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KEY POINTS

To address the growing importance of the Chinese consumer in the race for market share in the luxury brand market, we are seeing increased use of social media, particularly WeChat—China’s version of WhatsApp—the most popular social media app in the country. Capitalizing on WeChat’s popularity and the sheer number of users—the app has 980 million monthly active users (MAU) as of the third quarter of fiscal year 2017—luxury store sales associates are increasingly using the app as a sales tool to promote and sell their brands’ products. We delve into this phenomenon to better understand how and why WeChat is being used, and what brands can do to leverage this important sales tool. 

  • The growing trend of sales associates actively engaging Chinese consumers on WeChat seems to be part of a strategy to enhance the luxury retail experience.  
  • For brands wanting to maximize their social media presence, we suggest setting up a master WeChat account. This will give a universal view of all contacts that are added by their sales associates, and ensures the contacts remain on a company contact list.
  • We highlight US cosmetics brand Glossier, which has successfully been using social media to provide its brand’s narrative—other women are women’s best influencers—which has been instrumental in the brand’s popularity and in boosting sales.

The Growing Use of WeChat as a Sales Tool for Luxury Brands

WeChat, the most popular social media app in China, is increasingly being used by sales associates of luxury brands as a sales tool to promote and sell their companies’ products.

This growing trend was first highlighted in a blog post from September 2017. This particular blogger mentioned how she had received friend requests from over 10 sales associates of different luxury brands. A tactic frequently used by sales associates is to send a WeChat friend request after a customer has visited the store. The customer may have shown interest in an item or tried on an item, but for whatever reason, left the store without buying. By adding the customer as a WeChat contact, the sales associate can engage in a one-on-one dialogue to encourage the customer to make the purchase, or if the customer returns to the store to browse or buy the item, the sales quota will be attributed to that particular sales associate.

wechat_social_media_1Trends: A Fundamental Shift in Consumers’ Preferences for Engagement

We believe that sales associates actively engaging Chinese consumers on WeChat is part of a strategy to enhance the luxury retail experience. Through WeChat, store associates are able to not only communicate on a one-to-one basis with the customer, by sending personalized messages to keep them excited about the brand, but they can regularly post new product launches and promotional activity on their own WeChat moment space—similar to the newsfeed page on Facebook—to keep customers engaged as well as to attract new consumers. WeChat makes the sharing of product photos and brand information simple. This is consistent with the fundamental shift in consumers’ preference for a holistic and personalized retail experience.

See Five Reasons Tmall’s Luxury Pavilion Is Well Positioned to Ride China’s Consumption Wave.

Sales associates at luxury stores overseas also seem to be using WeChat in the same way to engage Chinese consumers.

Amidst the backdrop of an ever-growing number of Chinese tourists traveling abroad, a recent FGRT proprietary survey found that 98% of surveyed respondents use their smartphone while overseas to keep in touch with others and that 72% use online resources such as travel websites, blogs and social media to plan their trips.

As Chinese outbound tourists have quickly evolved to become experienced and savvy travellers, we recommend that in addition to using conventional advertising to target them, brands and retailers should adapt their strategies to better engage these travelling consumers.

See Deep Dive: Chinese Outbound Tourists—More Diverse, More Sophisticated.

Concerns: The Gray Areas of WeChat Sales

In the past, WeChat has proven to be a double-edged sword for luxury brands. The use of WeChat, rather notoriously by daigou agents to attract consumers, has created issues for luxury brands. Daigou refers to buying overseas goods through individual agents.

See DEEP DIVE: International Retailers Guide To Cross-Border Ecommerce In China.

There are addition concerns in addition to the use of wechat by daigou agents:

  1. Sales associates, not brands, have a direct connection with customers: When a sales associate engages with a customer and adds the customer to their WeChat contact list, the customer is not usually added to the brand’s centralized client relationship management (CRM) system. Should the sales associate leave the company, their contact list would leave with them and the store loses a valuable contact.
  2. The challenge of establishing a universal brand identity: In the absence of a centralized process, it is challenging for brands to monitor the conversations that take place on WeChat between their sales associates and their customers. The goals of brands and their sales associates are not necessarily aligned: a brand’s goal is to establish a long-term brand identity among consumers, while a sales associate may be more concerned with meeting their short-term sales quota.

Best Practices for Brands to Maximize their Social Media Presence

To maximize their social media presence, we believe brands need to use WeChat effectively to engage consumers in-store, as well as when they are not present. One such way is for brands to set up a master WeChat account, which gives them a universal view of all contacts added by their sales associates. The advantage of this is that it gives them greater control over the contact list (the customer remains on the list, even if the sales associate leaves the company) and there is greater transparency in the posts of sales associates and their interactions with customers. Furthermore, brands gain better viewership statistics for their brand messages, as posts from individuals tend to be viewed more widely than those by the brands themselves, because of the personalized one-to-one aspect.

