In the United States, email blasts may be one of the most effective marketing tactics due to the proliferation of smartphones, but brands that think they can just apply an email strategy to the China market should think again.
Mobile email open rates increased from 8 percent to 48 percent between 2011 and 2014 in the United States, but in China, the percentage of internet users with a personal email address is in decline. Average open rates for retail are just 8.43 percent, domestic e-commerce is even lower at 5.6 percent, and overseas e-commerce is 7.92 percent, according to Webpower China.
Email rates are stagnant in China due to issues with email service providers, firewalls, and security. Part of implementing a global strategy is recognizing the best way to reach users in each country. In China, all signs point to WeChat, the highest source of internet traffic in the country with over half a billion active users, according to Tencent’s March 2015 report. WeChat’s foundation as a one-to-one mobile messaging platform makes it the ideal platform for marketers to replace email in China.
WeChat has a deep understanding of (mainly Chinese) consumer behaviors with a robust innovation cycle, continuing to impress users every time it launches new relevant features, such as WeChat payment (with Chinese New Year Red Envelopes), Shake to add friends, WeChat Moments, and more. With these popular functionalities and its consistent commitment to improve user experience, it is not surprising to see that WeChat has evolved to be the leading mobile platform in China–integrating social, commerce, service, and communication.
According to digital market research firm L2’s “Digital IQ Index®: Luxury China 2014” report, 45 percent of Index brands are active on WeChat. Hermès and Chanel, which have been very discreet about social media selection, both launched their WeChat accounts last year.
Chinese luxury consumers are younger on average than their global counterparts, aspiring for a high-quality lifestyle and to be different from the crowd. They expect two-way communication with brands and are more likely to share photos and reviews with friends. Luxury brands use WeChat to engage with consumers with high-quality visual content and interactive campaigns (53 percent did so last year). Meanwhile, one third of the luxury brands indexed by L2 leverage WeChat to drive in-store traffic, helping customers find nearby brand stores with geo-location features.
However, luxury brands still show reluctance to integrate e-commerce on WeChat, due to the concerns about exclusivity and brand experience. In contrast, 44 percent of beauty brands and 20 percent of personal care brands are more aggressively exploring this opportunity as consumers start to embrace mobile commerce in these industries.
Given the one-to-one characteristic of WeChat communication, one in five brands in L2’s Index, such as Burberry and Louis Vuitton, are offering live chat customer service, while 7 percent of brands, including Coach, are experimenting with loyalty programs on WeChat. We expect to see these numbers continue to grow in 2015, as CRM tactics in WeChat are more mature and the tougher market environment drives luxury brands to seek more relevant and innovative ways to serve and retain customers in China.
Danielle Bailey is the research director at L2 Inc.