China Paradigm Transcript #17: Expert at creating loyalty programs for brands in China on what brands should and shouldn’t do when while trying to retain customers
Find here the China paradigm episode 17. Eliza Mao, Customer Success Director of Splio. Previously business development Director at Splio. Splio is an international company with 5 offices around the world, roughly 500 clients internationally, and a team of 130 team members. They have received funding from institutional investors such as BNP Paribas. Splio’s China branch manages and designs loyalty programs for brands in China. It started as an email marketing company but has evolved to become a marketing automation software company that offers a wide range of products that help brands to understand where consumers buy how often they buy and they help brands to manage this successfully across multiple channels. They provide their services on a SaaS basis. With so many touch-points between consumers and brands nowadays, customer retention in China is key to a brand’s success. Splio provides expertise in building CRM strategies for brands. In China, they work mainly in the B2C sector. Most of their clients are retailers, fast-fashion brands, cosmetics and skincare. We can build loyalty programs for brands in China from scratch or they will take the existing email-based loyalty program and optimize it for Chinese consumers by putting it in the right channels for communicating with Chinese consumers.
Full transcript below:
What are the first initial steps Western brands take when adapting to China?
Eliza Mao: China has more touchpoints. In China, WeChat is the most reliable touch point so brands will have to adapt to this. WeChat mini-programs make the app as much a service portal as it is a communication tool, they connect brands to consumers in a way that does not exist in the West. There are other online players like Tmall, JD, XiaoHongShu, Kaola, Toutiao, Douyin, Kuaishou, and other emerging platforms which brands can use to sell to consumers in a more effective way than their Western equivalents can do, and retargeting consumers in China is growing rapidly.
Initially at Splio, you focused on email marketing. When I started my business 10 years ago my emails were always going unopened. Is email marketing dead in China?
For some specific industries it is still a viable option because you can display more content. Maybe for booking tickets and travel companies emailing can still be used but for most industries email marketing in China is a waste of time and effort because other platforms are so much more in use and actually this trend is increasing. Emailing is not really in the DNA of Chinese people in the way it is in the West, and this is especially evident among younger people.
What was the scene like for targeting Chinese consumers before WeChat became really huge maybe in 2011?
Eliza Mao: Well I think the concept of CRM is newer in China. The explosion in CRM coincided with the explosion of WeChat.
Splio is a Western company, how did they merge with the Chinese method of CRM which is done a lot through WeChat mini-programs?
Our solutions have had to adapt the most in China, we interact the domestic sales platforms and run that that data and content through the domestic communication platforms like WeChat
What is the difference between tracking consumer data and running it through domestic communication platforms in China and doing the same for the West?
Eliza Mao: WeChat is very effective for gathering consumer data and feeding it into other online sales platforms. Also, segmenting and targeting Chinese consumers through WeChat is much more specific than it is the West. As the open rate for content in China decreases this has meant that segmentation of consumer groups has become more important for brands to ensure they are not wasting money on targeting consumers who are unlikely to view their content.
How can brands cooperate and negotiate with major platforms like Taobao, Tmall, and JD when these platforms already have all the data they need on the brands? It seems like brands would go into these negotiations holding none of the cards.
It depends on the brands. For lot of brands on Tmall, 80% of their customers are new customers so they don’t really enjoy that much brand loyalty. But brands need to go onto these platforms with their own CRM strategy and with their own omni-channel user journey planned in advance. They need to have a place where the consumer can directly interface with the brand and this way, they can generate private traffic. So, you want to be able to communicate with these consumers independent of Tmall.
Can you tell us more about the Nike success story in terms of customer retention in China?
Eliza Mao: Nike doesn’t have typical points and tier loyalty system. They take a community approach; they have the Nike + app. Actually, they try to have everything on their own mini-app. But they don’t do product promotion on their app, its more about building a community. However, building a community like this is not easy, it takes a lot of resources. Decathlon has recently tried a similar approach. In this way, brands can do customer retention in China by creating communities of people with similar interests.
How do you help brands to combine online and offline?
Eliza Mao: We take their unique identifier which is most often the mobile phone number from then we can track them and we run promotions to get them into the store, if not to buy then to try on products. This is often what Chinese consumers prefer, using offline locations for trying out products and then doing the purchase online.
Do you use DSP or DMP? Are these tools effective in China?
Eliza Mao: Some of our clients want to incorporate these platforms into their solutions. We can accommodate this. What we do is provide business intelligence on the customer data and then the brands can extract these segments and do their own analysis and integrate it with their own DMP system.
We don’t take much involved with the DSP area. We will usually work with partners for that.
Recently Splio was represented at ChinaDirect. What key findings did you talk about at the conference?
Eliza Mao: We mostly talked about what to do and what not to when it comes to loyalty programs for brands in China. Also, about how Chinese consumers are very willing to try new things and about how to make loyalty programs for brands in China stand out from the crowd and give end-users a deeper and more meaningful experience. When you track consumers across multiple platforms you can see if they are talking about certain KOLs on one platform and then you can target them on the eCommerce platform where they do most of their shopping and in time retargeting consumers in China will become more advanced too.
Do you have any stats about the success rate of loyalty programs for brands in China, specifically when it comes to customer retention in China?
Eliza Mao: Depends on the budget, which channels, what kind of promotions you are doing. For example, we have clients doing WeChat promotions who have conversion rates as high as 20% and this is 3 times their average rate.
I know it used to be very much about price but what are the key interaction generators nowadays among Chinese consumers that can lead to sales? Limited edition products, newly released products, or still discounts?
Eliza Mao: For WeChat, we see that customized products, seasonal products, or co-brand releases can be highly effective.
What are some very successful examples of co-branding in China you have seen?
Eliza Mao: Some stores like Uniqlo will collaborate with famous designers.
Have you got some metrics about the return that can be expected from doing loyalty programs for brands in China?
Eliza Mao: It depends on the industry or strategy used.
In terms of frequency, like perhaps in the fast fashion industry, how often should brands engage with consumers?
Eliza Mao: Again, it depends on a lot of variables but maybe for brands like cosmetics it should be every few months you offer them some deals or discounts but, in the meantime, you should be providing them with free advice or content.
Alibaba has been developing their own identifiers for consumers, have you interacted much with this new tool?
Eliza Mao: Alibaba won’t allow you to have the data but they will track and target the customers for you.
Is retargeting consumers in China as easy as it is in the West?
Eliza Mao: Retargeting consumers in China is not yet as developed as a Facebook look alike or LinkedIn pixel but it is a trend that is growing quickly. WeChat has something similar to Facebook’s Lookalike feature which allows brands to track and retarget consumers.
Are there any Chinese versions of Birchbox or PLAY! by Sephora?
Eliza Mao: I haven’t seen a successful case of consumers paying a monthly fee to brands for a box of samples but many brands will give free gifts to loyal consumers. What is quite common is that if loyal consumers buy a certain amount of one product, they will be given a nice bag with some other small samples inside. And this is quite common online.
Thanks for joining us today, anything you would like to add?
Eliza Mao: Thanks for having me on. I think to develop successful loyalty programs for brands in China, try to merge your online and offline experience as much as possible.