PersonalisationOpening doors to growth in ChinaAn Economist Intelligence Unit reportSponsored by Cisco
© Economist Intelligence Unit Limited 2009
PersonalisationOpening doors to growth in China
1
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 briefi ng papers that focus on China. The previous reports are Unlocking
innovation in China and Collaboration in China: Paths to profi t. The fi ndings and views expressed in the report do not necessarily refl ect 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
PersonalisationOpening doors to growth in China
2
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 fi ckle 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 confi gurations or applications. Fuelled by advances in technology—particularly web-based applications, which connect customers to
Who took the survey?
The online survey was fi elded 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% fi nancial services fi rms and 6% professional services fi rms.
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 fi rms (part-privatised companies with signifi cant government ownership). Twenty-fi ve 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.
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.
Mostly products
Only products
Equal mix of products and services
Only services
Mostly services
Figure 1. What does your company sell?(% respondents)
33
21
19
18
9
Source: Economist Intelligence Unit survey, January, 2009.
© Economist Intelligence Unit Limited 2009
PersonalisationOpening doors to growth in China
3
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 profi le.
Demand for personalised goods and services is driven in part by consumers, who want the option to modify products and services to their specifi c preferences. For companies, the advantage of personalisation is that it often leads to higher profi t 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 fi ve 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 fi ve years.
The 2009 survey evaluated how personalisation is infl uencing 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 diffi cult time fl ourishing 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 confi nes 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 benefi t from personalisation, is their preoccupation with cost and quality: 88% of respondents consider
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 confi gurations or applications.
Global
China
CurrentlyIn five years
Difference
6882
5464
Source: Economist Intelligence Unit survey, November, 2006 and January, 2009.
Figure 2. Personalisation’s impact on growth less in China than globally(% respondents who say personalisation has and will have positive impact)
© Economist Intelligence Unit Limited 2009
PersonalisationOpening doors to growth in China
4
quality a top driver of revenue growth, and 82% say cost is important. While still a signifi cant 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 diffi cult 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. Specifi cally, it indicates a need for more effi cient collection and centralisation of customer information, and more creative ways of interacting with customers.
© Economist Intelligence Unit Limited 2009
PersonalisationOpening doors to growth in China
5
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 fi ve years, a full 90% of respondents expect to offer customisable products or services—on par with the global fi ndings.
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 fi ve 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.
Privately owned Chinese enterprises (POEs)
State-owned enterprises (SOEs)
Joint ventures (JVs)
Wholly foreign-owned enterprises (WFOEs)
8090
7076
6376
6687
Figure 3. 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 yearsDifference
Source: Economist Intelligence Unit survey, November, 2006 and January, 2009.
© Economist Intelligence Unit Limited 2009
PersonalisationOpening doors to growth in China
6
and services. Yet the survey also revealed that smaller companies, and specifi cally 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 3. (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.
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 mobile-phone 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 traffi c. Baidu helps companies to achieve higher rankings by auctioning keywords related to their business: a fl orist, for example, would join other fl orists in an ongoing auction for the keyword
“fl ower”. 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 specifi c 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 traffi c 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 medium-sized enterprises. But the number of bigger clients, such as Hewlett-Packard, 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.
© Economist Intelligence Unit Limited 2009
PersonalisationOpening doors to growth in China
7
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 fi ndings 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
An ear to the ground with customer service
Personalised services help companies to differentiate themselves from their competitors and generate more revenue from their product lines.
Follow-up support
Service delivery
Repeat purchases (add-ons or bolt-ons)
Needs analysis
Contract negotiations
Figure 4. Service delivery, follow-up support and needs analysis open doors in China.(% respondents who considered this option an oportunity)
71
69
68
65
62
Source: Economist Intelligence Unit survey, January, 2009.
© Economist Intelligence Unit Limited 2009
PersonalisationOpening doors to growth in China
8
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 refl ects 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
“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 benefi ts 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.
44
10
6
40
6
29
11
54
Manufacturing
Financial services
Professional services
OtherGobal China
Figure 5. Manufacturing more prevalent in China (% respondents in manufacturing and other industries)
Source: Economist Intelligence Unit survey, November, 2006 and January, 2009.
© Economist Intelligence Unit Limited 2009
PersonalisationOpening doors to growth in China
9
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 intensifi es, companies in China are starting to realise the importance of strong customer relations. Twenty-fi ve 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 fi ndings: 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 diffi cult 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 effi ciently. Research in 2008 by McKinsey and Company, a management consulting fi rm, found that Chinese fi nancial 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.
