the lead in the industry to interpret the case of Zhongsheng GO paid subscription membership rights and interests, and sorted out the excerpts of the live broadcast record of "Auto Expert".
We are not the only ones who see the trend of stock. Wu Xiaobo's "Year-end Show of Concentration Supremacy Factory" mentions the stock game, quoting a sentence from Focus Media Jiang Nanchun: "In a counter-cyclical era of stock game, the new increment of entrepreneurs comes from four aspects: new product detonation, scene triggering, channel assistance, and the creation of high-quality content." ”
In the automotive industry, there are also many "enlightened" people who have seen the trend of stock and shouted "to increase the stock", "how to land, are there any good ideas and cases?"."This is a question that we have answered many times.
There is such a case, the 2023 interim results disclosed such data:
The number of individual customers increased by 1 from the beginning of the year2%；
Number of contracts for individual customers: 299, 26% of customers hold more than 4 contracts within the group;
The churn rate for customers with 4 or more contracts is only 091%；
From 2015 to 2022, the profit from business operations increased by 42 times (the number of customers increased by 2 times in the same period), the average profit per customer increased by 2 times, and the average customer contract increased by 15 times.
The growth of profits is greater than the growth of the number of customers, which is really fragrant!Who is this?How?
The case to be discussed in this article is Ping An of China (which can no longer be defined as an insurance company).
The key to this case is what Ping An called in its 2023 Interim Results Report"Cross-migration of existing customers".
The key inspiration of this article is that in the face of the customer stock game, we should not pursue the profit of each product, but should designProduct Matrix
How is peace done?What is the cross-migration of Ping An's existing customers?Why build a product matrix?
This article is quite in-depth, it is recommended to collect it first, and then taste it.
Every month of 2024, we will bring a case study of stock games. Pay attention to Lian Zhen and embrace uncertainty together.
What is the cross-migration of Ping An's existing customers?
In terms of cross-migration, we started by talking about cross-selling.
For example, for customers who have bought property insurance, cross-sell life insurance products and vice versa. It can also be understood as the development of multiple sales opportunities for existing customers.
The first and foremost problem is that there needs to be enough product. How many businesses and products does Ping An have, the following picture looks like it's too complete. In their own words, it is called a "fully licensed integrated financial group".
Ping An is not the only company with a full license.
So many business lines, so many companies and their products, usually often "brothers, clear accounts", my customers buy your products, how much do you share with me?The other side of the coin is that the customer doesn't think so, and the customer will say, aren't you all all safe?Isn't it all a boss behind it?
Can the same group content open up the customer information of various sectors, companies and product lines, and the accounts of the same customer can be interconnected, and what products have been purchased?What other products can be purchased?More transparency for buyers and more business opportunities for sellers.
To this end, they came up with the concept of "integrated finance". What is Integrated Finance?Ping An's official statement is to meet the diversified financial needs of customers and maximize the value of customers and the company through one-stop integrated financial solutions.
The one-stop integrated financial solution is as follows: one customer, one account, multiple products, and one-stop service.
Seeing the above picture, it still seems very abstract. We found a case study provided by Ping An about the ecology of car owners:
For car owners, Ping An can provide many products, such as car insurance is required to buy a car on the road, a car may also require a loan installment (or financial leasing) to buy a car, and after owning ......a car, it will involve services such as driving, parking, car maintenance, car repair, and car replacementTo this end, from the perspective of the car life rights platform, Ping An put forward a case of new customers migrating from four contract numbers to high-value products for car owners.
The logic of cross-migration of existing customers is not complicated: let existing customers buy more.
Luo Zhenyu said that as soon as it is concrete, it is profound.
If summed up in one sentence, the integrated financial model is passed under the premise of business complianceOne-stop solution to meet the diversified financial needs of customers, and in this way, maximize the value of customers and companiesFeatured paths. This is an inaccessible road, and Ping An Group has been walking for 30 years.
When the growth of customer scale slows down and the increment needs to be mined from the stock, one of the ideas is whether it is possible to let existing customers buy more and increase the "average number of contracts per customer"?
In 2022, the members of Ping An Group acquired 27.11 million new customers from the group, and the total number of new contracts for cross-selling within the group was 66.95 million. In the seven years from 2015 to 2022, the average number of contracts per customer of Ping An Integrated Finance increased from 203, increased to 299 pcs. That's a growth of 15 times.
