Personalisation Opening doors to growth in China An Economist Intelligence Unit report Sponsored by Cisco Personalisation Opening doors to growth in China Preface Personalisation: Opening doors to growth in China is a report written by the Economist Intelligence Unit and sponsored by Cisco The Economist Intelligence Unit conducted the analysis and wrote the report, which is the third in a series of briefing papers that focus on China The previous reports are Unlocking innovation in China and Collaboration in China: Paths to profit The findings and views expressed in the report not necessarily reflect those of the sponsor The report is based on a survey of 192 senior executives in China, in-depth interviews with senior executives from Chinese companies and desk research The author is Laura Dodge and the editor is Katherine Dorr Abreu Mike Kenny is responsible for the layout The Economist Intelligence Unit would like to thank all those who contributed their time and insight to this project August 2009 © Economist Intelligence Unit Limited 2009 Personalisation Opening doors to growth in China Introduction To many Westerners, the “Mao” jacket, a blue, high-collared button-down worn ubiquitously during Mao Zedong’s reign in China, symbolised the homogeneity of products available at the time State-owned companies met government production targets by churning out no-frill, basic goods China has come a long way; it is now a market economy that pits state-owned enterprises against private and foreign-owned companies striving to meet the fickle demands of consumers at home and abroad To compete, a growing number of Chinese companies are relying on innovation and customer service to provide personalised goods and services What is personalisation? It entails the ability to adapt a product or service continually and independently, whether by altering services or by changing product configurations or applications Fuelled by advances in technology—particularly web-based applications, which connect customers to Who took the survey? The online survey was fielded in Chinese and was answered by 192 executives in China Fifty-four percent of respondents work in companies that sell products and 27% in companies that sell services (19% sell equal amounts of products and services) They represent a wide range of industries: 44% are manufacturers, 10% financial services firms and 6% professional services firms Company ownership structures also vary widely: 30% of respondents come from private Chinese concerns; 27% from wholly owned foreign operations; 18% from state-owned enterprises or companies owned by provincial or municipal governments; 17% from joint ventures between Chinese and foreign concerns; and 8% from other firms (part-privatised companies with significant government ownership) Twenty-five percent of respondents’ organisations have annual revenue of US$100m or less, 25% between US$100m and US$500m, 17% between US$500m and US$1bn, and 33% more than US$1bn Figure What does your company sell? (% respondents) Mostly products 33 Only products 21 Equal mix of products and services 19 Only services 18 Mostly services Source: Economist Intelligence Unit survey, January, 2009 A total of 27 regions are represented, although the majority of respondents are located in the most economically advanced parts of China: Shanghai (24%), Guangdong (15%), Beijing (14%), Zhejiang (9%) and Jiangsu (8%) More details are provided in the Appendix © Economist Intelligence Unit Limited 2009 Personalisation Opening doors to growth in China companies—personalisation takes customisation a step beyond pre-set options offered to consumers, such as the choice of leather or cloth interior in a new car Examples include Facebook, the social networking site where users create and continually update their own web pages Another is personalised medicine, which allows doctors to treat patients based on individual characteristics such as weight, age and genetic profile Demand for personalised goods and services is driven in part by consumers, who want the option to modify products and services to their specific preferences For companies, the advantage of personalisation is that it often leads to higher profit margins More broadly, greater personalisation can serve as a catalyst for innovation by creating a mechanism through which customers can suggest improvements, or insights that can lead to entirely new products or ways of operating It is no wonder, then, that Chinese companies are joining the global personalisation trend An Economist Intelligence Unit survey of executives in China, conducted in January 2009 and sponsored by Cisco, found that personalisation is already having a positive impact on company growth, according to 54% of respondents Sixty-four percent of respondents expect personalisation to spur growth in the next five years These numbers are impressive, although lower than the results of a similar, global survey conducted by the Economist Intelligence Unit in 2006 that culminated in a report, Personalisation: Transforming the way business connects In that report, 68% of respondents worldwide said they had already felt the effect of personalisation, while 82% expected it to help increase growth in the next five years Figure Personalisation’s impact on growth less in China than globally Personalisation goes one step beyond customisation and entails the ability to adapt a product or service continually and independently, whether by altering services or by changing product configurations or applications Currently In five years Difference (% respondents who say personalisation has and will have positive impact) Global 68 82 China 54 64 Source: Economist Intelligence Unit survey, November, 2006 and January, 2009 The 2009 survey evaluated how