5 China Digital Luxury Marketing Trends to Watch for 2016

From WeChat to KOLs, luxury brands are constantly evolving their digital strategies to market effectively in China. At Luxury Society’s recent Digital Luxury Keynote event in Shanghai on December 8, top experts from companies including Net-a-Porter, Farfetch, Four Seasons, Pernod Ricard, Alibaba, Baidu, and more gathered to discuss the latest developments in digital for the China market. As brands constantly gain new data on what works and what doesn’t as they hone their digital prowess in China, here are some of the key takeaways for the global luxury industry to consider in the new year: 1. Brands should get savvier with WeChat’s CRM capabilities. Although most luxury brands now have a WeChat account, many have only just gotten started on the messaging app’s capabilities—which include sophisticated methods of customer relationship management (CRM). “The WeChat revolution is on its way, but it seems like we’re not there yet,” said Pablo Mauron, the China general manager of Digital Luxury Group. He noted that only an estimated 12 percent of luxury brands have loyalty programs and community management functions on their WeChat account, despite the fact that these are important incentives to get people to sign up. “Following a brand on WeChat is a very strong commitment,” he said, noting that messages are delivered straight to the user’s inbox, where they are also looking at messages from family or friends. “It is very intrusive. You don’t do that randomly just because you see a cool ad or a cool campaign from a brand.” As a result, strong customer service as well as access to exclusive content and offline events can give brand VIPs a strong reason to follow. 2. Quality will be emphasized over quantity with KOL selection. In recent years, key opinion leaders (KOLs) such as fashion bloggers have netted countless endorsement deals from big brands, often receiving a hefty fee to post on their social media accounts. “A lot of times we use bloggers; we just use bloggers for the sake of using bloggers,” said Alex Tang, the former global deputy marketing director of MCM Worldwide. “It doesn’t really come to sales, actually. That has to be in the back of your mind.” Chloé Reuter, the founder and CEO of Reuter PR, agreed, saying, “At a discerning level of society, I don’t know if people really follow bloggers. You look at Shanghai and Beijing—they know their brands, they travel independently, and they’re really street smart. I don’t know if those people are really influenced by bloggers.” According to discussions at the event, brands are becoming savvier and doing their research about which KOLs will best represent their image and actually have an impact with high-end customers. As a result, quality and not quantity is beginning to be emphasized. “As a luxury brand, who cares if a KOL has 60 million followers?” said Reuter. “They’re not all going to buy my bag.” According to her, “sometimes we’re looking at people who have few followers, but they’re influential with those followers.” 3. Content co-creation gives customers a voice in brand channels. According to John Hamilton, the director of marketing communications for Asia-Pacific at Four Seasons Hotels, customers’ social media posts about luxury brands are often “more credible” and “authentic” than advertising the brand puts out itself. “Real pictures taken by our guests can have as much authority, if not more than brand images—no matter how beautiful we produce them to be.” As a result, brands such as Four Seasons have been putting a growing emphasis on user-generated content. He says this isn’t just a millennial trend as consumers across age groups post on their social media accounts in China. “Consumers of all ages want to link themselves of the brands that they love.” 4. E-commerce platforms are all about accessible luxury. As only a limited number of luxury brands sign up for Tmall and JD.com, these platforms are mostly useful for brands selling items below 5,000 RMB (US$772), noted Josh Gardner, the founder and CEO of Kung Fu Data. As a result, lower-priced accessible luxury brands, cosmetics, and spirits are the most viable categories for online sales. Gardner stated that “there’s no real, true luxury purchasing happening on the platform,” but the average price point of cosmetics and personal care items sold online has increased over the past year, meaning that these categories are the most “viable” for online sales. 5. Luxury labels need to step up their game to reach Chinese travelers on WeChat. According to Mauron, even brands that have a strong WeChat presence are severely lacking when it comes to reaching Chinese travelers abroad—despite the fact that most of their luxury shopping happens outside the mainland. He noted that very few labels offer store locators and service for their overseas locations in Chinese, or recruit WeChat followers in stores abroad. “Being ready to expand the reach of those services knowing that travel shopping is happening and continuing to happen is probably the best way to once again bring added value and establish a trusted relationship with your followers,” he said. Another major challenge is duty-free shops, which make up a significant portion of Chinese spending. He suggested that brands put the QR code for their WeChat account somewhere in the physical package, so if a Chinese customer buys an item at a duty-free shop, they won’t miss out on easy access to sign up for the official account.

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5 China Digital Luxury Marketing Trends to Watch for 2016