#CRM#China#foreign markets#customer relationship management

Unlocking Foreign Markets: 3 Ways to Encourage Chinese Consumers

We Photo Booth You
|Jul 8|magazine11 min read

By Michael Kustreba, managing director, APAC, Epsilon

Earlier this year there was a flurry of media hype concerning China’s perceived stumble in its otherwise voracious growth over recent decades. Various banks, including Goldman Sachs, cut their 2014 growth outlook for China by around 0.3 percent to 7.3 percent, noting that the country faced a “bumpy road ahead.”

However, there is good reason to remain upbeat about the world’s second largest economy. Similar predictions were made last year, and yet the growth targets were still largely met and the country went on to become the planet’s largest trader of goods.  

The Chinese market is tough but lucrative for brands looking to engage an audience of hundreds of millions. Chinese consumers have turned the nation into the next “consumption superpower” and the country’s leaders are encouraging the population to save less and spend more as wages and interest rates rise.

With this evolving market comes a need for marketers and brands to also adjust their approach to the country. The Chinese market is no longer a blanket audience – the customer now needs to be central to every plan and campaign. So how can you build an authentic, strongly connected loyalty relationship that will not only win over Chinese consumers but keep them engaged with your brand? In my mind, there are three key steps.

Understand your customers’ journeys

To crack the Chinese market, brands need to deploy the same intimate consumer knowledge that they have mastered in Western markets. It comes down to understanding the consumer, their pressures and pains and what motivates them into making a purchase. Buying habits need to be understood, as does the host of influences affecting each and every decision.

For example, it is important to recognise the role that mobile commerce is playing in Chinese retailing. More than 70 percent of Chinese consumers use the Internet, according to research from Bain, and most via their mobile devices, with nearly 60 percent of those buying luxury goods online. Retailers are leveraging this increased smartphone use to offer improved mobile commerce experiences.

Shape your loyalty strategy

At the heart of this lies a need for brands to move away from segmenting consumers by income brackets, and start moving towards a model that segments them by spend. In the same way that Western markets have evolved well beyond salaries and net worth, so the Chinese consumer profile is now mature enough to warrant segmentation according to what they are buying, not what they are earning.

While research shows Chinese consumers make up 29 percent of the global population of luxury buyers, consumers are increasingly buying locally as domestic brands increase in both sophistication and brand awareness. Foreign brands still dominate in luxury and aspirational sectors, but consumers are increasingly turning to native brands for everyday products. These local companies have an obvious advantage in terms of on and offline infrastructure, while foreign brands have to take an “outside in” approach to both learning about consumers, and then selling to them.

Structure your CRM

It is important to note the growing internationalisation of the Chinese consumer in implementing customer interactions. Tourism Australia reports the number of Chinese tourists increased by nearly 25 percent over the past year. Retailers have begun to notice this trend and cater directly for this influx of Asian shoppers with signs, literature and collateral available in a variety of Asian languages.

The key word here is omnichannel. A seamless and integrated approach to providing a world-class customer experience through all channels is now what China customers are starting to expect. As a brand, all your channels should be an extension of the brand and purchase experience, fully integrated and in tune with your consumer, whether they are online, offline or in store.

The Chinese market presents an exciting opportunity for companies that are willing to invest the time and resources in getting to know the market. But loyalty will not come cheaply, and organisations that underestimate the power of local brands and increasing consumer savviness risk alienating themselves from the market. Reputations can be made or broken as easily as in Western markets, but with the right combination of insight, knowledge and respect, China can become the jewel in your retail crown.