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Personalisation: Opening doors to growth in China
 

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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 ...

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 do 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.

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    Personalisation: Opening doors to growth in China Personalisation: Opening doors to growth in China Document Transcript

    • PersonalisationOpening doors to growth in ChinaAn Economist Intelligence Unit reportSponsored 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 do 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 1
    • 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 Figure 1. What does your company sell? (% respondents) executives in China. Fifty-four percent of respondents work in companies that sell products and 27% in companies that sell services Mostly products 33 (19% sell equal amounts of products and services). They represent Only products a wide range of industries: 44% are manufacturers, 10% financial 21 services firms and 6% professional services firms. Equal mix of products and services 19 Company ownership structures also vary widely: 30% of Only services respondents come from private Chinese concerns; 27% from wholly 18 Mostly services owned foreign operations; 18% from state-owned enterprises or 9 companies owned by provincial or municipal governments; 17% from Source: Economist Intelligence Unit survey, January, 2009. joint ventures between Chinese and foreign concerns; and 8% from other firms (part-privatised companies with significant government A total of 27 regions are represented, although the majority of ownership). Twenty-five percent of respondents’ organisations have respondents are located in the most economically advanced parts of annual revenue of US$100m or less, 25% between US$100m and China: Shanghai (24%), Guangdong (15%), Beijing (14%), Zhejiang US$500m, 17% between US$500m and US$1bn, and 33% more than (9%) and Jiangsu (8%). US$1bn. More details are provided in the Appendix.2 © Economist Intelligence Unit Limited 2009
    • Personalisation Opening doors to growth in Chinacompanies—personalisation takes customisation a step beyond pre-set options offered to consumers, Personalisationsuch as the choice of leather or cloth interior in a new car. Examples include Facebook, the social goes onenetworking site where users create and continually update their own web pages. Another is personalised step beyondmedicine, which allows doctors to treat patients based on individual characteristics such as weight, age customisationand genetic profile. and entails the Demand for personalised goods and services is driven in part by consumers, who want the option ability to adapt ato modify products and services to their specific preferences. For companies, the advantage of product or servicepersonalisation is that it often leads to higher profit margins. More broadly, greater personalisation continually andcan serve as a catalyst for innovation by creating a mechanism through which customers can suggest independently,improvements, or insights that can lead to entirely new products or ways of operating. whether by altering It is no wonder, then, that Chinese companies are joining the global personalisation trend. An services or byEconomist Intelligence Unit survey of executives in China, conducted in January 2009 and sponsored by changing productCisco, found that personalisation is already having a positive impact on company growth, according to 54% configurations orof respondents. Sixty-four percent of respondents expect personalisation to spur growth in the next five applications.years. These numbers are impressive, although lower than the results of a similar, global survey conductedby the Economist Intelligence Unit in 2006 that culminated in a report, Personalisation: Transforming theway business connects. In that report, 68% of respondents worldwide said they had already felt the effect ofpersonalisation, while 82% expected it to help increase growth in the next five years.Figure 2. Personalisation’s impact on growth less in China than globally Currently(% respondents who say personalisation has and will have positive impact) In five years DifferenceGlobal 68 82China 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 andtheir customer relationships. The results suggest that Chinese companies face unique challenges indelivering personalised products and services. Innovation, which is often a prerequisite to personalisation, can have a difficult time flourishing inChinese companies. China’s education system continues to emphasise rote learning at the expense ofpromoting debate and the generation of new ideas. In addition, many companies operate within theconfines 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 innovationthrough 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 Chineseconsumers, these steps can help companies to become truly innovative. A more immediate challenge for Chinese companies, and particularly for manufacturers looking tobenefit from personalisation, is their preoccupation with cost and quality: 88% of respondents consider© Economist Intelligence Unit Limited 2009 3