Figure: The average number of contracts per individual comprehensive financial customer has increased significantly.
*: 2023 Ping An Q3 earnings report).
In the 2023 Investor Day materials, the most obvious business indicators of Ping An Integrated Finance are reflected in the "three figures" of Ping An's market-leading customer scale, average number of contracts and average profit per customer.
The cross-migration guided by the number of customer contracts not only realizes the increase to the stock, but also brings two "by-products": the reduction of customer acquisition costs and customer churn rates.
According to Ping An's "2023 Interim Results Report", the cross-migration of existing customers makes the customer acquisition link shorter, the friction cost is lower, and the comprehensive customer acquisition cost is lower (the internal channels of banks and health insurance are only 73% and 55% of the external channels). At the same time, the increase in the number of contracts per customer leads to a lower customer churn rate and higher customer stickiness (the churn rate of customers with 4 or more contracts is only 0.).91%。Nearly 1 customer with 5 years or more in the group5.3 billion people, accounting for 667%）。
More than that, there is a more important conclusion:The higher the number of contracts per customer, the higher the "importance" of the customer.
The well-known "28 principle" tells people that 20% of important customers bring 80% of the performance contribution. The question is, who are the "high net worth" clients?Ping An's public information disclosure: The higher the customer's wealth level, the more contracts held by Ping An. As of the end of June 2023, the group's middle-class and above customers accounted for more than 757%, and the average number of contracts for high-net-worth clients reached 2144, much higher than affluent customers.
In fact, it is not difficult to understand that the so-called "VIP" is just buying more and buying more expensive!
The cross-migration of Ping An's integrated financial and existing customers can be interpreted from many aspects. Based on the competitive perspective of the stock game, it can be considered that Ping An used to be an insurance company, whether it is life health insurance or automobile insurance, will face a problem in the future
The logic of high-speed scale growth based on the demographic dividend in the past no longer exists in the future. It's not that there aren't so many people who don't work hard!(As mentioned in the previous article, the team of associate professor Qiao Jinzhong of Beijing Normal University has used data models** to say that by 2035, there will be a surplus of about 1.5 million primary school teachers and 370,000 junior high school teachers in the country.) The number of students enrolled in compulsory education will peak in 2024 and then accelerate the decline, and by around 2035, the number of students enrolled in compulsory education will be 30 million fewer than in 2020).
So what to do?For the track and practitioners who are moving towards the stock game, the case of Ping An has given an inspiration
Provide diversified products and services, and the growth of customer scale slows down, then the stock operation will increase the average customer value.
Figure: The logic of Ping An's steady and sustainable growth.
2023 Ping An Investor Open Day Materials).
How to improve the value of existing operating customers?
Xiao Zhixing, the founder of the Lingjiao Workshop, has a point of view that there are two "Pacific Oceans" between not knowing and knowing, and knowing and doing. The integrated financial model has brought great development assistance to Ping An's own business development and achieved the rapid development of the supermarket. Over the past 30 years, Ping An has achieved a net profit growth rate far exceeding the market under the integrated financial model, with a compound growth rate of 27%, and the highest market industry indicators in the same period are only 21%.
Rome is good, but Rome was not built in a day. In the history of China's financial industry, integrated finance has always been a river that few people have stepped on. Few people step in, either without fish or without ability. Comprehensive finance is obviously a big fish in the water.
In the 2004 pre-IPO roadshow in Hong Kong, in the face of international investors' concerns about integrated finance, Ma Mingzhe made a forward-looking choice for Ping An: if it does not take the integrated financial path of one customer, one account, multiple products and multiple services, Xiaocheng has no problem, and Zhongcheng is also possible, but it is difficult to become Dacheng, that is, it cannot become an industry benchmark, let alone become a world-class innovative company.
At that time, it was a foresight or a dream, but now and in the future, it seems that it is not only the right way to go, but also a must in the future!
This material is interpreted as a report that reshapes the valuation logic (available at the end of the article), which not only dismantles the operating profit of individual business from the familiar dimensions of quantity (number of customers) and quality (average profit per customer), but also proposes to focus on the growth of personal business value driven by the three major customer operating indicators "three numbers".
Which three counts?Profit per customer, number of customers and contracts per customer.