Customer service
IT
Sales
Marketing
Operations
Finance
ChinaGlobal
Difference
Figure 6. In China, customer service is the business process that requires the most re-engineering (% respondents who think the process needs re-engineering)
2518
2015
1917
1964
1524
26 Source: Economist Intelligence Unit survey, November, 2006 and January, 2009.
© Economist Intelligence Unit Limited 2009
PersonalisationOpening doors to growth in China
10
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] do 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 do so within the next fi ve 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 fi rm “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.
© Economist Intelligence Unit Limited 2009
PersonalisationOpening doors to growth in China
11
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.
Conclusion
12 Economist Intelligence Unit 2009
AppendixSurvey results
PersonalisationOpening doors to growth in China
Appendix: Survey results
Mostly businesses in China
Mostly businesses abroad
Mostly consumers in China
Mostly consumers abroad
Equal mix of businesses and consumers in China
Equal mix of businesses and consumers abroad
Governments/Public sector
Who are your company’s primary customers?(% respondents)
28
13
27
13
13
5
1
Only products
Only services
Mostly products
Mostly services
Equal mix of products and services
What does your company sell?(% respondents)
21
18
33
9
19
Innovative (creative, intuitive, quality-oriented)
Traditional (conservative, hierarchically controlled)
Collaborative (teamwork, consensus-oriented)
Impersonal (formal, strictly business)
Personal (individual- and values-oriented)
Transactional (routine, rigid)
Critical (negative, pessimistic)
Interactive (flexible, empowering)
Don’t know
How would you characterise your company’s culture?(% respondents)
36
32
13
5
4
4
2
2
3
The product is standard and we offer no customisable features
The buyer can order some features and value-added services
The buyer can customise most aspects of the product
The buyer has total freedom to shape the product to his/her specifications
Currently, to what degree does your company offer each customer the ability to configure products or services in a unique way?(% respondents)
22
34
26
18
The product is standard and cannot be personalised
The cost of offering personalised goods or services outweigh calculated gains
The company does not have access to technologies that enable it to offer personalised goods or services
If your company currently does not offer customers the ability to personalise goods or services, which of the following factors are responsible?(% respondents)
64
29
7
The product will be standard and we will offer no customisable features
The buyer will be able to order some features and value-added services
The buyer will be able to customise most aspects of the product
The buyer will have total freedom to shape the product to his/her specifications
In five years, to what degree do you expect your company will offer each customer the ability to configure products or services in a unique way?(% respondents)
10
40
31
19
The product is standard and cannot be personalised
The cost of offering personalised goods or services outweigh calculated gains
The company does not have access to technologies that enable it to offer personalised goods or services
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)
79
21
0
Economist Intelligence Unit 2009
AppendixSurvey results
PersonalisationOpening doors to growth in China
13
1 Very important 2 3 4 5 Not important Don’t know
Cost
Quality
Quantity/variety of product available to consumer
Speed of delivery
Product/service innovation
Customisation of products/services
Customer loyalty
Customer satisfaction
How important are the following factors to your company’s current revenue growth? Rate on a scale of 1 to 5, where 1=Very important and 5=Not important.(% respondents)
60 21 12 3 2 2
68 21 8 3 1 0
36 33 18 5 5 3
41 29 21 5 4 0
47 24 21 4 3 1
43 29 21 4 3 0
59 21 16 4 1 0
64 24 10 2 1 0
1 Very important 2 3 4 5 Not important Don’t know
Cost
Quality
Quantity/variety of product available to consumer
Speed of delivery
Product/service innovation
Customisation of products/services
Customer loyalty
Customer satisfaction
In five years’ time, how important do you expect these factors will be to your company’s revenue growth?Rate on a scale of 1 to 5, where 1=Very important and 5=Not important.(% respondents)
60 22 13 3 2 1
70 20 8 1 1 0
45 31 15 3 4 2
49 29 15 3 3 1
60 22 12 3 2 1
52 27 16 2 3 0
60 27 11 2 1 0
72 21 6 1 1 0
Strong positive impact 1
2
3
4
Strong negative impact 5
Don’t know
Please indicate the impact that you believe personalisation currently has on your company’s growth. Rate on a scale of 1 to 5, where 1=Strong positive impact and 5=Strong negative impact.(% respondents)
33
20
30
7
6
3
Strong positive impact 1
2
3
4
Strong negative impact 5
Don’t know
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 1 to 5, where 1=Strong positive impact and 5=Strong negative impact.(% respondents)
41