    • 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.4 © Economist Intelligence Unit Limited 2009
    • Personalisation Opening doors to growth in ChinaInnovation at the root of personalisationChina may still be known as the world’s factory, but many China-based companies already offer Manufacturingpersonalised goods and services as sophisticated as those found in the most advanced economies. Nearly companies in China80% of respondents say their organisations offer products or services that can be customised partly or are particularlyfully, in line with the results of the global survey. In the next five years, a full 90% of respondents expect attuned to theto offer customisable products or services—on par with the global findings. competitive Manufacturing companies in China are particularly attuned to the competitive advantages offered advantages offeredby innovation via personalisation. The vast majority of manufacturers rate cost and quality as critical to by innovation viarevenue growth, but a growing number also recognise the importance of product personalisation: 75% of personalisation. Amanufacturers rate product customisation as critical to current revenue growth, while 90% say it will be growing numbercritical in five years. recognise the Many of China’s biggest names, such as Baidu and China Mobile, are leaders in the trend towards importancepersonalisation. Beijing-based Baidu, which saw revenue grow by 83% in 2008, to US$468m, offers an of productonline search engine with keyword auctions and targeted advertising. China Mobile, the world’s largest personalisation tomobile provider by number of subscribers and with revenue of US$60bn in 2008, allows users to sign up revenue growth.for personalised text messages based on their interests or profession. Lenovo, a computer giant withrevenue of US$14.9bn last year, offers consumers a range of services that provide different levels andtypes of support according to the customer’s preferences. Lenovo, Baidu and China Mobile have the resources to supply the most technologically advanced goodsFigure 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 years DifferencePrivately owned Chinese enterprises (POEs) 80 90State-owned enterprises (SOEs) 70 76Joint ventures (JVs) 63 76Wholly foreign-owned enterprises (WFOEs) 66 87 Source: Economist Intelligence Unit survey, November, 2006 and January, 2009.© Economist Intelligence Unit Limited 2009 5
    • Personalisation Opening doors to growth in China Technology makes personalisation “flower”. Those that bid more and provide the most relevant links possible for Baidu 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 Baidu, whose name means “hundreds of times”, is a NASDAQ-listed customer segments. Advertisers pay only for the ads that generate company based in Beijing that holds about two-thirds of China’s “clicks”, or visits to their website. For example, if a carmaker plans search engine market. Its revenue reached US$468m (Rmb3.2bn) in to launch a new line in China, and aims to advertise to people who 2008, an 83% increase on 2007. In addition to online and mobile- have researched the brand online over the past week or months, phone searches, Baidu’s businesses include keyword auctions, Baidu can analyse web traffic to help the company target its ads more marketing and targeted advertising. All business lines rely on effectively. personalisation. According to Shen Haoyu, vice-president of business Baidu has more than 200,000 customers for its targeted advertising operations, the business is “really made possible by technology, and services. According to Mr Shen, most customers are small to medium- by the internet. We’re not selling a computer.” sized enterprises. But the number of bigger clients, such as Hewlett- One example is keyword auctions, an important revenue generator Packard, Daimler, and Proctor and Gamble, is growing fast. for Baidu. Companies that rank high in an online search receive “We’re seeing more and more demand from advertisers for more traffic. Baidu helps companies to achieve higher rankings by targeted advertising. Online ads used to be very simple—not that auctioning keywords related to their business: a florist, for example, different from TV commercials—but more advertisers are realising the would join other florists in an ongoing auction for the keyword 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 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.6 © Economist Intelligence Unit Limited 2009
    • Personalisation Opening doors to growth in ChinaAn ear to the ground with customer servicePrivately owned companies in China are using innovation, including personalisation, to gain a Personalisedcompetitive advantage, but customer service may be just as important. Service delivery, follow-up support services helpand customer-needs analysis are the types of customer interaction that offer the best opportunities for companies toany company seeking to gain a competitive advantage, according to the survey. This is in line with the differentiateglobal findings from our 2006 survey. themselves from These interactions can help to build customer loyalty and satisfaction, which more than 80% of their competitorsrespondents rank as very important to revenue growth. The delivery of personalised goods and services and generate moreis considered a driver