China’s size and speed is constant. This year, China is expected to post retail sales of $5.6 trillion and overtake the US to become the world’s largest retail market. However, change is afoot. China’s e-commerce market continues to post impressive year-on-year growth, but patchy penetration across different product categories and increasingly expensive user acquisition have prompted some businesses to re-examine their physical retail presence and how they form a ‘single customer view’ across online and offline channels.

As a firm dedicated to connected loyalty marketing on and offline delivering revenue and profit across every channel, Splio is keeping a watching brief on the changes New Retail is bringing to customer relationship management and loyalty programs. With a tip of the hat to Jack Ma, we’ve dubbed this New Loyalty.

New Loyalty entails a number of different concepts. One of these is Shifting Center of Gravity.

Splio closely observed how new, fast-growing brands have gained market share across different categories. Our observations have led us to believe that we’re at two different turning points.

First, we foresee that in the near future customized SKUs will contribute more to brand growth in China than mass variants. This shift means ‘the long tail’ isn’t the realm of niche brands.

Second, to facilitate this shift, brands in China will sharpen their customer segmentation capabilities, focusing on micro-segments that have similar customization motivations or results. This shift means a need to move away from demographic and geographic segmentation to psychological and benefit segmentation.

We are at an inflection point. In the near future, customized SKUs will contribute more to brand growth than mass variants. Brands will accordingly shift their line of sight to micro-segments that possess similar customization motivations and results.

We are at an inflection point. In the near future, customized SKUs will contribute more to brand growth than mass variants. Brands will accordingly shift their line of sight to micro-segments that possess similar customization motivations and results.

Well before New Retail, companies and consumers had integrated some level of customization or personalization into their products, services or marketing communications.

NikeID, for instance, allows consumers to customize colors and graphics on particular shoes and have it delivered to their door. Similarly, Longchamp’s dedicated WeChat Mini-Program allows consumers to customize Longchamp Le Pliage bags with different colors, badges and imprints.

This is part of a broader trend. Consumers are morphing into prosumers – dictating what they want, as well as when and where they want it. And they’re more than willing to pay a premium for something that’s crafted according to their needs and preferences.

But New Retail has accelerated adoption of customization of personalization. e-Commerce platforms are leveraging their data, manufacturing partnerships and marketing channels to introduce private label goods. Alibaba, JD, NetEase and Little Red Book each have their own private label lines, competing with domestic and international brands that have listed on their platforms.

While private label goods are a permanent feature of the retail landscape, it’s fair to say that going up against Alibaba or NetEase isn’t quite the same as competing against a supermarket or pharmacy chain. Brands in China, therefore, are acutely aware of the need to add more value to products, services, experiences and marketing communications. Without it, they face death by a thousand cuts.

CRM plays a key role in assisting brands move from a simplistic understanding of the customer, to segmenting, to offering personalized products and services.

CRM plays a key role in assisting brands move from a simplistic understanding of the customer, to segmenting, to offering personalized products and services. 

Adding value to products, services, experiences and marketing communications accentuates the need for a sophisticated customer relationship management system.

SOURCE: mp.weixin.qq.com, by Michael Norris Splio速立优 8月7日