personalisation is influencing the growth of Chinese companies and their customer relationships The results suggest that Chinese companies face unique challenges in delivering personalised products and services Innovation, which is often a prerequisite to personalisation, can have a difficult time flourishing in Chinese companies China’s education system continues to emphasise rote learning at the expense of promoting debate and the generation of new ideas In addition, many companies operate within the confines of rigid corporate hierarchies that dampen innovative ferment An earlier report in this series, Unlocking innovation in China, found that management plays a critical role in fostering innovation through its ability to deconstruct these hierarchies and to invest in research and development (R&D) When channelled towards understanding the swiftly changing habits and preferences of Chinese consumers, these steps can help companies to become truly innovative A more immediate challenge for Chinese companies, and particularly for manufacturers looking to benefit from personalisation, is their preoccupation with cost and quality: 88% of respondents consider © Economist Intelligence Unit Limited 2009 Personalisation Opening doors to growth in China quality a top driver of revenue growth, and 82% say cost is important While still a significant majority, fewer consider customisation of products and services and innovation as among key revenue generators: 72% and 71% of respondents, respectively As manufacturers tend not to be in direct contact with end users, it is more difficult for them to identify and respond to customer needs The survey suggests that most Chinese companies need to better manage and respond to their customers Specifically, it indicates a need for more efficient collection and centralisation of customer information, and more creative ways of interacting with customers © Economist Intelligence Unit Limited 2009 Personalisation Opening doors to growth in China Innovation at the root of personalisation China may still be known as the world’s factory, but many China-based companies already offer personalised goods and services as sophisticated as those found in the most advanced economies Nearly 80% of respondents say their organisations offer products or services that can be customised partly or fully, in line with the results of the global survey In the next five years, a full 90% of respondents expect to offer customisable products or services—on par with the global findings Manufacturing companies in China are particularly attuned to the competitive advantages offered by innovation via personalisation The vast majority of manufacturers rate cost and quality as critical to revenue growth, but a growing number also recognise the importance of product personalisation: 75% of manufacturers rate product customisation as critical to current revenue growth, while 90% say it will be critical in five years Many of China’s biggest names, such as Baidu and China Mobile, are leaders in the trend towards personalisation Beijing-based Baidu, which saw revenue grow by 83% in 2008, to US$468m, offers an online search engine with keyword auctions and targeted advertising China Mobile, the world’s largest mobile provider by number of subscribers and with revenue of US$60bn in 2008, allows users to sign up for personalised text messages based on their interests or profession Lenovo, a computer giant with revenue of US$14.9bn last year, offers consumers a range of services that provide different levels and types of support according to the customer’s preferences Lenovo, Baidu and China Mobile have the resources to supply the most technologically advanced goods Manufacturing companies in China are particularly attuned to the competitive advantages offered by innovation via personalisation A growing number recognise the importance of product personalisation to revenue growth Figure Product and service innovation is particularly important to revenue growth for smaller firms in China (% respondents who rated product/service innovation very important or important to their company’s revenue growth) Currently In five years Difference Privately owned Chinese enterprises (POEs) 80 90 State-owned enterprises (SOEs) 70 76 Joint ventures (JVs) 63 76 Wholly foreign-owned enterprises (WFOEs) 66 87 Source: Economist Intelligence Unit survey, November, 2006 and January, 2009 © Economist Intelligence Unit Limited 2009 Personalisation Opening doors to growth in China Technology makes personalisation possible for Baidu Baidu, whose name means “hundreds of times”, is a NASDAQ-listed company based in Beijing that holds about two-thirds of China’s search engine market Its revenue reached US$468m (Rmb3.2bn) in 2008, an 83% increase on 2007 In addition to online and mobilephone searches, Baidu’s businesses include keyword auctions, marketing and targeted advertising All business lines rely on personalisation According to Shen Haoyu, vice-president of business operations, the business is “really made possible by technology, and by the internet We’re not selling a computer.” One example is keyword auctions, an important revenue generator for Baidu Companies that rank high in an online search receive more traffic Baidu helps companies to achieve higher rankings by auctioning keywords related to their business: a florist, for example, would join other florists in an ongoing auction for the keyword “flower” Those that bid more and provide the most relevant links rank higher in an online search result The fact that companies can bid for any keyword at any time personalises the process Baidu also sells customisable advertisements targeted to specific customer segments Advertisers pay only for the ads that generate “clicks”, or visits to their