of future growth: almost one-half of survey respondents (46%) say that more revenue from theirpersonalised customer interactions would affect over 25% of their revenue. product lines. Personalised services help companies to differentiate themselves from their competitors and generatemore revenue from their product lines. Lenovo, for example, has been able to boost revenue by linkingpersonalised services to computer sales. According to Li Xianglin, vice-president of service for LenovoChina, Chinese consumers are increasingly demanding personalised, professional services as part oftheir purchase of a personal computer. To meet this demand, Lenovo offers various service platforms thatallow 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 aLenovo employee online or use “eRobot”, an automated program that allows users to solve software orhardware issues independently. Although survey respondents recognised the value of personalised customer service, it is still aFigure 4. Service delivery, follow-up support and needs analysis open doors in China.(% respondents who considered this option an oportunity)Follow-up support 71Service delivery 69Repeat purchases (add-ons or bolt-ons) 68Needs analysis 65Contract negotiations 62 Source: Economist Intelligence Unit survey, January, 2009.© Economist Intelligence Unit Limited 2009 7
    • Personalisation Opening doors to growth in China “Virtual instructors” help Ambow a student’s online work. Teachers work with students, parents and personalise education Ambow salespeople to evaluate students’ progress. This business model helps to generate customer loyalty by providing a continuous Ambow Education is a Beijing-based, privately held company feedback loop between service providers and consumers. founded in 2000 that provides personalised online and in-class Ambow uses the same educational technology to design highly education to schoolchildren and university students, as well as online customised online training programs for companies and their clients. educational programs for corporate clients. Its business model It created, for example, a program for an international software relies on personalisation in several ways. For example, Ambow has developer that sells to resellers in China. The developer offers online relationships with more than 100 universities to deliver vocational sales training programs to the resellers’ sales representatives as training that is customised according to the needs of businesses a way to advertise and promote its products, as well as to gain near each university. Ambow works with local units of the Ministry of their allegiance. One of the program’s benefits is that it allows the Education to identify the talent needs of companies in the area near software developer to forge stronger relations with resellers by a university, and then designs courses on topics such as new digital tracking representatives’ participation in the training programs and media and telecommunications, geared to those needs. offering new programs or broadcasting new products to individual At one of its centres in Kunshan, near Shanghai, Ambow offers representatives based on their participation. courses in business process outsourcing to more than 1,000 students, Ambow has received nearly US$160m in private equity and has the capacity to expand to 5,000. According to Cherry Pu, investments since 2007, and is using the funds to establish regional Ambow’s vice-president of global alliance and investment, the hubs in Beijing, Tianjin, Henan, Shaanxi and Guangzhou. These centre teaches both technical and “soft” skills, such as teamwork hubs will include 30 regional educational centres aimed at college and integrity. Classes are tailored to individual students through a entrance exam preparation and vocational training. “virtual instructor” embedded in the software. The “instructor” can In addition, the company recently signed an agreement to build identify a student’s problem areas and suggest course material based a software and service outsourcing training centre in Dalian, in the on the student’s progress. Live instructors complement the software province of Liaoning. Ambow aims to achieve revenue of US$147m by providing in-class instruction and personalised tutoring based on (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 5. Manufacturing more prevalent in China (% respondents in manufacturing and other industries) 6 Manufacturing 44 29 Financial services 10 11 Professional services 6 Gobal 54 Other 40 China Source: Economist Intelligence Unit survey, November, 2006 and January, 2009.8 © Economist Intelligence Unit Limited 2009
