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"If Douyin is doing so well, why is Xiaohongshu still growing so fast?" Zhang Nan, then CEO of Douyin Group, asked the team in 2021. ("Behind the 300 Million-User War, Xiaohongshu's Determination, Struggle and Price")

The "sense of crisis" about home is also the best proof of strength.

Three years later, Xiaohongshu’s monthly active users reached 300 million. (March 20, 2024, Xiaohongshu’s “New Ecosystem of Grass-Growing Services” Business Partner Conference)

The certain traffic growth opportunities and high-quality content creation community atmosphere are attracting more and more creators of different types to bet on Xiaohongshu. The same is true in the financial ecology field that Yiwealth focuses on. At the end of 2023, the data from the financial KOL survey report initiated by Yiwealth showed that except for those KOLs who want to continue to deepen their roots on the existing platform, 46% of the remaining KOLs chose to expand the Xiaohongshu platform.

As a weather vane in the financial content field, financial KOLs are clearly trending towards Xiaohongshu, but another important player in the same field - financial institutions - may not have figured out how to proceed.

The number of fans of financial institutions on Xiaohongshu is relatively low, with only China Merchants Bank exceeding 100,000.

Compared with other top financial bloggers on Xiaohongshu, such as Director Lin Chao, Sanduo Tongxue, Xiao Lin Shuo, etc., the number of fans of financial institutions on Xiaohongshu is not high. As of June 26, 2024, only China Merchants Bank has entered the 100,000 club, with 235,000 fans.

Specifically, the banks with the highest number of fans on the Xiaohongshu platform are mainly well-known joint-stock banks, with a total of 7 banks (12 accounts) having more than 10,000 fans.

Among securities firms, there are five with more than 10,000 fans, namely Jianghai Securities, CICC Wealth, CITIC Securities, China Galaxy Securities and Guotai Junan Securities. Among them, the one with the highest number of fans is 35,000, which is less than 100,000, which is a big gap compared with bank accounts.

There is a serious gap between the top and bottom of the fund companies. Currently, only three fund companies have more than 10,000 fans, while the number of fans of most other institutions still remains in the thousands.

According to Yiwealth Research Institute, many financial institutions have already recognized the potential value of the Xiaohongshu platform and have a strong interest in its ecosystem. However, since Xiaohongshu has not yet provided a direct and effective conversion path, and there are still few observable financial institution samples, most institutions are still in a hesitant wait-and-see stage. For those that have already joined the game, they do not fully understand the characteristics of the Xiaohongshu platform, resulting in low content exposure, attention and interaction rates.

Therefore, the following article will analyze the traffic mechanism of Xiaohongshu that is different from other social media platforms and how financial institutions can create content, aiming to provide a reference for institutions that want to join Xiaohongshu.

The appeal of Xiaohongshu: decentralized traffic field + high potential population

In Marketing Revolution 4.0, Professor Kotler proposed the 5A marketing method, namely "understanding - attracting - inquiry - action - advocacy". Traditional advertising plays a role in the first two steps, and the key change is the last three steps. Inquiry means that users actively search for product-related information, and advocacy means that users actively publish positive product reviews and recommend them to others after completing the purchase behavior in the fourth step. From inquiry to advocacy, what plays a role is content, which is useful, real, and credible content, which is the so-called "grass-planting content".

This coincides with Xiaohongshu’s rules of the game.

Different from the single-column information flow or full-screen content display mode chosen by TikTok and most content platforms, Xiaohongshu's double-column content display gives users more autonomy in choosing. It can also feed back user choices to the recommendation model, allowing content to better find people.

Based on the above-mentioned "content finds people" logic, Xiaohongshu's content recommendation mechanism of "crowd anti-funnel model" can quickly locate the core population, stimulate the core population to generate purchasing behavior and share spontaneously through content, thereby forming a word-of-mouth effect within the circle, and then gradually penetrate into high-potential groups and the general population, greatly improving the efficiency of traffic utilization.

On traditional social media platforms, the number of fans usually determines the weight of traffic distribution, but on a platform like Xiaohongshu where user-generated content accounts for more than 90%, the right to speak on traffic is no longer concentrated in the hands of the platform and a few top KOLs. This means that more mid-level bloggers, users, brand owners, and organizations can reach their target users with high-quality content.

