Need for red envelope strategy
There are two school of thoughts when it comes to attracting users or developing a customer
base. A company can either leverage with their product launch or the optimizing the product
operating method. Red envelope strategy of WeChat falls under the latter where it simplified
a product that was already existing the market provided by the competitors with limited
functionalities.
A red envelope strategy is a perfect example to show how user engagement and experience
can be enhanced with the amalgamation of social tradition and digitalization. Companies
need to have such strategies not only to engage their customers but also to utilize the multiple
touchpoints for the customers in their distribution system. Following are the reasons why
companies need a red envelope strategy:
1. Rapid digital penetration
In the early digitalization phase, people were reluctant in using digital modes of payment and
especially third-party e-wallet services. This changed with the advancements of security
gateways and secure communication models of the companies. Countries like China and U.S.
have been the early adapters of online payment services. There has been a boom in digital
penetration and usage of digital payment modes. Therefore, the need of customers has
evolved to integrated online payments where an e-wallet from a particular company can be
used for transaction at multiple platforms. Hence, the benefits programs like red envelope
which involve e-coupon or money also serve such multifunctionalities to enhance the e-
commerce and socialization experience.
2. Vertically integrated marketing platforms
As the businesses are evolving into multi-channel and omnichannel from traditional structure,
there is an issue in identification of customers if they are the same customers of different
touch points. There is a need to have unique IDs for the individual customers and make them
go through the process of registration and allow maintaining record of their purchase and
transaction. Therefore, a benefit program such as red envelope strategy allows elimination of
duplicity in the customer database.
3. Blurred e-commerce and retail lines
Companies are expanding their offerings to the customers by acquiring other businesses or
allying with other service providers. This is done in orders to increase the usage of their core
product along with enhanced user experience. Programs such as red envelope strategy
incentivize customers to use frequently their unique ID for different purposes because of the
multiple applications allowed by the company.
4. Localization in shared promotions
In order to generate immediacy and real-time content along with local social traditions,
companies share the marketing and promotional activities which the channel partners. These
channel partners can be online or offline. Therefore, companies allocate marketing budget to
channels and integrate the local trends in their promotion scheme by sharing responsibilities
of promotion with the channel partners of a particular region.
5. Digital campaigning