WeChat as the Go-To Destination for Advertisers in China

As noted, the recent trend in China is for sales associates of luxury brands to service and communicate with customers via WeChat, the most popular social media messaging app in China. With an MAU of 980 million, as reported in the company’s third quarter earnings announcement for fiscal 2017, WeChat is the most effective advertising platform in China. It is also the most-used app in the country with the highest number of active users, at 93%, according to a survey by the China Internet Network Information Center (CNNIC).  

This critical mass in China makes WeChat the go-to destination for both brands and advertisers. WeChat acts both as a channel for mobile advertisements, as well as loyalty program management. In line with this, management made “Connection” its core strategy for 2017—this includes expanding its market share of advertising and growing digital content. As of the third quarter of fiscal 2017, the online advertising revenues of WeChat’s parent company Tencent accounted for 17% of total revenues, according to the company’s earnings release.  

WeChat Moments Advertising

WeChat Moments allows users to share their photos, videos, articles and even websites on a real-time basis. Friends can “like” or comment on the post to interact with other users. According to WeChat data, 76.4% of accounts use Moments to share experiences and to keep up to date with their friends’ stories on a daily basis.

WeChat Official Accounts Advertising

Official Accounts allow brands or individual users to set up a page for distribution of news, articles, customer services, etc. Users of WeChat can follow any public account they want to stay on top of news and issues important to them.

See Deep Dive: WeChat—From Messaging App to Profitable Ecosystem.

Global Comparisons in Social Media Marketing

We see many parallels around the world of brands using social media to market to their consumers. Nowadays, consumers are constantly bombarded with information and endless choices, and it is important for brands to engage and connect with consumers in order to differentiate themselves. This is not a new phenomenon: in 2012, 78.6% of sales people using social media to sell outperformed those who were not using social media. Social media users were 23% more successful than their non-social media peers in exceeding sales quotas.

wechat_social_media_2Case Study–Glossier

In the following section, we outline how Glossier, a US cosmetics brand, successfully uses social media to provide its brand’s narrative—other women are women’s best influencers—which has been instrumental in the brand’s popularity and in boosting sales.

wechat_social_media_3The Role of Social Media in Glossier’s Spectacular Rise 

Glossier has been known for its brand identity and consumer engagement both online and offline since it first launched in 2014. The Founder and CEO, Emily Weiss, chose to launch the company’s first direct-to-consumer (D2C) products—four baseline items—to her existing followers on Instagram, rather than follow the industry norm of selling to counters/vendors. To maintain a unified brand identity, Glossier is keeping a consistent look and feel to its products, as well as its brand message on social media and other channels. To maintain relevance with consumers, Glossier’s product team maintains ongoing conversations with consumers, particularly on social media, taking a bespoke approach to each Glossier product. For example, its Priming Moisturizer Rich, which launched in January 2017, was based on over 1,000 comments that were received when the company asked its followers what they wanted to see in a moisturizing cream.

Glossier has set up a Slack channel—a real-time messaging, file-sharing, search and archiving app—to interact with and gather feedback from consumers. Consumers’ sharing on Instagram and social media form a substantial part of their marketing.  

Storytelling + Content = Engagement

The success of Glossier is premised on storytelling and content. Weiss sought to create a beauty shopping experience that possesses the context of real women and real experiences. Before she started Glossier, Weiss, a former beauty editor, had a website on which she posted interviews with celebrities, models and influencers on their beauty routines.  

The company has been testing the physical retail space in the form of pop-ups, called Glossier Showrooms, in the US and the UK. The Glossier experience consists of “showroom editors” who evaluate consumers’ complexions and offer skincare tips on skincare products. Purchases are completed by the showroom editors using iPads and the products are placed in a plastic bag with the consumer’s name.  

About Glossier—a Beauty Lifestyle Brand Born on Instagram

Glossier is a D2C beauty brand that has achieved cult status and is well- loved by millennial consumers. Founded just three years ago, the company is known for its no-makeup-makeup look. The brand is known for its digital first approach—it involves consumers in product development and offers a personalized customer experience. It is because of this personalized service that its products are known for receiving favourable consumer reviews.  Weiss estimates that 90% of Glossier’s revenues come from its fans. The company received initial funding from Forerunner Capital and Thrive Capital.

wechat_social_media_4Key Takeaways

We expect marketing on WeChat will drive further growth in discretionary consumer spending in China, in particular luxury sales.

The best practice we recommend for brands that seek to take advantage of WeChat to sell is to set up a master WeChat account which would give them a universal view of all customer contacts and ensure the contacts stay with the brand.  

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