website For example, if a carmaker plans to launch a new line in China, and aims to advertise to people who have researched the brand online over the past week or months, Baidu can analyse web traffic to help the company target its ads more effectively Baidu has more than 200,000 customers for its targeted advertising services According to Mr Shen, most customers are small to mediumsized enterprises But the number of bigger clients, such as HewlettPackard, Daimler, and Proctor and Gamble, is growing fast “We’re seeing more and more demand from advertisers for targeted advertising Online ads used to be very simple—not that different from TV commercials—but more advertisers are realising the returns are higher for targeted advertising,” says Mr Shen and services Yet the survey also revealed that smaller companies, and specifically privately owned Chinese enterprises (POEs), are keen to compete at the same level More respondents from POEs than other types of companies—state-owned enterprises (SOEs), joint ventures (JVs) and wholly foreign-owned enterprises (WFOEs)—say they consider personalisation, innovation and speed of delivery vital ingredients for current and future growth Almost 80% of respondents from POEs say that product and service innovation is important to revenue growth today A large percentage of respondents from SOEs, in which change has until now been slower, also value product and service innovation, more than both WFOEs (66%) and JVs (63%) Looking forward, however, SOEs are less likely to value it than other types of companies, as shown in Figure (See “Who took the survey” for a break-out of companies by ownership structure.) Innovation may be particularly important to private companies because they are trying to gain a foothold in markets long dominated by larger, more established companies: 55% of the POEs we surveyed have less than US$100m in revenue, whereas the majority of SOEs, JVs and WFOEs have revenue of more than US$250m Small companies that are more willing to experiment with new channels of growth have more innovative cultures that prioritise personalisation © Economist Intelligence Unit Limited 2009 Personalisation Opening doors to growth in China An ear to the ground with customer service Privately owned companies in China are using innovation, including personalisation, to gain a competitive advantage, but customer service may be just as important Service delivery, follow-up support and customer-needs analysis are the types of customer interaction that offer the best opportunities for any company seeking to gain a competitive advantage, according to the survey This is in line with the global findings from our 2006 survey These interactions can help to build customer loyalty and satisfaction, which more than 80% of respondents rank as very important to revenue growth The delivery of personalised goods and services is considered a driver of future growth: almost one-half of survey respondents (46%) say that more personalised customer interactions would affect over 25% of their revenue Personalised services help companies to differentiate themselves from their competitors and generate more revenue from their product lines Lenovo, for example, has been able to boost revenue by linking personalised services to computer sales According to Li Xianglin, vice-president of service for Lenovo China, Chinese consumers are increasingly demanding personalised, professional services as part of their purchase of a personal computer To meet this demand, Lenovo offers various service platforms that allow customers to update, repair or service their computers according to their individual preferences Customers who register their computers with the company can book troubleshooting sessions with a Lenovo employee online or use “eRobot”, an automated program that allows users to solve software or hardware issues independently Although survey respondents recognised the value of personalised customer service, it is still a Personalised services help companies to differentiate themselves from their competitors and generate more revenue from their product lines Figure Service delivery, follow-up support and needs analysis open doors in China (% respondents who considered this option an oportunity) Follow-up support 71 Service delivery 69 Repeat purchases (add-ons or bolt-ons) 68 Needs analysis 65 Contract negotiations 62 Source: Economist Intelligence Unit survey, January, 2009 © Economist Intelligence Unit Limited 2009 Personalisation Opening doors to growth in China “Virtual instructors” help Ambow personalise education Ambow Education is a Beijing-based, privately held company founded in 2000 that provides personalised online and in-class education to schoolchildren and university students, as well as online educational programs for corporate clients Its business model relies on personalisation in several ways For example, Ambow has relationships with more than 100 universities to deliver vocational training that is customised according to the needs of businesses near each university Ambow works with local units of the Ministry of Education to identify the talent needs of companies in the area near a university, and then designs courses on topics such as new digital media and telecommunications, geared to those needs At one of its centres in Kunshan, near Shanghai, Ambow offers courses in business process outsourcing to more than 1,000 students, and has the capacity to expand to 5,000 According to Cherry Pu, Ambow’s vice-president of global alliance and investment, the centre teaches both technical and “soft” skills, such as teamwork and integrity Classes are tailored to individual students through a “virtual instructor” embedded in the software The “instructor” can identify a student’s problem