This is attractive to most financial institutions. Based on the past research of Yiwealth Research Institute on the financial Douyin content ecology, it is found that the trend of traffic concentration in the head is very obvious, especially the top ten institutions in the industry will not change much, but the operating conditions of the accounts of the middle and tail institutions are very unstable.

In addition, the user profile of Xiaohongshu is highly consistent with the people that financial institutions want to reach. At the business partner conference held by Xiaohongshu in March, Xiaohongshu officially disclosed the user profile data: 50% were born after 1995, 35% were born after 2000, 50% were from first- and second-tier cities, and the male-female ratio was 3:7. The core group is young women in high-tier cities, who often represent higher consumption decision-making capabilities and have high potential demand for financial management. They are the key groups that financial institutions are concerned about.

Decentralized venues and “high-potential” people are undoubtedly attractive to financial institutions. The question is what kind of “goods” (content) should financial institutions bring to the table?

Investment education, practical operation, and youth, how do financial institutions plan to develop Xiaohongshu?

The 5A marketing method mentioned above is exactly the underlying methodology that financial institutions can consider when deploying Xiaohongshu. The key lies in how to effectively build influence at the critical moment when users turn from "inquiry" to "action", thereby promoting deep user participation and conversion.

When using Xiaohongshu, users can easily get the feeling that any strange question can be answered on Xiaohongshu. Indeed, Xiaohongshu official data shows that among the massive searches of Xiaohongshu users every day, 88% are initiated by users themselves. Xiaohongshu has become a "search engine" for young people.

In other words, if you can understand the user's concerns, you have a higher chance of being searched. Xiaohongshu officially releases a monthly report on the financial industry. In the March period, under the wealth category, the search popularity of "funds" and "stocks" remained high, and questions such as how to get started as a beginner and how to buy funds were searched most.

The inspiration for securities companies and fund institutions is that on Xiaohongshu, they can focus on the layout of knowledge related to financial basics and content related to practical investment operations.

For example, Yiwealth Research Institute found that the Xiaohongshu accounts of Jianghai Securities and CICC Wealth Securities have long insisted on popularizing scientific investment education content, and some of their practical content has won the recognition of many users.

Image source: Screenshots of Jianghai Securities and CICC Wealth Securities homepages

As users become more familiar with the industry, hot search terms will become more focused. For example, in the top search terms for the banking and insurance industries, not only more specific institution names but also more specific product categories appear, which shows that users' purchase decisions have entered a critical stage. At this time, more persuasive content information plays a decisive role in the conversion effect.

Taking banks as an example, if the institution finds that the main questions users ask recently are about fixed deposit interest rates and bank gold bars, then it can launch related activities and "grass-planting content" to attract more user circles.

In addition to developing content around "issues" that users care about, Xiaohongshu also has a major feature that it is a gathering place for "young women". Therefore, financial institutions can also create activities and content around this user characteristic. The "China Merchants Bank" mentioned above, which ranks first in the number of fans on Xiaohongshu, is a very good example.

It can be clearly seen from the two fan benefits pinned on its account that the event prizes are mainly customized for young women. Whether it is the pink appearance or the integration of the cute image of the Bewitching Cat, it is easy to touch the "girlish heart" of users. The event also triggered the active participation of users, and the operating data of the two event tweets performed well.

In addition, many popular topics such as "Joy of Life", "McDonald's Walkie-Talkie", "Singer", etc. are incorporated into China Merchants Bank's daily tweets, creating a youthful image of Zhaozhao Cat in keeping with the times.

Image source: Screenshot of China Merchants Bank's homepage

In the process from action to advocacy, how to get users to spontaneously and proactively form word-of-mouth sharing mainly tests the product and service capabilities of the organization itself. However, the organization can also organically guide users to post seeding content on the Xiaohongshu platform. For example, many consumer brands have adopted the approach of inviting users to post order posts on Xiaohongshu in exchange for welfare prizes.

In general, as a fast-growing new social media platform, Xiaohongshu has attracted the attention of a large number of high-quality traffic. Financial institutions may wish to take advantage of their first-mover advantage and seize the dividends of the early market.

（Yiwealth）