Daxue Talks transcript #90: Brand loyalty and tips for decreasing the cost of ecommerce returns in China

Brand loyalty in China

Click here to listen to episode 90 of Daxue Talks where we interviewed Olivier Vérot to learn more about brand loyalty among China’s fashion consumers. We asked him about loyalty program management and what brands need to know about ecommerce return management in China.

Full transcript below

Welcome to Daxue Talks, a show powered by Daxue Consulting, a China based strategic market research company founded in 2010.

I’m Olivier Verot, I’m the founder of Gentleman Marketing Agency – GMA, we’re a digital marketing agency focused on performance, we are based in Shanghai.

We understand fashion brands are relying a lot on community when it comes to loyalty programs. How do you manage your community and loyalty program to make sure you that you maintain a relationship with and retain your clients?

The loyalty in China it’s actually an interesting topic and I’m pretty sure that nobody has the real solution because Chinese consumers are basically not loyal. They are not really loyal to a brand; they are loyal to what they like or by discount or by gift or by something that’s of benefit for them. So, its very difficult to find a consumer that will buy the same fashion brand all his life. I have never met them and they like to change, they like to try new things. So, if you want to really speak about loyalty programs, its complicated.

If you want to speak about the tools – today there is like a WeChat mini program that is basically pretty good – you can set up a mini-program and basically people can receive information or special discount or something, so it can be a good way to develop the loyalty of the consumer. Actually, for me its not really loyalty – you just repeat and resend message and new information about your brand, you new product to the consumer. So, if you don’t develop something new, if you don’t give them new reason to buy, people will basically – don’t do it.

I’ll give you an example, its very easy to understand. If a girl buys a beautiful AMS bag, I don’t think she will buy a second AMS bag or third AMS bag, so its not like this – however after she tries the first AMS bag you can communicate to her about clothes or a scarf or something else. So, you need to have a mini program to follow her step of buying, her step of understanding about the brand and this mini program is very good. So you can divide them in the new customer, in the old customer, in the people who never buy, in the people that never buy but always open the account, so basically it gives you better segmentation of your followers and then basically you can send more targeted message directly to these people.

On WeChat I think the best tool to develop the loyalty – I would like to say its more complicated and its more one to one relationship. On WeChat you have also the groups that create community and in the community you can communicate about your offers and something like this, but its not really for the consumer, the consumer are more in one to one with the brand and they don’t like to be with everybody in the same group, with like 500 top customers. It doesn’t work like this or I don’t believe it works like this. Its more the community to intimate about the new offer, the new things about the brand, as a community management for the new buyers but not really to the old buyers. Old buyers is one to one. So, mini program or the sales, who are directly chatting and talking directly to the seller.

If you are selling fast fashion, I understand mini program can make sense, especially if you have a store. So, if you have a store – 100 stores everywhere and every time people buy, they can scan, they follow your mini program, with this you can create a huge database very fast. If it made out to luxury then 20 shop in China, you get 20 clients maximum per shop so its complicated and when it’s made out to luxury, people expect to not have a robot speak to them but to have a high-quality sale who give special relationship.

Special relationship with luxury, high end consumer its very hard to be automated or by post, you have to be by people who are really good. That’s my personal point of view, but I’m not very specific in loyalty programs.

About after sales we know that there may be a lot of product returns for fashion brands. How is it managed and do you have any metrics to share?

There is a lot of return online, especially on Taobao and Tmall and I think its normal. I’ll explain you why – its very easy to understand. People buy fashion, fast fashion online and they see a picture and when they receive it, they will try and they don’t like it. So, its normal. You imagine a girl going to a shop, how many clothes she tries before deciding to buy one. So, its basically the same concept. So, when it made out to fast fashion, something that doesn’t cost much, the return rate is very high. It can be 20 – 30% even for the brand 50%. The brand has to accept that and integrate this into their cost. Its normal.

Getting this information – the return rate is usually quite low and usually the quality is also higher so there is less surprise. How to manage that I would like to say, the more you develop yourself the more you need to understand what it is and the more you can integrate this information into your Tmall store or into your self-service, so I don’t know – if for example the picture of this one looks kind of like purple, but when you receive it its pink, usually you need to remodify your page so it looks like as much real that it is to the normal. If there is some problems or if there is – if people think that this clothes should look sort of like this, you need to adapt your Tmall page and your message to something that looks like more real or to change the point of view to decrease this rate as much as you can and I would like to say – if you’re really successful you have to integrate this to your – its normal. People buy, they try and they return and if they know that the next item they buy, and if they don’t like it, they can return it easily, so it’s the trust you can build with your audience.

Any questions? We will find an expert to answer them. Drop your questions in the comments or send us an email at dx@daxueconsulting.com.