areas and suggest course material based on the student’s progress Live instructors complement the software by providing in-class instruction and personalised tutoring based on a student’s online work Teachers work with students, parents and Ambow salespeople to evaluate students’ progress This business model helps to generate customer loyalty by providing a continuous feedback loop between service providers and consumers Ambow uses the same educational technology to design highly customised online training programs for companies and their clients It created, for example, a program for an international software developer that sells to resellers in China The developer offers online sales training programs to the resellers’ sales representatives as a way to advertise and promote its products, as well as to gain their allegiance One of the program’s benefits is that it allows the software developer to forge stronger relations with resellers by tracking representatives’ participation in the training programs and offering new programs or broadcasting new products to individual representatives based on their participation Ambow has received nearly US$160m in private equity investments since 2007, and is using the funds to establish regional hubs in Beijing, Tianjin, Henan, Shaanxi and Guangzhou These hubs will include 30 regional educational centres aimed at college entrance exam preparation and vocational training In addition, the company recently signed an agreement to build a software and service outsourcing training centre in Dalian, in the province of Liaoning Ambow aims to achieve revenue of US$147m (Rmb1bn) in 2009 relatively new concept in China One of the hurdles Chinese companies face in improving customer service is getting close to their customers The survey found that Chinese respondents are less likely than their global peers to contact customers directly to assess their needs or deliver personalised service This result probably reflects not only the lack of a service culture in many Chinese companies, but also the large proportion of respondents in the China survey that are manufacturers In fact, only 24% of respondents Figure Manufacturing more prevalent in China (% respondents in manufacturing and other industries) Gobal Manufacturing 44 29 Financial services 10 11 Professional services 54 Other 40 China Source: Economist Intelligence Unit survey, November, 2006 and January, 2009 © Economist Intelligence Unit Limited 2009 Personalisation Opening doors to growth in China Figure In China, customer service is the business process that requires the most re-engineering (% respondents who think the process needs re-engineering) China Global Difference Customer service 25 18 IT 20 15 Sales 19 17 Marketing 19 64 Operations 15 24 Finance Source: Economist Intelligence Unit survey, November, 2006 and January, 2009 from manufacturing companies in China say they are likely to use direct personal contact to improve relationships with customers, compared with 48% of those from non-manufacturing companies Manufacturers are usually more distant from end users than service providers: they supply to retail outlets or to other manufacturers that use the products to make their goods Furthermore, many Chinese companies produce mainly for foreign markets, and are now trying to catch up with the evolving tastes of Chinese consumers But as competition for consumers intensifies, companies in China are starting to realise the importance of strong customer relations Twenty-five percent of survey respondents (the largest proportion) acknowledge that customer service is the company process that most requires re-engineering in order to offer a personalised customer experience The 2006 global survey respondents, by contrast, were more likely to choose operations or marketing as the business process requiring most change Companies can improve customer service by better assessing customer needs Beijing-based Ambow Education does this by working closely with its clients to identify potential training needs and developing programs for those customers Its business model is in line with survey findings: 28% of respondents say that information about customers’ future needs would increase the chance of subsequent interaction For this, collection and management of customer information is critical But the survey reveals some weakness in managing customer information in China Thirty-four percent of respondents say that decentralised customer information makes it difficult for them to implement a personalisation strategy Twenty-three percent say inadequate IT infrastructure, which would help collect and centralise customer information, is a barrier Having adequate IT resources does not mean a company uses them efficiently Research in 2008 by McKinsey and Company, a management consulting firm, found that Chinese financial institutions tend to hold customer information in geographical silos Bank branches in different provinces are unlikely to share information related to customer preferences or consumption habits, thus hindering a bank’s ability to capture general trends in customer behaviour and needs © Economist Intelligence Unit Limited 2009 Personalisation Opening doors to growth in China Up-to-date customer information, when used properly, can be a powerful tool to sustain a loyal customer following Baidu, for example, assigns dedicated customer service representatives (CSRs) to each customer The CSRs use customer data to build stronger relationships through targeted newsletters, websites, e-mails, personal visits and phone calls “[The CSRs] a lot of hand holding,” says Shen Haoyu, the company’s vice-president of business operations Many companies surveyed already use technologies such as voice over Internet protocol (VoIP), video