    • Personalisation Opening doors to growth in ChinaFigure 6. In China, customer service is the business process that requires the most re-engineering(% respondents who think the process needs re-engineering) China Global DifferenceCustomer service 25 18IT 20 15Sales 19 17Marketing 19 64Operations 15 24Finance 2 6 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 improverelationships 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 retailoutlets or to other manufacturers that use the products to make their goods. Furthermore, many Chinesecompanies produce mainly for foreign markets, and are now trying to catch up with the evolving tastes ofChinese consumers. But as competition for consumers intensifies, companies in China are starting to realise the importanceof 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 tooffer a personalised customer experience. The 2006 global survey respondents, by contrast, were morelikely to choose operations or marketing as the business process requiring most change. Companies can improve customer service by better assessing customer needs. Beijing-based AmbowEducation does this by working closely with its clients to identify potential training needs and developingprograms for those customers. Its business model is in line with survey findings: 28% of respondents saythat information about customers’ future needs would increase the chance of subsequent interaction. Forthis, collection and management of customer information is critical. But the survey reveals some weakness in managing customer information in China. Thirty-four percentof respondents say that decentralised customer information makes it difficult for them to implement apersonalisation strategy. Twenty-three percent say inadequate IT infrastructure, which would help collectand centralise customer information, is a barrier. Having adequate IT resources does not mean a company uses them efficiently. Research in 2008 byMcKinsey and Company, a management consulting firm, found that Chinese financial institutions tendto hold customer information in geographical silos. Bank branches in different provinces are unlikely toshare information related to customer preferences or consumption habits, thus hindering a bank’s abilityto capture general trends in customer behaviour and needs.© Economist Intelligence Unit Limited 2009 9
    • 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] 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 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 ChinaConclusionAdvances in technology are enabling organisations to respond in more ways to a growing demand forpersonalised 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 fromthe competition, the survey on personalisation and the earlier report on innovation suggest that successhinges largely on the companies’ ability to understand and respond to consumer demand. They haveseveral 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 anticipatedemand, but also to innovate in ways that respond to or even create demand. Only by understanding andresponding to customer needs will they be able to compete in what is an increasingly personalised globaleconomy.© Economist Intelligence Unit Limited 2009 11
    • Appendix PersonalisationSurvey results Opening doors to growth in China Appendix: Survey results Who are your company’s primary customers? Currently, to what degree does your company offer each (% respondents) customer the ability to configure products or services in a unique way? Mostly businesses in China (% respondents) 28 Mostly businesses abroad The product is standard and we offer no customisable features 13 22 Mostly consumers in China The buyer can order some features and value-added services 27 34 Mostly consumers abroad The buyer can customise most aspects of the product 13 26 Equal mix of businesses and consumers in China The buyer has total freedom to shape the product to his/her specifications 13 18 Equal mix of businesses and consumers abroad 5 Governments/Public sector 1 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 64 Only products The cost of offering personalised goods or services outweigh calculated gains 21 29 Only services The company does not have access to technologies that enable 18 it to offer personalised goods or services Mostly products 7 33 Mostly services 9 Equal mix of products and services In five years, to what degree do you expect your company will 19 offer each customer the ability to configure products or services in a unique way? (% respondents) How would you characterise your company’s culture? The product will be standard and we will offer no customisable features (% respondents) 10 The buyer will be able to order some features and value-added services Innovative (creative, intuitive, quality-oriented) 40 36 The buyer will be able to customise most aspects of the product Traditional (conservative, hierarchically controlled) 31 32 The buyer will have total freedom to shape the product to his/her specifications Collaborative (teamwork, consensus-oriented) 19 13 Impersonal (formal, strictly business) 5 Personal (individual- and values-oriented) If your company currently does not plan to offer customers the 4 ability to personalise goods or services in five years, which of Transactional (routine, rigid) the following factors are responsible? 4 (% respondents) Critical (negative, pessimistic) 2 The product is standard and cannot be personalised Interactive (flexible, empowering) 79 2 The cost of offering personalised goods or services outweigh calculated gains Don’t know 21 3 The company does not have access to technologies that enable it to offer personalised goods or services 012 Economist Intelligence Unit 2009