To increase the average profit, you need more transactions and more average profit. The average profit is not an independent decision within the enterprise, subject to the product life cycle, brand premium ability, chain cost control, operational efficiency, etc., of course, the more important point is that the competition "volume or not".
How do I get more contracts?It's certainly best to have more new customers growing, but what if you don't?Excavation in stock holding. How to dig?Still a case provided by Ping An:
In the face of the "new track" of new energy vehicles, Ping An Bank has penetrated into the panorama of the industrial chain, and organically connected the capital needs of retail terminals with the financing needs of upstream manufacturing, providing packaged financial services for new energy vehicle manufacturers, and effectively expanding the boundaries of financial products and services. It also builds a car through the pocket bank APP, and builds a service platform covering the whole cycle of car selection, car purchase, car use and replacement for customers, thereby increasing the contact point with existing customers, so that Ping An car owner customers can enjoy Ping An Bank's warm financial services.
Starting from the needs of specific segments of customers, we will go deep into the scene and accurately match the products. Ping An's official description of it is: "Strengthen the business model: based on the needs of the customer group, accurately match the products, and realize the jump in the value of the customer group in the business chain".
This diagram has a very, very useful key information: different customer business indicator orientation, different product value propositions
Hook (customer acquisition) products: products that are easy to obtain, have a good reputation, and have high customer acceptance increase the number of customers.
Sticky products: high-frequency, rigid demand, and high-stickiness products increase the average customer contract (number of transactions).
*Value products: professional, exclusive, exclusive, differentiated products to improve the average profit of customers.
Back to the automotive-related fields that are familiar to our readers:
The comprehensive cost ratio of auto insurance is high, and it is difficult to make a profit in underwriting, but car insurance is just needed by customers and has a high penetration rate, so it is positioned as a "hook" type product, others make products to make money, and Ping An says that they are to "gain customers".
How to increase customer stickiness, such as credit cards and their installment business, are products that can increase stickiness and churn barriers between customers and customers.
Sticky products are also very rolly, what should I do if the profit is not high?Car owner loan products, accident insurance, life insurance products, etc. can become high value-added products.
In the past 20 years, the rapid growth of the automobile market has made the auto insurance industry also enjoy incremental dividends. After 2017, the domestic passenger car market has changed the trend of rapid growth in the past and gradually entered the new normal of "growth convergence".
The incremental market means that the scale and income continue to grow, and the market demand is strong, and what the auto insurance business needs to do is to expand product supply, improve market coverage, and enhance service capabilities. The development of auto insurance business emphasizes channels: strategic cooperation with OEMs, density and depth of network cooperation with "car dealers", and business development capabilities of telemarketing and online sales. Similar to the auto market, the auto insurance business emphasizes more on scale, growth rate and share under the incremental dividend. The auto market has entered the stock game, and the changes and pressures will gradually be passed on to the auto insurance industry. Without sufficient incremental growth of car owners, it is difficult for the overall market to maintain the momentum of year-on-year growth in the auto insurance market.
Starting from the car owner customer, car insurance, as a hook product, extends to the car owner credit card with the function of sticking to customers, and through the continuous service of the owner's rights and interests such as refueling and driving, and then converts it into the most valuable products such as car owner loan and new car loan, the entire car ecological link can achieve more than four product contracts.
Car insurance doesn't make money, and new energy car insurance loses money, so what should I do?Don't you just do it?
The so-called cross-migration is not to sell fish to more people, but to find a way to eat more fish and sell it more expensive!
Have you ever thought that some products may not and cannot make money!!
At the end of the case, one word is shared: product matrix.
Hook, stickiness or value?
Behind it is the product matrix
Before the product matrix, let's introduce another matrix: the Ansoff matrix.
In 1957, Dr. Ansoff, the father of strategic management, proposed an analysis matrix: taking product and market as the two basic aspects, distinguishing four product market combinations and corresponding marketing strategies, which has become one of the most widely used marketing analysis tools. Hence the name.
Ansoff Matrix.
The Ansoff Matrix is a 2 x 2 matrix that represents the four options for companies to try to grow their revenues or profits, and the main logic is that companies can choose four different growth strategies to achieve the goal of increasing revenue.
Ansoff Matrix has many applications and inspirations, analyzing stock trends in the context of existing markets, either to increase product penetration or to develop new products.