22
22
4
6
5
14 Economist Intelligence Unit 2009
AppendixSurvey results
PersonalisationOpening doors to growth in China
Quality
Brand
Price
Customer service
Necessity
Convenience
In your opinion, which of the following factors most influences the purchasing decisions of your company’s customers? (% respondents)
42
27
14
9
6
1
1 Strong opportunity 2 3 4 5 Little or no opportunity Don’t know
Customer enquiry
Initial sale
Order change
Product shipping
Service delivery
Follow-up support
Repeat purchases (add-ons or bolt-ons)
On-site sales visit
Needs analysis
Contract negotiations
Online/offline information about product or service
Referrals to product or service by third party
To what extent do the following customer interactions offer your company an opportunity to establish competitive advantage? Rate on a scale of 1 to 5, where 1=Strong opportunity and 5=Little or no opportunity.(% respondents)
34 31 19 5 5 6
29 38 17 4 5 7
23 28 29 7 6 7
27 22 20 11 16 5
41 28 18 6 4 2
39 32 16 4 5 4
37 31 15 4 7 5
30 29 20 7 9 5
38 27 22 7 2 5
37 25 24 6 4 3
31 29 22 7 7 3
32 25 24 7 5 5
Information relating to customer’s future needs
Information about customer’s buying preferences
Information about new products/services
Personal information
Information about customer’s lifestyle
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
What information exchanged during a customer interaction do you think would most increase the chance of a subsequent interaction for your company?(% respondents)
28
15
14
13
8
7
6
4
4
3
Economist Intelligence Unit 2009
AppendixSurvey results
PersonalisationOpening doors to growth in China
15
Telephone
Direct personal contact
Events/trade shows
Fax
Direct sales
Focus groups
Web chat
Voice-over Internet protocol (VoIP)
Webcasts
Postal mail
Streaming video
Podcasts
Other
Which of the following technologies/activities do you see as most helpful in improving the relationship your company has with its customers? Select up to three.(% respondents)
62
59
37
30
28
17
7
6
6
4
3
2
1
2
Telephone
Direct personal contact
Events/trade shows
Fax
Direct sales
Focus groups
Web chat
Webcasts
Voice-over Internet protocol (VoIP)
Postal mail
Streaming video
Podcasts
Other
Not applicable—we do not have personalised products or services
Which of the following best enables your company to personalise its products and services? Select up to three.(% respondents)
56
50
34
23
16
16
10
8
7
6
2
1
1
3
3
1 Strong positive impact 2 3 4 5 Strong negative impact Don’t know
Average time to facilitate communication
Number of interactions initiated
Agility to respond to customer requests
Frequency of miscommunication
Customer satisfaction
Customer loyalty
Ability to personalise products and 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 1 to 5, where 1=Strong positive impact and 5=Strong negative impact.(% respondents)
38 29 21 2 2 8
36 30 20 3 3 8
47 25 16 3 2 7
29 23 27 5 7 8
51 24 16 2 2 5
43 28 17 4 2 6
35 29 22 4 4 7
16 Economist Intelligence Unit 2009
AppendixSurvey results
PersonalisationOpening doors to growth in China
Growth is much higher
Growth is somewhat higher
No change in growth
Growth is somewhat lower
Growth is much lower
Not applicable—we have not delivered personalised products and services
Don’t know
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)
27
46
8
5
2
5
8
On-the-job training
Training by supervisor
On-site classroom
Peer mentoring
Written operating procedures
Self-guided learning
Other
Not applicable—we do not offer formal training for customer interactions
Don’t know
How does your company train its personnel to interact with customers? Select all that apply. (% respondents)
64
35
34
33
29
27
1
5
3
Customer satisfaction surveys
E-mail follow-up
Outbound telephone surveys
In-package customer surveys
Exit interviews
Repeat purchase accounting
Service calls/letters as percentage of shipments
Return/cancellation rates
Video or voice monitoring
Secret shoppers
Other
Not applicable—we do not formally monitor the customer experience
Don’t know
What metrics does your company have in place for monitoring the customer experience? Select all that apply. (% respondents)
62
43
33
27
22
20
11
10
7
6
1
3
3
Communications skills
Insight into customer needs
Product knowledge
Creativity
Discipline
Humour
Which traits/skills do you think are most important for your employees to possess in order to deliver a meaningful customer interaction? Select all that apply. (% respondents)
67
54
50
29
19
11
Surveys
Front-line salespeople
Service calls
Point-of-sale data
Website interactions
Other
How does your company capture customer buying preferences and behaviours? Select all that apply. (% respondents)
53
48
41
28
22
2
Economist Intelligence Unit 2009
AppendixSurvey results
PersonalisationOpening doors to growth in China
17
11
44
45
Often
Sometimes
Rarely
Do privacy concerns hamper relationships with your company’s customers? (% respondents)
Customer service
IT
Sales
Marketing
Operations
Finance
Which of your company’s business processes do you think requires the most reengineering to deliver a personalised customer experience? (% respondents)