    • Personalisation Appendix Opening doors to growth in China Survey resultsHow 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) 1 Very important 2 3 4 5 Not important Don’t knowCost 60 21 12 3 2 2Quality 68 21 8 3 1 0Quantity/variety of product available to consumer 36 33 18 5 5 3Speed of delivery 41 29 21 5 4 0Product/service innovation 47 24 21 4 3 1Customisation of products/services 43 29 21 4 3 0Customer loyalty 59 21 16 4 1 0Customer satisfaction 64 24 10 2 1 0In 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) 1 Very important 2 3 4 5 Not important Don’t knowCost 60 22 13 3 2 1Quality 70 20 8 11 0Quantity/variety of product available to consumer 45 31 15 3 4 2Speed of delivery 49 29 15 3 3 1Product/service innovation 60 22 12 3 2 1Customisation of products/services 52 27 16 2 3 0Customer loyalty 60 27 11 2 1 0Customer satisfaction 72 21 6 11 0Please indicate the impact that you believe personalisation Please indicate the impact that you believe personalisationcurrently has on your company’s growth. 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 Rate on a scale of 1 to 5, where 1=Strong positive impact and5=Strong negative impact. 5=Strong negative impact.(% respondents) (% respondents)Strong positive impact 1 Strong positive impact 1 33 412 2 20 223 3 30 224 4 7 4Strong negative impact 5 Strong negative impact 5 6 6Don’t know Don’t know 3 5Economist Intelligence Unit 2009 13
    • Appendix PersonalisationSurvey results Opening doors to growth in China 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) 1 Strong opportunity 2 3 4 5 Little or no opportunity Don’t know Customer enquiry 34 31 19 5 5 6 Initial sale 29 38 17 4 5 7 Order change 23 28 29 7 6 7 Product shipping 27 22 20 11 16 5 Service delivery 41 28 18 6 4 2 Follow-up support 39 32 16 4 5 4 Repeat purchases (add-ons or bolt-ons) 37 31 15 4 7 5 On-site sales visit 30 29 20 7 9 5 Needs analysis 38 27 22 7 2 5 Contract negotiations 37 25 24 6 4 3 Online/offline information about product or service 31 29 22 7 7 3 Referrals to product or service by third party 32 25 24 7 5 5 In your opinion, which of the following factors most What information exchanged during a customer interaction influences the purchasing decisions of your company’s do you think would most increase the chance of a subsequent customers? interaction for your company? (% respondents) (% respondents) Quality Information relating to customer’s future needs 42 28 Brand Information about customer’s buying preferences 27 15 Price Information about new products/services 14 14 Customer service Personal information 9 13 Necessity Information about customer’s lifestyle 6 8 Convenience 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 314 Economist Intelligence Unit 2009
    • Personalisation Appendix Opening doors to growth in China Survey resultsWhich of the following technologies/activities do you see as Which of the following best enables your company tomost helpful in improving the relationship your company has personalise its products and services?with its customers? Select up to three.Select up to three. (% respondents)(% respondents) E-mailTelephone 56 62 TelephoneE-mail 50 59 Direct personal contactDirect personal contact 34 37 Events/trade showsEvents/trade shows 23 30 FaxFax 16 28 Direct salesDirect sales 16 17 Focus groupsFocus groups 10 7 Web chatWeb chat 8 6 WebcastsVoice-over Internet protocol (VoIP) 7 6 Voice-over Internet protocol (VoIP)Webcasts 6 4 Postal mailPostal mail 2 3 Streaming videoStreaming video 1 2 PodcastsPodcasts 11 OtherOther 3 2 Not applicable—we do not have personalised products or services 3How have advanced technologies (such as VoIP, streaming video or Podcasts) affected your company’s interactions withcustomers in the areas listed below?Rate on a scale of 1 to 5, where 1=Strong positive impact and 5=Strong negative impact.(% respondents) 1 Strong positive impact 2 3 4 5 Strong negative impact Don’t knowAverage time to facilitate communication 38 29 21 2 2 8Number of interactions initiated 36 30 20 3 3 8Agility to respond to customer requests 47 25 16 3 2 7Frequency of miscommunication 29 23 27 5 7 8Customer satisfaction 51 24 16 2 2 5Customer loyalty 43 28 17 4 2 6Ability to personalise products and services 35 29 22 4 4 7Economist Intelligence Unit 2009 15
    • Appendix PersonalisationSurvey results Opening doors to growth in China To what extent has your company’s overall revenue growth What metrics does your company have in place for monitoring changed as a direct result of delivering personalised products the customer experience? and services? Select all that apply. Select up to three. (% respondents) (% respondents) Customer satisfaction surveys Growth is much higher 62 27 E-mail follow-up Growth is somewhat higher 43 46 Outbound telephone surveys No change in growth 33 8 In-package customer surveys Growth is somewhat lower 27 5 Exit interviews Growth is much lower 22 2 Repeat purchase accounting Not applicable—we have not delivered personalised products and services 20 5 Service calls/letters as percentage of shipments Don’t know 11 8 Return/cancellation rates 10 Video or voice monitoring 7 How does your company train its personnel to interact Secret shoppers with customers? 6 Select all that apply. Other (% respondents) 1 Not applicable—we do not formally monitor the customer experience On-the-job training 3 64 Don’t know Training by supervisor 3 35 On-site classroom 34 Peer mentoring How does your company capture customer buying 33 preferences and behaviours? Written operating procedures Select all that apply. 29 (% respondents) Self-guided learning 27 Surveys Other 53 1 Front-line salespeople Not applicable—we do not offer formal training for customer interactions 48 5 Service calls Don’t know 41 3 Point-of-sale data 28 Website interactions 22 Which traits/skills do you think are most important for Other your employees to possess in order to deliver a meaningful 2 customer interaction? Select all that apply. (% respondents) Communications skills 67 Insight into customer needs 54 Product knowledge 50 Creativity 29 Discipline 19 Humour 1116 Economist Intelligence Unit 2009
