As an avid reader of the State of Fashion report, I noticed a recurring theme that was brought up in both the 2018 and the 2019 forecasts: the rise of the Asian market, with a heavy emphasis on China. If you haven’t read it yet, here’s the Reader’s Digest version with the most relevant quotes. If you wish to expand to the Chinese market, it’s absolutely necessary to understand how to build brand loyalty in China.
For this, you need to tailor your customer retention strategy to meet the expectations of an audience with a unique cultural background. In this comprehensive guide I’ll give you a comprehensive tour of the dos and don’ts for entering the Chinese market, coupled with insights provided by five experts, who are all well-versed in marketing strategies in Asia.
What Does Brand Loyalty Mean in China?
Over the past twenty years, Asian countries – China in particular – have seen a sudden increase in opportunities, both in terms of products and services. Chinese customers are only now being introduced to Western brands that have existed since the early 20th century. This creates a peculiar situation where a country with tremendous shopping potential is only now getting used to having a large variety of products from the US and Europe. Therefore, the concept of brand loyalty is underdeveloped. At the same time, cultural differences make the Chinese market a minefield for marketers.
We got to talk with Joanne Yulan Jong – founder of Yulan Creative, fashion strategy expert, and author of the book ‘Fashion Switch’ – and asked her about building customer loyalty in Asia and China.
Fashion expert Joanne Yulan Jong explains iconic customer trends and brand loyalty in China, recounting several examples of Western companies winning over shoppers in this episode of Customer Loyalty Minutes.
One big takeaway from this video is that most marketing channels that are popular in the US or Europe have a Chinese counterpart. Facebook’s equivalent is called WeChat in China, and the majority of customers use it to connect with their peers. There are also social media platforms unique to the country, such as the the Little Red Book (XiaoHongShu), which is a social ecommerce app specialising in product reviews. Marketers who wish to foster brand loyalty in China should master these platforms, otherwise they won’t be able to reach a wide audience.
“Dolce Gabbana’s recent cultural debacle clearly shows that “globalized approach” doesn’t equal “simplified communication. In the next few years, it’ll be crucial for companies to engage in a meaningful discussion with their Asian customers. The ability to culturally connect with customers in their own reality will be the next important challenge for companies – especially for global ones.”
Cultural Strategist and Course Leader at Sotheby’s Institute of Art
Top 4 Trends to Keep in Mind When Entering the Chinese Market
The biggest challenge of winning over the Asian demographic lies in understanding the difference in eastern and western customer behavior. Big brands with decades of history serving the European or US market often learn the hard way that their tried and tested marketing campaigns fail in China.
The confusion stems from the fact that you can’t simply translate your message and expect the same level of interest from an audience that has a different background. As a matter of fact, this could be the hardest personalization challenge a marketing team could ever face.
High-end fashion house Dolce & Gabbana faced a serious scandal, as well as a huge drop in sales, in China due to an ad making fun of Chinese traditions.
In order to engage the modern Chinese customer, you should pay attention to the four following trends:
- Still on a journey of discovery: Since the audience hasn’t been exposed to western heritage brands for long, brand loyalty is still a new concept. Companies aren’t able to take brand recognition for granted, and they need to build brand awareness from the ground up.
- Strong digital mindset: Asian consumers discover brands via social media interactions or browsing deals on the internet. In this sense, having a mobile presence – or even better, omnichannel – is an absolute necessity, even if you are focused primarily on selling in stores.
- Hunger for novelty: They have an insatiable appetite for freshness and modernity. If you can keep up and offer something new and exciting to your customers each week, they’ll no doubt keep showing up and eventually become loyal buyers.
- Authenticity is everything: Customers are very discerning when it comes to entering the purchase cycle. They are cautious and companies must win their trust. To achieve this, you must show that your products have actual value.
“Asian consumers prefer to avoid human contact while buying. They are very sensitive on alternative pricing. And how will the market look like in 5 years? More specialty stores, less monobrand stores in key cities, min 50% of business through ecommmerce, and multi-brand stores playing like showrooms.”
Senior Executive in Marketing, Brand Management, Business Development, Sales, Retail
Customer Retention in the Chinese Market
Because of the challenges, the Asian market is still an uncharted territory for most Western brands and retailers… but not for long. Italian luxury fashion house Ermenegildo Zegna was the first company of its kind to realize the potential of the Chinese audience way back in 1991. Now they are one of the most esteemed brands in the country when it comes high-end menswear.t the same time, China has become the leading market for Zegna in terms of revenue.
