Why Virtual Hongbao Should Have WeChat Pleased as Punch
Giving hongbao, or red envelopes filled with money to children, relatives and employees, is a traditional Chinese New Year custom. Over the recent holiday, the hottest topic on social media was WeChat's virtual red envelope service, which allowed people to send hongbao to their friends through the Tencent messaging apps.
The excitement was such that Wu Yi, the product director for Tencent's online payment service, had to quell it, calling it "just a seasonal product." But people were enthusiastic anyway.
The red envelope service was not invented by WeChat. Similar services, such as Sina Corp.'s Weibo Hongbao and the Alipay Hongbao by Alibaba Group, were around before Tencent launched its version on January 28. However, none of those achieved the success of WeChat Hongbao.
One reason is that WeChat's version was more fun. It put a new spin on an old custom. To send money, users linked their bank accounts to WeChat. The app supports sending a fixed amount to one person. It can also send a lump sum to a group of friends, and the money will be divided into random amounts for a certain number of friends.
WeChat's hongbao service made its debut at the right moment: five days before Chinese New Year. The right design and the right launch time led to the right result: more than 5 million people used the service from January 30 to the afternoon of January 31, Tencent's data showed. The total number of hongbao received topped 20 million.
So why was the WeChat Hongbao so popular?
Chinese people are generally festive around this time of year. Everybody is caught up in the holiday spirit. The pace of work slows and they can spend more time on WeChat with friends. The hongbao function took advantage of all of this.
In addition, WeChat Hongbao had an element of suspense, making the app much more fun to play with than its competitors' versions. When a user sends a lump sum to a group of friends, an algorithm divides the money randomly. No one knows how much money is in their virtual red packet before opening it.
Smart design ideas can be found in every aspect of the WeChat Hongbao. First, users need to put money into their hongbaos from bank accounts through Tencent's online payment service, Tenpay. Then comes the fun part, distributing the hongbao, which could hold up to 200 yuan each.
Using the WeChat feature was very simple. Users on both ends just needed to click a few times. This seems unimportant but it is essential to the service's popularity. The simplicity meant WeChat Hongbao was suitable for various social scenarios and was unlikely to become a tool for bribery or money laundering. The fact that each amount is small helped WeChat attract more users. In addition, since the whole process involved only a few clicks and no extra information, it seems to have been fraud free.
Upon receiving a hongbao, a user could send a request to have it put in their bank account, and the money will arrive the next day. If a hongbao is not accepted within three days, the money will be returned to the sender.
All for O2O
At the peak of the hongbao-giving, many people were jumping from one of their chat groups to another to hunt for the virtual red envelopes. In fact, sending hongbao, searching for them and cashing them in became entertainment. At the same time, all these users of WeChat Hongbao instantly became users of WeChat's payment service.
The virtual hongbao helped WeChat cultivate users for its payment service. WeChat launched the service much later than Alibaba started Alipay, but people open WeChat much more often than they open the Alipay app, meaning Tencent's version has greater traction.
The question of finding the right development path for mobile payment has been around for years. The market likes the methods used by Alipay and WeChat: a solution that integrates account data management, money processing platforms and mobile devices. Products with low entry barriers and simple operations have the best user experience and have set the trend for mobile payment.
I think there are three key factors for winning users: "gamification," interaction and benefit sharing.
Everybody likes playing games. A mobile payment product that comes with a user manual is certainly not welcomed by the market. From PCs to smartphones and tablets, users become impatient when they face difficulties using a new product. What consumers want is for a service to be accessible – anytime, anywhere. Therefore, "gamification" – or making an app as easy to use as playing a game – is the best ways to win the hearts of users.
The second principle is interaction. For any product or service to gain loyalty, user interaction is essential. Consumers are the voice of the market. If users think that a service meets their needs and feel that a product is "friendly," they are more likely to share their experiences with others. In this way, user interaction is at play. This is why online-to-offline (O2) business – say, paying for a taxi ride with an app on a smartphone – has more room for exploration than simply online business.
The third principle is benefit-sharing. Here "benefit" refers to monetary income as well as convenience and accessibility. The operation of a mobile payment service is usually easy enough for someone with even a little knowledge of technology. In the balance between security and user friendliness, WeChat's payment service and other e-financial services lean toward the latter, pursuing an acceptable level of risk rather than none at all. Transferring a limited amount of company benefit to users is the strategy of mobile payment. User flow and user loyalty are the beginning and the end of the Internet business model because they are the prerequisite for profitability.
Once the holiday season ends, the popularity of hongbao wanes. But as a mobile payment product, WeChat Hongbao was an unqualified success. It was an experiment in how users behave, a good example of product design and a great marketing campaign for mobile payment. In the age of the Internet, information asymmetry has been diminished. As the world gets flatter, competition gets fiercer and profit margins smaller, so understanding human nature is what matters in the end.
Amid all the buzz, Tencent gained droves of users without spending much. With its little game, Tencent boosted user flow, married user habit to the WeChat payment service and gained a good reputation among users. These things are the keys to unlocking greater O2O market opportunities.
The author is a deputy general manager of e-banking at Bank of China.
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