streaming and podcasts, and more plan to so within the next five years Yet only a small percentage of respondents rank these technologies highly as useful tools in improving their relationships with customers The telephone (chosen by 62% of respondents) and e-mail (59%) are considered the most powerful tools for this purpose In the 2006 global survey, direct personal contact topped the list (68%), followed by e-mail (51%) and the telephone (50%) What is the best way to interact with customers? Good communications skills are considered of utmost importance in China Sixty-seven percent of respondents rank these as highly important in delivering meaningful customer interaction, and 29% cite creativity as the most important skill for employees to possess in order to interact well with customers Although they value creativity, few companies train employees to be creative in their customer interactions One respondent says his company does not train employees to be creative because “sometimes it’s better to play it safe” Another comments that her company “mostly focuses on hard skills or some communication skills” But a third respondent says his firm “not only trains its staff in sales and communications skills, but also teaches employees about the cultures of its clients Since to some extent sales is a process of understanding between two parties, knowing more [about the client] means selling more than our competitors.” This emphasis on creativity in customer interactions suggests that Chinese companies are anxious to shed their reputation as providers of mass-produced goods and services They are also probably becoming more aware of the importance of customer service in an increasingly competitive global market 10 © Economist Intelligence Unit Limited 2009 Personalisation Opening doors to growth in China Conclusion Advances in technology are enabling organisations to respond in more ways to a growing demand for personalised goods and services, thus creating opportunities for companies to add to their bottom lines While Chinese companies have begun to use technology to innovate and differentiate themselves from the competition, the survey on personalisation and the earlier report on innovation suggest that success hinges largely on the companies’ ability to understand and respond to consumer demand They have several tools at their disposal: l Innovation makes personalisation possible Management can foster innovation by breaking down company hierarchies, encouraging feedback from employees and investing more in R&D These steps should help companies both to tune in to customer needs and develop compelling personalised products l Accurately assessing customer needs and aspirations is the most important attribute in providing successful personalised products and services This requires getting closer to customers and effectively managing customer information This may entail overcoming internal and technical barriers l Personalised customer service can strengthen the bonds created by personalised goods and services, increasing customer loyalty and thus improving a company’s competitive position Frequent and direct contact with customers will enable a company to be attuned to their needs l Chinese companies recognise the importance of communication skills as a tool to improve customer interaction By training their employees in both hard skills—how their products and services work, for example—and soft skills—such as communication and cultural information—they can improve the effectiveness of their customer relations efforts By better understanding their customers, Chinese companies will be able not only to anticipate demand, but also to innovate in ways that respond to or even create demand Only by understanding and responding to customer needs will they be able to compete in what is an increasingly personalised global economy © Economist Intelligence Unit Limited 2009 11 Appendix Survey results Personalisation Opening doors to growth in China Appendix: Survey results Currently, to what degree does your company offer each customer the ability to configure products or services in a unique way? Who are your company’s primary customers? (% respondents) (% respondents) Mostly businesses in China 28 The product is standard and we offer no customisable features Mostly businesses abroad 22 13 The buyer can order some features and value-added services Mostly consumers in China 34 27 The buyer can customise most aspects of the product Mostly consumers abroad 26 13 The buyer has total freedom to shape the product to his/her specifications Equal mix of businesses and consumers in China 18 13 Equal mix of businesses and consumers abroad Governments/Public sector If your company currently does not offer customers the ability to personalise goods or services, which of the following factors are responsible? (% respondents) What does your company sell? (% respondents) The product is standard and cannot be personalised Only products The cost of offering personalised goods or services outweigh calculated gains 64 29 21 The company does not have access to technologies that enable it to offer personalised goods or services Only services 18 Mostly products 33 Mostly services In five years, to what degree you expect your company will offer each customer the ability to configure products or services in a unique way? Equal mix of products and services 19 (% respondents) How would you characterise your company’s culture? The product will be standard and we will offer no customisable features 10 (% respondents) The buyer will be able to order some features and value-added services 40 Innovative (creative, intuitive, quality-oriented) 36 The buyer will be able to customise most aspects of the product 31 Traditional (conservative, hierarchically