    • Personalisation Appendix Opening doors to growth in China Survey resultsDo privacy concerns hamper relationships with your In your opinion, what obstacles stand in the way of yourcompany’s customers? company’s implementing a personalisation strategy?(% respondents) Select all that apply. (% respondents) Often 11 Decentralised customer information 34 Sometimes 44 Lack of management buy-in Rarely 45 25 Inadequate IT infrastructure 23 Lack of customer information 23 Overall company culture 21 Inadequate budgets 20 Fragmented staff structures 18 Competing agendasWhich of your company’s business processes do you think 10requires the most reengineering to deliver a personalisedcustomer experience?(% respondents) In your opinion, what percentage of your company’s revenueCustomer service base would be affected by more personalised customer 25 interactions?IT (% respondents) 20Sales 19Marketing 0% 5 19 25% or less 49Operations 15 25% to 50% 31Finance 50% to 75% 12 2 75% to 100% 4Economist Intelligence Unit 2009 17
    • Appendix PersonalisationSurvey results Opening doors to growth in China Which of the following applications of technology do 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 Web chat 46 27 13 14 Instant messaging 58 21 10 10 Personal digital assistants (PDAs) or other mobile devices 51 29 10 10 Video conferencing 41 40 12 7 Video messaging 28 43 16 14 Collaborative workplace applications (eg, instant messaging, file sharing) 48 34 9 9 Business intelligence applications 39 36 12 13 What is your primary industry? How would you define your company’s structure? (% respondents) (% respondents) Manufacturing Private Chinese enterprise 44 30 Financial services Wholly owned foreign operation 10 27 Professional services Joint venture between Chinese and foreign companies 6 17 Transportation, travel and tourism State-owned enterprise 5 16 Consumer goods Partially privatised company with significant state ownership 5 8 Chemicals Enterprise owned by provincial or municipal government 4 2 Energy and natural resources 4 Healthcare, pharmaceuticals and biotechnology 4 What is your educational background in management? Construction and real estate Select all that apply. 3 (% respondents) Automotive 3 Practical on-the-job training IT and technology 29 3 Ongoing education provided by the company Logistics and distribution 26 3 Undergraduate degree in business administration from Chinese university Entertainment, media and publishing 34 2 Undergraduate degree in business administration from foreign university Retailing 7 2 Graduate degree in business administration from Chinese university Telecoms 16 2 Graduate degree in business administration from foreign university Education 15 1 Other Agriculture and agribusiness 4 1 Government/Public sector 118 Economist Intelligence Unit 2009
    • Personalisation Appendix Opening doors to growth in China Survey resultsWhat are your main functional roles? In which region of the Chinese mainland are youPlease choose no more than three functions. personally located?(% respondents) (% respondents)Marketing and sales Shanghai 29 24Strategy and business development Guangdong 28 15General management Beijing 22 14Finance Zhejiang 15 9Customer service Jiangsu 14 8Information and research Shandong 13 6Operations and production Fujian 13 3IT Henan 9 3R&D Sichuan 8 3Supply-chain management Hubei 6 2Human resources Anhui 5 1Legal Liaoning 5 1Procurement Qinghai 4 1Risk management Tianjin 3 1Other Xinjiang Uygur 4 1 Chongqing 1 GansuDuring your career, have you worked in the following types 1of companies or held government positions? GuizhouSelect all that apply. 1(% respondents) Hainan 1In private Chinese enterprises Hebei 38 1In joint venture between Chinese and foreign entities Jiangxi 33 1In wholly owned foreign operations Jilin 30 1In both government and state-owned enterprise positions Neimenggu (Inner Mongolia) 14 1Mostly state, provincial or municipal enterprises Shaanxi 13 1Government positions Shanxi 7 1 Yunnan 1 Xizang (Tibet) 1Economist Intelligence Unit 2009 19
    • Appendix PersonalisationSurvey results 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 4 CEO/President/Managing director 8 CFO/Treasurer/Comptroller 6 CIO/Technology director 6 Other C-level executive 23 SVP/VP/Director 7 Head of Business Unit 5 Head of Department 13 Manager 17 Other 1020 Economist Intelligence Unit 2009
    • Whilst every effort has been taken to verify the accuracy Cover images: iStockphoto.comof this information, neither The Economist IntelligenceUnit Ltd. nor the sponsors of this report can accept anyresponsibility or liability for reliance by any person onthis white paper or any of the information, opinions orconclusions set out in the white paper.
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