Precision marketing is the next big thing... and Europe is dangerously lagging behind
During the last nexxworks China Innovation Tour I co-hosted, we visited a number of riveting companies - startups, scale-ups as well as established companies. Whilst listening to their stories, I found four elements to be essential for businesses in that area of the world. First of all, they have the advantage of access to a huge market with over 1.4B people. This enables them to quickly test out new ideas and iterate on them. Second this market size creates an abundance of very big data. Third, literally all Chinese live their lives on their smartphone with mobile superapps like WeChat. And, finally, not only are they very comfortable with rapid and continuous change, they appreciate speed very much as they greatly value time over money.
It is in this culture that a company like Secoo is thriving. Secoo was founded in 2008 and starting from an Experience Center first, they moved to becoming the biggest online-offline premium lifestyle platform in China (over 25%) and Asia (over 15%). They help global premium brands tackle the Chinese market and got listed on Nasdaq in 2017. They set themselves apart from other e-commerce platforms in that their average purchase is about 20 times higher. They aspire to become the Amazon of luxury!
Secoo has over 100 data scientists on their payroll and just like any other e-commerce platform, they have piles of traffic data in their online environment and purchases made by their customers. But the most important is that they have a partnership with Tencent, the platform that also includes WeChat. This allows them to combine first-hand purchase data with WeChat’s data on social behaviour, to perform what they call ‘precision marketing’. They get clear insights into the real customer journey by doing marketing ‘reversely’: they for example will select all the people that purchased a specific brand or product and then use this data pack on Tencent to find out their overall behaviour on the Internet: which type of videos they watch, which social channels and apps they use most, which KOLs (Key Opinion Leaders) they follow, what sports they like and what other industries are highly interesting for them. All of these aspects are translated into ‘tags’ and Artificial Intelligence is being used to find the correlations between combinations of these tags and the actual purchases to gather insights and predict future actions by their consumers. These are then used to define extremely targeted ads on their app, with very high conversion rates as powerful results. One surprising outcome they found for example was most of their ‘real purchasers’ to be watching soap series a lot and it goes without saying these soaps were included in the ads.
Using this very targeted technique of precision marketing, Secoo can create an emotional connection with their consumers and find out who their SUPER USERS are. Revenue generated by one super user is at least TEN times of one regular user and consequently targeting this super user group with great precision can create huge conversion not only within specific brand they represent, but also across brands and across various categories of products.
The West really has a long way to go before we could integrate and profit from this type of vision. The reason is that we like to keep things neatly compartmentalized: e-commerce is not the same as search is not the same as social. We have separate platforms for each. Where Secoo profits from its tight strategic partnership and (encrypted!) data exchange with Tencent, we lack this type of integration altogether. We EITHER stroll the e-commerce platforms like Amazon or more locally bol.com and Zalando, OR we surf the Internet with Google and ‘do social’ on one of Facebook’s apps. The Chinese, on the other hand have a very holistic way of thinking and this is perfectly mirrored in their very clever use of (business) channels.
Furthermore we could learn a lot from how the Chinese use the super apps to do almost EVERYTHING, from bike-sharing to meals to small purchases anywhere. It’s such at tragedy that European companies are not capable of performing the type of precision marketing Secoo is engaged in for the moment … We really need to find ways to gather both the quantity and the quality of the data that are being mined in China as we speak.