Five things you need to know about CRM in China

10 August 2011

1. Shift in focus from new customer acquisition to retention

A number of key factors are driving a greater focus of brands towards incorporation of customer retention strategies. Firstly, the rising intensity of competition – with more than 50% of all points of sale within China for luxury goods opened in the last three years – places higher pressure on the ability to both recruit new customers and also the attrition, which is increasingly evident. Secondly, the beginning of a new consumer era for high-end products such as automobiles, as the first wave of car buying is now complete and it is now time to replace/upgrade. Another element especially evident in the luxury sector is the particular ability of the Chinese consumer to purchase multiple product lines from the same brand – think cars, watches and handbags.

2. The importance of brand consistency from tier one to lower tier cities

To sustain the incredible levels of growth that are expected from the China market with consumer spending to nearly double by 2015 in the retail sector, many companies are expanding their focus into tier two, three and lower tier cities. In comparison with the relatively more sophisticated and multi-cultural tier-one cities, there are considerable challenges with managing operations in these lower tier cities, where experienced distributors and qualified sales staff are not abundant – resulting in a greater emphasis on both brand and product education. In these cities CRM is an important tool to ensure that there is a layer of communication which is direct between the brands and the customers to develop a consistency within the brand message.

3. Targeting to unique Chinese consumer segments

Taking the travel industry for example; we are seeing that there is a growing segment of independent travelers driven by easier access to visas and a change in mentality to that of exploring; and there is the government segment which is controlled and selective. Brands need to be wary of who their current customers are and how this will be represented in the future – thus segmenting their communications accordingly. On top of this, with young Chinese consumers’ lifestyle and tastes rapidly evolving and becoming less price sensitive, higher expectations are being demanded, urging brands to provide differentiated benefits and recognition to their most revenue valuable customers.

4. Understanding CRM in the B2B space

In the fast moving consuming China market, a lot of products are sold through the retail channel to reach the end-consumers. Taking IT/Tech sector for example, channel sales will remain the core sales vehicle, contributing to major revenue generation. With China retail channel being incredibly complex, extremely layered and very competitive, brands need to establish long-lasting and yet cost-effective incentive driven relationships with channel partners in order to influence channel behavior thus stimulating sales.

5. Social Media with Chinese characteristics

With the fast penetration of internet nationwide and more than 265 million Chinese engaged in social networking nowadays, brands have rapidly started to incorporate SM in their CRM mix as a strategic and powerful communications channel to influence consumer purchase behavior. Understanding how the young generation collects information from SM to redefine and validate their lifestyle needs, and how powerful word of mouth marketing is in China, the Holy Grail for brands in China is bringing the right tools to control this new method of communication while being able to measure its impact.


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