controlled) 32 The buyer will have total freedom to shape the product to his/her specifications 19 Collaborative (teamwork, consensus-oriented) 13 Impersonal (formal, strictly business) Personal (individual- and values-oriented) Transactional (routine, rigid) If your company currently does not plan to offer customers the ability to personalise goods or services in five years, which of the following factors are responsible? (% respondents) Critical (negative, pessimistic) The product is standard and cannot be personalised Interactive (flexible, empowering) 79 The cost of offering personalised goods or services outweigh calculated gains Don’t know 21 The company does not have access to technologies that enable it to offer personalised goods or services 12 Economist Intelligence Unit 2009 Personalisation Opening doors to growth in China Appendix Survey results How important are the following factors to your company’s current revenue growth? Rate on a scale of to 5, where 1=Very important and 5=Not important (% respondents) Very important Not important Don’t know Cost 60 21 12 2 Quality 68 21 Quantity/variety of product available to consumer 36 33 18 5 Speed of delivery 41 29 21 4 Product/service innovation 47 24 21 Customisation of products/services 43 29 21 4 Customer loyalty 59 21 16 Customer satisfaction 64 24 10 In five years’ time, how important you expect these factors will be to your company’s revenue growth? Rate on a scale of to 5, where 1=Very important and 5=Not important (% respondents) Very important Not important Don’t know Cost 60 22 13 Quality 70 20 11 Quantity/variety of product available to consumer 45 31 15 Speed of delivery 49 29 15 3 Product/service innovation 60 22 12 Customisation of products/services 52 27 16 11 11 Customer loyalty 60 27 Customer satisfaction 72 21 Please indicate the impact that you believe personalisation currently has on your company’s growth Please indicate the impact that you believe personalisation will have on your company’s growth in the next five years Rate on a scale of to 5, where 1=Strong positive impact and 5=Strong negative impact (% respondents) Rate on a scale of to 5, where 1=Strong positive impact and 5=Strong negative impact (% respondents) Strong positive impact Strong positive impact 33 41 20 22 3 30 22 Strong negative impact Strong negative impact Don’t know Economist Intelligence Unit 2009 Don’t know 13 Appendix Survey results Personalisation Opening doors to growth in China To what extent the following customer interactions offer your company an opportunity to establish competitive advantage? Rate on a scale of to 5, where 1=Strong opportunity and 5=Little or no opportunity (% respondents) Strong opportunity Little or no opportunity Don’t know Customer enquiry 34 31 19 5 Initial sale 29 38 17 7 Order change 23 28 29 Product shipping 27 22 20 11 16 Service delivery 41 28 18 Follow-up support 39 32 16 Repeat purchases (add-ons or bolt-ons) 37 31 15 5 On-site sales visit 30 29 20 Needs analysis 38 27 22 Contract negotiations 37 25 24 Online/offline information about product or service 31 29 22 24 Referrals to product or service by third party 32 25 5 In your opinion, which of the following factors most influences the purchasing decisions of your company’s customers? What information exchanged during a customer interaction you think would most increase the chance of a subsequent interaction for your company? (% respondents) (% respondents) Quality Information relating to customer’s future needs 42 Brand 28 Information about customer’s buying preferences 27 Price 15 Information about new products/services 14 Customer service 14 Personal information Necessity 13 Information about customer’s lifestyle Convenience The company’s business plans for products/services The company’s innovation cycle Opportunities to offer feedback Rewards and incentives The company’s business plans for customer segmentation 14 Economist Intelligence Unit 2009 Personalisation Opening doors to growth in China Appendix Survey results Which of the following best enables your company to personalise its products and services? Which of the following technologies/activities you see as most helpful in improving the relationship your company has with its customers? Select up to three (% respondents) Select up to three (% respondents) E-mail Telephone 56 Telephone 62 E-mail 50 Direct personal contact 59 Direct personal contact 34 Events/trade shows 37 Events/trade shows 23 Fax 30 Fax 16 Direct sales 28 Direct sales 16 Focus groups 17 Focus groups 10 Web chat Web chat Webcasts Voice-over Internet protocol (VoIP) Voice-over Internet protocol (VoIP) Webcasts Postal mail Postal mail Streaming video Streaming video Podcasts Podcasts 1 Other Other Not applicable—we not have personalised products or services How have advanced technologies (such as VoIP, streaming video or Podcasts) affected your company’s interactions with customers in the areas listed below? Rate on a scale of to 5, where 1=Strong positive impact and 5=Strong negative impact (% respondents) Strong positive impact Strong negative impact Don’t know Average time to facilitate communication 38 29 21 2 Number of interactions initiated 36 30 20 3 7 Agility to respond to customer requests 47 25 16 Frequency of miscommunication 29 23 27 Customer satisfaction 51 24 16 2 Customer loyalty 43 28 17 Ability to personalise products and services 35 Economist Intelligence Unit 2009 29 22 15 Appendix Survey results Personalisation Opening doors to growth in China To what extent has your company’s overall revenue growth changed as a direct result of delivering personalised products and services? Select up to three (% respondents) What metrics does your company have in place for monitoring the customer experience? Select all that apply (% respondents) Customer satisfaction surveys Growth is much higher 62 E-mail follow-up 27 Growth is somewhat higher 43 46 Outbound telephone surveys No change in growth 33 In-package customer surveys Growth is somewhat lower 27 Exit interviews Growth is much lower 22 Repeat purchase accounting Not applicable—we have not delivered personalised products and services 20 Service calls/letters as percentage of shipments Don’t know 11 Return/cancellation rates 10 Video or voice monitoring How does your company train its personnel to interact with customers? Secret shoppers Select all that apply (% respondents) Other Not applicable—we not formally monitor the customer experience On-the-job training 64 Don’t know Training by supervisor 35 On-site classroom 34 How does your company capture customer buying preferences and behaviours? Peer mentoring 33 Select all that apply (% respondents) Written operating procedures 29 Self-guided learning Surveys 27 53 Other Front-line salespeople 48 Not applicable—we not offer formal training for customer interactions Service calls 41 Don’t know Point-of-sale data 28 Website interactions 22 Which traits/skills you think are most important for your employees to possess in order to deliver a meaningful customer interaction? Other Select all that apply (% respondents) Communications skills 67 Insight into customer needs 54 Product knowledge 50 Creativity 29 Discipline 19 Humour 11 16 Economist Intelligence Unit 2009 Personalisation Opening doors to growth in China Do privacy concerns hamper relationships with your company’s customers? In your opinion, what obstacles stand in the way of your company’s implementing a personalisation strategy? (% respondents) Select all that apply (% respondents) Often 11 Decentralised customer information Sometimes 44 Lack of management buy-in Rarely 45 Appendix Survey results 34 25 Inadequate IT infrastructure 23 Lack of customer information 23 Overall company culture 21 Inadequate budgets 20 Fragmented staff structures 18 Competing agendas Which of your company’s business processes you think requires the most reengineering to deliver a personalised customer experience? 10 (% respondents) Customer service 25 IT 20 In your opinion, what percentage of your company’s revenue base would be affected by more personalised customer interactions? (% respondents) Sales 19 Marketing 19 Operations 15 Finance Economist Intelligence Unit 2009 0% 25% or less 49 25% to 50% 31 50% to 75% 12 75% to 100% 17 Appendix Survey results Personalisation Opening doors to growth in China Which of the following applications of technology you have now, or expect to deploy in five years, to deliver more personalised customer experiences? (% respondents) Have now Expect to deploy within five years Do not expect to deploy within five years Don’t know Virtual data storage 50 25 11 14 Unified voice, video and data networking 42 33 14 12 Voice-over Internet protocol (VoIP) 47 28 11 13 Click-to-talk 39 31 17 14 13 14 Web chat 46 27 Instant messaging 58 21 10 10 29 10 10 Personal digital assistants (PDAs) or other mobile devices 51 Video conferencing 41 40 12 Video messaging 28 43 16 14 Collaborative workplace applications (eg, instant messaging, file sharing) 48 34 9 Business intelligence applications 39 36 12 13 What is your primary industry? How would you define your company’s structure? (% respondents) (% respondents) Private Chinese enterprise Manufacturing 30 44 Financial services Wholly owned foreign operation 27 10 Professional services Joint venture between Chinese and foreign companies 17 Transportation, travel and tourism State-owned enterprise 16 Consumer goods Partially privatised company with significant state ownership Chemicals Enterprise owned by provincial or municipal government Energy and natural resources Healthcare, pharmaceuticals and biotechnology Construction and real estate What is your educational background in management? Select all that apply (% respondents) Automotive Practical on-the-job training IT and technology 29 Ongoing education provided by the company Logistics and distribution 26 Undergraduate degree in business administration from Chinese university Entertainment, media and publishing 34 Undergraduate degree in business administration from foreign university Retailing Graduate degree in business administration from Chinese university Telecoms 16 Graduate degree in business administration from foreign university Education Agriculture and agribusiness 15 Other Government/Public sector 18 Economist Intelligence Unit 2009 Personalisation Opening doors to growth in China Appendix Survey results In which region of the Chinese mainland are you personally located? What are your main functional roles? Please choose no more than three functions (% respondents) (% respondents) Shanghai Marketing and sales 24 29 Guangdong Strategy and business development 15 28 Beijing General management 14 22 Zhejiang Finance 15 Jiangsu Customer service 14 Shandong Information and research 13 Fujian Operations and production 13 Henan IT Sichuan R&D Hubei Supply-chain management Anhui Human resources Liaoning Legal Qinghai Procurement Tianjin Risk management Xinjiang Uygur Other Chongqing Gansu During your career, have you worked in the following types of companies or held government positions? Guizhou Select all that apply (% respondents) Hainan In private Chinese enterprises Hebei 1 38 33 30 In both government and state-owned enterprise positions 14 13 Government positions Jilin In wholly owned foreign operations Mostly state, provincial or municipal enterprises Jiangxi In joint venture between Chinese and foreign entities Neimenggu (Inner Mongolia) Shaanxi Shanxi Yunnan Xizang (Tibet) Economist Intelligence Unit 2009 19 Appendix Survey results Personalisation Opening doors