Francis Kwok | August 5, 2011
According to Wikipedia, group buying or collective buying, offers products and services at significantly reduced prices on the condition that a minimum number of buyers would make the purchase. And China’s huge population is favourable for this business. The country currently has 3,600 group-buying sites with monthly growth rate over 29 percent based on China E-business Research Centre data.
The core value of group purchase is reflected on the prices and offerings. Each customer usually gets between 5 percent to 40 percent discount from the original listed price of the products/service. So marketers are asking: “How can we increase customer stickiness of my sites after the first purchase?”, “Any blue ocean strategies in the price war?” In my humble opinion, here are three tips for group purchase marketers.
1. Increase relevance of product offerings to match individual interests/preferences.
Group purchase sites generally target mass market, so whether you like it or not, you receive these mass offers daily. In my opinion, this is not very effective to retain your customers in the long-term. Marketers can stimulate communication with customers by collecting feedback after each purchase and then consider offering ‘mini’ coupons besides the main deal, which matched their preference. You can also consider adding the ‘Suggested purchase’ items in your newsletter that they ‘clicked’ in the previous e-newsletter. First, record down their interest and when u have an offer that matched their ‘click behaviour’ from previous records, immediately send an offer to remind them and trigger them to buy. Never miss the good timing for selling and on the other hand, customers can be engaged by those caring actions.
2. Leverage multiple e-channels for branding and promotion.
Big group purchase sites in China mainly use traditional channels for advertising e.g., TVC, outdoor billboard and posters in the metro station etc which cost a lot but not easy to measure effectiveness. Actually marketers have to think who your target customers are? And which channels they prefer to communicate with you? I have discussed with some CEOs of famous group purchase sites in China recently, since the majority of customers who purchase are from the post ’80s and post ’90s generation, they now tend to invest more on online channels. Beside their own website, email and social media especially Weibo marketing can favour those young generation due to the real-time interactions. If they like your offer, they can simply forward the email to their friends or post it to their own Weibo accounts to share. For active members that always recommend your offers, you can think of some reward programs to encourage them to get more friends to your sites, we call it member-get-member campaigns (MGM). These loyal fans will be your effective marketing channel in the future.
3. Improve pre-sales and after-sales service by life-cycle campaign.
As we talk about the shopping experience on group purchase sites, most customers are fairly satisfied due to poor pre-sales and after-sales service. Before sending out the mass offers, marketers need to first understand customer interest by doing some pre-offer launch campaigns to dig out which group of targets are interested and avoid bothering those who are not interested. Marketers usually end communication with customers immediately after they click the payment button. In my opinion, continuous communication is essential for customer engagement. In the whole shopping experience, after sales care is critical to the customer, when they have problems, have you contacted them immediately to provide solutions? Or at least collect their feedback and let them know u noticed the problems? If not, your customers will leave you and go to other sites next time. Life-cycle campaigns are helpful in this case, and immediate after sales communication is important to improve overall customer shopping experience and increase loyalty as well.
Nowadays, most of the group purchase sites are targeting customers in Shanghai, Beijing, Guangzhou, and some second-tier cities. With the strong purchasing power from the younger generation, estimated sales from group purchase sites is more than 20 billion RMB in 2010 , and will keep growing to 40 billion or 100 billion yuan this year. Marketers should consider how to retain loyal members by implementing a good eCRM program rather than just compete with others based on price in the red sea.