But overlooking the effort Zegna put into its relationship with Asian customers would be a mistake. For starters, it has a deep-seated presence on Chinese social media platforms, like WeChat. Secondly, it actively uses local influencers to spread the message. Last but not least, Zegna reacts to the latest trend shifts immediately. As Jind Daily pointed out in its article, the company has assigned designers to tailor their sneakers to the taste of affluent Asian customers.
“Asians, whilst they are always on the lookout for a good deal, will spend if the brand has authority. They are happy to use labels to impress peers and they really love the status and security of being part of the trend and ‘tribe’. Their retention would be less on price or value but, instead newness, the ability to access VIP or limited editions and of course impeccable customer service.”
Joanne Yulan Jong
Fashion Strategist, Founder of Yulan Creative, Author of ‘Fashion Switch’
The Playing Field Will Become Fragmented
Joanne also pointed out that the window of opportunity to capitalize on the freshness of brand loyalty and establish your presence in China and Asia is rapidly closing. On one hand, the more players that enter the field, the smaller the metaphorical slice of the pie will be. Therefore, creating a marketing campaign that stands out and at the same times resonates with the Asian audience will cost a lot of effort and money.
Interestingly, western competitors might be the least of your worries, since China and South Korea are both developing their own brands. Talented individuals, who were educated in Europe’s illustrious marketing and design schools, are spearheading their own fashion, beauty and lifestyle companies. Homegrown businesses start with an advantage as they understand the market better than anyone else, making the competition even fiercer.
“Helping Asian companies is far-far easier in some respects because they are fast moving and reactive. They listen, make changes, spend money and make smart hires as soon as you make them aware of opportunities, especially with long-term customer retention, as consumers increase their spending potential.”
Global Fashion Business Consultant
How Can a Loyalty Program Help?
In an interview about brand loyalty, Kristy Watson, CMO of global skincare company Erno Laszlo, drew a similar conclusion, claiming that partnering with authentic influencers and a heavy reliance on local social media platforms are key aspects for reaching the Chinese audience. However, she closed her argument with this statement: “The Chinese consumer isn’t very loyal, so you’re constantly having to invent new products, deals and gifts to keep them engaged.”
So the challenge is set: turning Chinese shoppers into loyal customers. Arriving prepared to the land of the Red Dragon is only possible by creating a system of engagement points that is geared towards the preferences of the Chinese audience. A combination of the following loyalty program features would no doubt be a strong differentiator against both Western and Eastern competitors:
- Gamified profiling: Gathering relevant customer data is the bread and butter for brands and retailers. Gamified profiling asks questions in a fun and engaging way and incentivizes members to share personal information regarding their values, interests, and lifestyle – data they wouldn’t provide otherwise.
- Enhanced engagement: The behavioral data collected from gamified profiling allows you to enrich the single customer view and offer a personalised experience across all boards – especially on mobile. Furthermore, this newfound knowledge can be used to engage customers outside of the buying cycle and stay relevant in their eyes.
- Tiers, badges & challenges: A tiered loyalty program provides a roadmap people can follow while also acquiring a unique status within the brand they love. The frequency of their interactions is also driven by the desire to unlock better rewards and benefits exclusive to the highest tiers.
“Tiers & badges are a great way to create emotional connections. They offer so many ways to be different – naming, visual identity, tailored benefits and specific access criteria that are appealing to regional audiences. How about creating a tier threshold at 8888 points – 8 being a symbol of prosperity in China? Once the tier is established the benefits can be a formidable competitive advantage against local competitors.”
VP of Strategy & Insight at Antavo
- Special interest groups: Exclusivity and being part of a ‘tribe’ plays an important role in Asian society, so why not create a VIP club inside your loyalty program? It acts as an inner circle, which only the most dedicated members can enter. In exchange, they receive access to group-specific perks.
Free Mentoring in Customer Loyalty
Achieving brand loyalty in China is a daunting task, but definitely not impossible. And if you manage to nail it, you’ll no doubt see a drastic increase in your bottom line. If you are up to the challenge, we are willing to give you the insight necessary for success. Check out our in-depth guide about the ins and outs of a successful customer loyalty program.