to growth in China What are your organisation’s global annual revenues in US dollars? (% respondents) $100m or less 25 $100m to $250m 15 $250m to $500m 10 $500m to $1bn 17 $1bn to $5bn 16 $5bn or more 17 Which of the following best describes your title? (% respondents) Board member CEO/President/Managing director CFO/Treasurer/Comptroller CIO/Technology director Other C-level executive 23 SVP/VP/Director Head of Business Unit Head of Department 13 Manager 17 Other 10 20 Economist Intelligence Unit 2009 Cover images: iStockphoto.com Whilst every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd nor the sponsors of this report can accept any responsibility or liability for reliance by any person on this white paper or any of the information, opinions or conclusions set out in the white paper LONDON 26 Red Lion Square London WC1R 4HQ United Kingdom Tel: (44.20) 7576 8000 Fax: (44.20) 7576 8476 E-mail: london@eiu.com NEW YORK 111 West 57th Street New York NY 10019 United States Tel: (1.212) 554 0600 Fax: (1.212) 586 1181/2 E-mail: newyork@eiu.com HONG KONG 6001, Central Plaza 18 Harbour Road Wanchai Hong Kong Tel: (852) 2585 3888 Fax: (852) 2802 7638 E-mail: hongkong@eiu.com [...]... becoming more aware of the importance of customer service in an increasingly competitive global market 10 © Economist Intelligence Unit Limited 2009 Personalisation Opening doors to growth in China Conclusion Advances in technology are enabling organisations to respond in more ways to a growing demand for personalised goods and services, thus creating opportunities for companies to add to their bottom.. .Personalisation Opening doors to growth in China Up -to- date customer information, when used properly, can be a powerful tool to sustain a loyal customer following Baidu, for example, assigns dedicated customer service representatives (CSRs) to each customer The CSRs use customer data to build stronger relationships through targeted newsletters,... respond to or even create demand Only by understanding and responding to customer needs will they be able to compete in what is an increasingly personalised global economy © Economist Intelligence Unit Limited 2009 11 Appendix Survey results Personalisation Opening doors to growth in China Appendix: Survey results Currently, to what degree does your company offer each customer the ability to configure... Retailing 2 7 Graduate degree in business administration from Chinese university Telecoms 2 16 Graduate degree in business administration from foreign university Education 1 Agriculture and agribusiness 15 Other 4 1 Government/Public sector 1 18 Economist Intelligence Unit 2009 Personalisation Opening doors to growth in China Appendix Survey results In which region of the Chinese mainland are you personally... respondents) Communications skills 67 Insight into customer needs 54 Product knowledge 50 Creativity 29 Discipline 19 Humour 11 16 Economist Intelligence Unit 2009 Personalisation Opening doors to growth in China Do privacy concerns hamper relationships with your company’s customers? In your opinion, what obstacles stand in the way of your company’s implementing a personalisation strategy? (% respondents)... following factors most influences the purchasing decisions of your company’s customers? What information exchanged during a customer interaction do you think would most increase the chance of a subsequent interaction for your company? (% respondents) (% respondents) Quality Information relating to customer’s future needs 42 Brand 28 Information about customer’s buying preferences 27 Price 15 Information... respondents) Customer service 25 IT 20 In your opinion, what percentage of your company’s revenue base would be affected by more personalised customer interactions? (% respondents) Sales 19 Marketing 19 Operations 15 Finance 2 Economist Intelligence Unit 2009 0% 5 25% or less 49 25% to 50% 31 50% to 75% 12 75% to 100% 4 17 Appendix Survey results Personalisation Opening doors to growth in China Which of... 14 Customer service 14 Personal information 9 Necessity 13 Information about customer’s lifestyle 6 Convenience 8 The company’s business plans for products/services 1 7 The company’s innovation cycle 6 Opportunities to offer feedback 4 Rewards and incentives 4 The company’s business plans for customer segmentation 3 14 Economist Intelligence Unit 2009 Personalisation Opening doors to growth in China. .. offering personalised goods or services outweigh calculated gains 2 Don’t know 3 21 The company does not have access to technologies that enable it to offer personalised goods or services 0 12 Economist Intelligence Unit 2009 Personalisation Opening doors to growth in China Appendix Survey results How important are the following factors to your company’s current revenue growth? Rate on a scale of 1 to. .. 7 1 Jilin In wholly owned foreign operations Mostly state, provincial or municipal enterprises 1 Jiangxi In joint venture between Chinese and foreign entities 1 Neimenggu (Inner Mongolia) 1 Shaanxi 1 Shanxi 1 Yunnan 1 Xizang (Tibet) 1 Economist Intelligence Unit 2009 19 Appendix Survey results Personalisation Opening doors to growth in China What are your organisation’s global annual revenues in US .. .Personalisation Opening doors to growth in China Preface Personalisation: Opening doors to growth in China is a report written by the Economist Intelligence Unit and sponsored... creative ways of interacting with customers © Economist Intelligence Unit Limited 2009 Personalisation Opening doors to growth in China Innovation at the root of personalisation China may still... Limited 2009 Personalisation Opening doors to growth in China Figure In China, customer service is the business process that requires the most re-engineering (% respondents who think the process