Why Customer Data Is King in China

By Spring Wu
Why Customer Data Is King in China: Convert your Data into Actionable Customer Insight in China

China’s economy is slowly recovering from the shock of the Covid-19 pandemic. In September, China’s National Bureau of Statistics reported that retail sales rose 0.5 percent in August year-over-year, the first time positive report of the year. Car sales grew 11.8 percent, cosmetics grew 19 percent, online retail sales overall increased 13.3 percent year-over-year. As McKinsey pointed out, the Chinese consumer is resilient and confident. At the same time, businesses in China need to tackle a fundamental challenge that existed long before the pandemic: understanding how to connect with the Chinese consumer. And there is much work to be done, starting with harnessing the value of data along the entire customer lifecycle.

Customer Pain Points in the Customer Journey

According to Shanghai-based McKinsey Partner Felix Poh, China is seeing a rise in omnichannel and online commerce, including social commerce:

What I see in terms of trends would be, absolutely, an accelerated shift to omnichannel and online. We saw that in online grocery retail, in apparel, in cosmetics. We saw the rise of what people term social commerce: an explosion in livestreaming or selling through WeChat private-domain groups.

We predicted these trends in a post that we published earlier in 2020. But we also see Chinese retailers and consumer packaged goods companies struggle to build loyalty among these consumers. 

Many brands are now present on online and offline user touchpoints, including different engagement channels such as WeChat, TikTok, Tmall, and JD. Those brands have started to create their own inventory of “self-owned” data. 

The problem is that brands still don’t understand the consumer. For example, they don’t understand how customers are engaging with the brand, what stage a consumer is at in the journey, and pain points in the journey. That lack of understanding results in brands creating online and offline experiences that are irrelevant and bland. In addition, a number of other problems result, such as:

  • Annoying communications including irrelevant product recommendations and content with the wrong tone.
  • Lack of care, such as a failure to retain customers within the golden 48 hours of their becoming a user, or lack of communication at important milestones such as  birthdays and holidays. 
  • Missed opportunities such as learning from customers’ ratings and reviews of products or from personal interactions such as a customer query about a product. 

Part of the problem is that in the digital world, businesses cannot “read” customers the way they might in an offline retail store. Online, a business cannot see a customer and adjust in real time how they interact with them. In addition, the retailer lacks required knowledge of the customer, which is an unacceptable problem because online is supposed to give businesses more customer data than they’ve ever possessed. 

Understand the Customer Lifecycle

There is no single solution to the customer insight challenge, but one important way to get started is to take a step back and understand your customer in context of their entire lifecycle instead of treating customer interactions out of context. 

The customer lifecycle refers to the relationship between the customer and the brand, from birth and growth to death. Specific to different industries, there are different definitions, in the retail industry, can generally be divided into Anonymous Customer, Window Customer, First-Time Customer, Repeat Customer, Loyal Customer, Indecisive Customer and Lapsed Customer.

A retailer or CPG brand needs to customize its complete customer experience – not just its messaging – based on whether a customer is forming a relationship with the brand, continuing to consume its products, or possibly leaving the relationship – a reality that businesses must plan for, not fear. The key is to develop a strategy ad personalize the experience and depending on where the customer is. 

understanding the customer lifecycle

 

Covid-19 did not trigger the need to manage the complete customer lifecycle, but it certainly underscored the need for it. Brands in China have been discovering that they need to do more than manage an offline-to-online experience efficiently – because offline-to-online is but one moment. They’re asking, “What comes after that?”

The Role of Customer Data

What comes next is mapping the entire journey. And to do that, brands need to do a better job digging into customer data – first-, second-, and third-party data. To refresh you:

  • First-party data is information that your customers willingly share when they interact with you directly, such as on your website. But first-party data creates an incomplete identity because customers live in too many channels for marketers to track them properly. In China, WeChat is the most prominent channel to gain your first-party data. 
  • Second-party data is the customer information that a trusted brand makes available to you so that you can market to a more targeted audience. In other words, second-party data is someone else's first-party data shared with you.
  • Third-party data is any customer data a company collects from a variety of sources with no direct connection to the consumer. Third-party data may come from sources ranging from social media networks to surveys. 

Marketers consider first-party data to be the most valuable. As I noted, most marketers assume they have huge inventory of “first-party” data such as data captured from WeChat interactions, CRM, the data warehouse. However marketers still struggle with a number of problems with the data. For example: 

  • They are not able to contextualize the data.
  • Key data attributes are missing.
  • Data links are broken.
  • Duplicate data entries exist, causing confusion.

As a result, the data asset is not really an asset but rather a burden to the business to maintain and manage.

Even brands that manage first-party data than others face obstacles. For example. They might clean their data fairly well, but they still might not know how to scale it. Or they might not know how to apply it at crucial points in the customer lifecycle, such as how to re-engage with a lapsed customer. 

The Role of Unified Customer Data Platforms

To overcome these limitations, marketers are turning to customer data platforms that aggregate data from all sources and help brands achieve scale. Customer data platforms make it possible for a business to create rich profiles of customers everywhere they live in the digital world, ranging from TikTok to WeChat to a company’s own website. That comprehensive view of the customer gives a business a foundation to create personalized communications across the entire lifecycle, such as:

  • Early stages of the relationship: conversion a new social media follower with an offer to sign up and complete your first purchase; and then recommending other seasonal items based on subsequent product purchases.
  • A well-established relationship: developing a sophisticated online/offline program with incentives that make it possible for the customer to achieve loyalty points for purchases in-store or online.  
  • A mature relationship: loyalty programs that provide richer and deeper benefits for repeat purchases and for recommending the brand to other people. Customers enjoy personalized engagement and a more personal touch from the brands. Because customers feel closer to the brand, they are willing to proudly to share their brand loyalty within their circles. High influencers becoming key opinion consumers or power users to expand the customer reach.  

But your platform must include all forms of data – first-, second-, and third-party. That’s the foundation for succeeding beyond 2020 in China. 

How Pactera EDGE Can Help

The first step is to get your first-party data right. Doing so means taking a sample of that data and understanding how it applies in context of the customer journey to make the data meaningful. With our test-and-learn culture, we start small and ideate in a way that  mitigates against cost and risk.

We are here to help you realize a quick win with your data by building your customer persona and applying data across the entire customer journey. 

Our service offering encompasses:

  • China Customer and Local Ecosystem Strategy.
  • WeChat Platform Design, Development, and Optimization.
  • Digital Platform Engineering.
  • Social Commerce Strategy and Activation.
  • Unified Customer Data and Marketing Automation.
  • Advanced Analytics and Business Intelligence.

Contact us to learn more.