25
20
19
19
15
2
5
49
31
12
4
0%
25% or less
25% to 50%
50% to 75%
75% to 100%
In your opinion, what percentage of your company’s revenue base would be affected by more personalised customer interactions? (% respondents)
Decentralised customer information
Lack of management buy-in
Inadequate IT infrastructure
Lack of customer information
Overall company culture
Inadequate budgets
Fragmented staff structures
Competing agendas
In your opinion, what obstacles stand in the way of your company’s implementing a personalisation strategy? Select all that apply. (% respondents)
34
25
23
23
21
20
18
10
18 Economist Intelligence Unit 2009
AppendixSurvey results
PersonalisationOpening doors to growth in China
Have now Expect to deploy within five years Do not expect to deploy within five years Don’t know
Virtual data storage
Unified voice, video and data networking
Voice-over Internet protocol (VoIP)
Click-to-talk
Web chat
Instant messaging
Personal digital assistants (PDAs) or other mobile devices
Video conferencing
Video messaging
Collaborative workplace applications (eg, instant messaging, file sharing)
Business intelligence applications
Which of the following applications of technology do you have now, or expect to deploy in five years, to deliver more personalisedcustomer experiences? (% respondents)
50 25 11 14
42 33 14 12
47 28 11 13
39 31 17 14
46 27 13 14
58 21 10 10
51 29 10 10
41 40 12 7
28 43 16 14
48 34 9 9
39 36 12 13
Manufacturing
Financial services
Professional services
Transportation, travel and tourism
Consumer goods
Chemicals
Energy and natural resources
Healthcare, pharmaceuticals and biotechnology
Construction and real estate
Automotive
IT and technology
Logistics and distribution
Entertainment, media and publishing
Retailing
Telecoms
Education
Agriculture and agribusiness
Government/Public sector
What is your primary industry?(% respondents)
44
10
6
5
5
4
4
4
3
3
3
3
2
2
2
1
1
1
Private Chinese enterprise
Wholly owned foreign operation
Joint venture between Chinese and foreign companies
State-owned enterprise
Partially privatised company with significant state ownership
Enterprise owned by provincial or municipal government
How would you define your company’s structure?(% respondents)
30
27
17
16
8
2
Practical on-the-job training
Ongoing education provided by the company
Undergraduate degree in business administration from Chinese university
Undergraduate degree in business administration from foreign university
Graduate degree in business administration from Chinese university
Graduate degree in business administration from foreign university
Other
What is your educational background in management? Select all that apply.(% respondents)
29
26
34
7
16
15
4
Economist Intelligence Unit 2009
AppendixSurvey results
PersonalisationOpening doors to growth in China
19
Marketing and sales
Strategy and business development
General management
Finance
Customer service
Information and research
Operations and production
IT
R&D
Supply-chain management
Human resources
Legal
Procurement
Risk management
Other
What are your main functional roles? Please choose no more than three functions.(% respondents)
29
28
22
15
14
13
13
9
8
6
5
5
4
3
4
In private Chinese enterprises
In joint venture between Chinese and foreign entities
In wholly owned foreign operations
In both government and state-owned enterprise positions
Mostly state, provincial or municipal enterprises
Government positions
During your career, have you worked in the following types of companies or held government positions? Select all that apply.(% respondents)
38
33
30
14
13
7
Shanghai
Guangdong
Beijing
Zhejiang
Jiangsu
Shandong
Fujian
Henan
Sichuan
Hubei
Anhui
Liaoning
Qinghai
Tianjin
Xinjiang Uygur
Chongqing
Gansu
Guizhou
Hainan
Hebei
Jiangxi
Jilin
Neimenggu (Inner Mongolia)
Shaanxi
Shanxi
Yunnan
Xizang (Tibet)
In which region of the Chinese mainland are you personally located?(% respondents)
24
15
14
9
8
6
3
3
3
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
20 Economist Intelligence Unit 2009
AppendixSurvey results
PersonalisationOpening doors to growth in China
25
15
10
17
16
17
$100m or less
$100m to $250m
$250m to $500m
$500m to $1bn
$1bn to $5bn
$5bn or more
What are your organisation’s global annual revenues in US dollars? (% respondents)
Board member
CEO/President/Managing director
CFO/Treasurer/Comptroller
CIO/Technology director
Other C-level executive
SVP/VP/Director
Head of Business Unit
Head of Department
Manager
Other
Which of the following best describes your title?(% respondents)
4
8
6
6
23
7
5
13
17
10
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.
Cove
r im
ages
: iSt
ockp
hoto
.com
LONDON26 Red Lion SquareLondon WC1R 4HQUnited KingdomTel: (44.20) 7576 8000Fax: (44.20) 7576 8476E-mail: [email protected]
NEW YORK111 West 57th StreetNew York NY 10019United StatesTel: (1.212) 554 0600Fax: (1.212) 586 1181/2E-mail: [email protected]
HONG KONG6001, Central Plaza18 Harbour RoadWanchai Hong KongTel: (852) 2585 3888Fax: (852) 2802 7638E-mail: [email protected]