The penetration of existing products may be improved, but it is often a "fish and bear's paw" that cannot be achieved in the "Red Sea" operation. For manufacturers or dealers in the automotive industry, it is customary to set a "markup rate" between new cars and accessories to obtain gross margins.
For a tire, the purchase price of ** merchant is 300 yuan, the car manufacturer "wholesale" to the dealer is 450 yuan, and the dealer ** gives the customer 600 yuan (subjectively I also want to add the "working hours" of changing the tire).
Is it fragrant?It's fragrant. Can it be sold?It's so hard!Luo Zhenyu said again, as soon as he was confused, he went out.
Go to the supermarket in order to attract customers to lower the eggs**, to think about the tires, small maintenance and car washing ** of the "cats, tigers and dogs" in the automotive aftermarket, maybe it is not difficult to understand!
Drainage products want to attract customers, either brand attraction or low-cost mentality, such as car wash.
Sticky products are about increasing the frequency of customer transactions, increasing repurchases, and obtaining cash flow at the same time, such as car maintenance.
Profit products, to earn high value-added profits, such products are high, the cost is controllable but the sales are limited, such as the extended warranty of the car.
Image products, what you want is a high-end brand image, not seeking quantity, not profit, and not income, such as the "top configuration" of cars.
In the era of incrementality, the Ansoff Matrix inspires more customers to increase supply and provide products to meet different needs in new markets.
For example, car brands often provide top, sub-top, medium, and low-end models for a certain car series at the same time, which are called entry-level entry, economy, high-end luxury, and flagship flagship.
In the era of stock, what should I do if there are not so many customers?The Internet industry, which has already entered the stock game, has given an inspiration to provide the same customers with diversified product choices, and let existing customers buy more without more customers.
The inspiration of the cross-migration of safe stocks
Ping An's cross-migration for existing customers is not fragrant?Of course it's fragrant!Is it difficult for other insurance companies or even other industries to replicate?Of course it's hard!There can be no second peace.
Ping An's successful case can at least help people in the stock game to see the trend clearly, so that it is possible to reconstruct the advantage.
Wang Sai, the author of the book "Growth Structure", said that if there is no opportunity for infrastructure migration (such as the market space dividend of 1,000 people's car ownership) and population migration (such as the urbanization of the population and the use of cars to the countryside), the only growth strategy that can be chosen is "integrated growth".If there is no growth cake and no market share, then increase the "wallet share" of existing customers.
Regarding the stock game, Ping An chose to increase the number of customer contracts under the trend that the customer scale could not grow, so as to increase the average customer value. This is not only a safe choice, but also the law of survival of the fittest in market competition.
Ping An is a success story, but not an isolated case.
Ping An's case answers a question: under the trend of stock, it is no longer possible to expect every product to be "...... as beforeAgain, ......And ......"Some people are struggling to make a profit in car insurance, and Ping An seems to be just a hook to get customers.
Ping An's case illustrates a logic: profit is not just about quantity and individual gross profit. Any business growth usually comes from the 3 M's - "more user, use more, more expensive", that is, "let more people use, let everyone use more, let everyone spend more". Any business growth, at the end of the day, is voted on by customer transactions. Whether the product matrix is effective or not can only be verified by the market in the end.
The customer determines what your business is, what it produces, and whether the business will prosper in the future, because customers only pay for what they think is valuable. Drucker said, "The success of [a strategy] depends on whether it meets the needs of the customer, and whether it can answer the question of 'what is the real service and the real utility for the customer?'"
Ping An's case clarifies the fact that any success is inseparable from the accumulation of long-termism. When Ping An summarized the advantages of "one-stop integrated finance", he mentioned six core advantages: complete licenses, focus on main business, channel network, ecological services, technology platform and organizational culture. What's behind it?It is the accumulation of time, resources and experience in the past 30 years, which is the "barrier" that knows the "fragrance" of Ping An, but others cannot learn.
Stock games can have mature cases and experience, but there are no commonly known skills and routines.
The relevant content and materials in this article are quoted from the "2023 Interim Results Release", "2023 Third Quarter Results Report" and "2023 Investor Open Day - Approaching Ping An Group Integrated Finance" released by Ping An of China to obtain the original documents of the report.