Technology gives e-commerce players an edge on customer loyalty

A recent Epsilon study reveals that e-commerce players lead in consumer loyalty in China, with 61% of respondents stating that they are loyal to e-commerce brands like Taobao, JD and Tmall. Respondents also express more loyalty for brands in sectors such as financial services (56%) and grocery (55%).  This is a change from the 2012 study where the financial services sector held the top spot in customer loyalty at 62%.

The Chinese people fell in love with online shopping since 2012. There was $540 billion spent in China’s online shops in 2014, leaving no doubt that consumers enjoy the convenience and product variety that e-commerce sites have to offer.  Shoppers can now browse page after page of merchandise whenever and wherever they want. Is this why consumers feel loyal to e-commerce companies?

In addition to the convenience and variety that e-commerce players offer, they also have natural advantages that come with operating in the virtual, electronic space –technologies and automation take merchandising, marketing and customer service to the next level. Insights from data including website browsing patterns to click behaviors, e-commerce sites can target awareness, serve more relevant messages, bring up transaction history and drive content based on preference – quickly and consistently. The personalized experience doesn’t hurt either – customers are always greeted by their names and often personalized product recommendations when they come back to the shopping site.

E-commerce is by now so ubiquitous that Chinese online platforms have successfully inserted themselves as a formidable layer between consumers and product brands. They have restructured the value chain, and the rising allegiance of consumers to e-commerce players observed in this year’s study indicates that they are doing something right. How can brands win customers over in this competitive market place? Here are a few things to consider:

  1. Deliver quality and service, build trust

Quality topped the list of loyalty motivators for the first time ever. In this year’s survey 36% of respondents ranked quality as their most important criterion in determining whether they will be loyal to a brand. Product performance, purity and endurance have now trumped price in the mind of the Chinese consumer. Savvy Chinese consumers no longer necessarily align with the most popular brands, nor with those brands that offer the most convenient locations.

Today’s upwardly-mobile consumers have more purchasing options than ever before. Brands should highlight quality – including dependability and product integrity – across marketing communications to help distinguish products from low-price competitors. And as the Chinese government strongly criticizes Alibaba, China’s biggest e-retailer, for failing to do enough to stop fake goods being sold on its site, genuine brands can offer customers an unmatched guarantee that products sold on their own online and offline channels are the safest bet for authenticity.

  1. Choose the right channel mix for each sector

To contend with the sheer scale of the China market, many brands blindly adhere to “360 degree marketing,” disbursing their investments across a wide variety of channels to reach as many consumers as possible. But our survey results show that channel effectiveness varies drastically by sector. To avoid budget wastage and maximize ROI, marketers trying to reach Chinese consumers need to match the correct channel to each sector of their markets. E-commerce customers are accustomed to using a variety of digital channels including company websites (42%), email (35%), WeChat (34%), mobile apps (29%) and QQ (29%), whereas financial services loyalists prefer face-to-face interaction (44%) and text messaging (35%) among other digital channels. Grocery loyalists prefer in-store communications (62%) and are still agreeable to postal mail (24%). Rather than trying to use every channel to reach every customer, brands need to identify the correct channel mix.

  1. Find your loyalty sweet spot

In terms of diversity, China is more like the Eurozone than a single country market. Companies need to understand their customers and their loyalty priorities. Armed with customer segmentation profiles based on data insights, brands need to deploy targeted communications and services to address the unique concerns of each corner of the market. For example, our study found that younger Chinese consumers show more affinity to brands that have similar value as them. Online content programs targeting interest groups, or specific content on the brands’ corporate-social responsibility programs catered to the younger audience could have great impact. Find your own loyalty sweet spots – turn to your data and let it undercover those spots for you.

  1. Show love to your loyalists

Chinese consumers are starting to cling to brands, but they need to feel coddled. This may mean investing in personalized communications or giving special treatment to most valuable customers. In today’s China, a sharpened focus on retention pays dividends – converting emerging brand loyalists into long-term brand advocates. In our survey, up to 87% of sector loyalists stated that they would spend more with the brands they are loyal to, and up to 88% would make referral to their friends and family. And let’s not forget to provide good customer services and after-sales support, which was ranked by respondents as one of the top three motivators of loyalty. As Alibaba’s Jack Ma announced in 2014 when his company went public, he would uphold the company value of “Customers first,” even above shareholders.

Do you know who your best customers are? Who will likely become your new loyalist? Your database could be a gold mine of insights. Start using that data to create a win-win situation for you and your customers.

The writer is Rickie Hobbie of Epsilon

Get the full report: People’s choice: A view into Chinese customer loyalty, click here.

This article was brought to you by Epsilon


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