Staff Writer
Oct 31, 2022

How Alibaba secures long-term growth for retailers by driving customer loyalty

Through the upcoming 11.11 shopping festival and beyond, Alibaba’s unique membership management programme helps retailers on the platform reap the rewards of having a loyal, engaged customer base.

How Alibaba secures long-term growth for retailers by driving customer loyalty
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The annual 11.11 Shopping Festival is the world’s biggest shopping extravaganza. Started by Alibaba in 2009, the event has always offered retailers huge revenue and customer growth. In its 14th year, 11.11 continues to evolve with China’s internet and ecommerce ecosystem. The participating retailers are increasingly focus more on customer retention and loyalty for long-term business opportunities, instead of mere new sales growth.   
 
In its pre-11.11 research report released in late October, Bain & Co found that retailers need to prioritise customer loyalty over discount-led sales growth. The survey revealed that retailers who ranked the highest on consumer loyalty scored well on product quality, product range, and membership programmes. Consumers who gave these retailers the highest scores cited these as the top-three reasons, with less emphasis than average on pricing. 
 
The role brand membership programmes play in building customer loyalty
 
Brand membership programmes are an effective method to cultivate long-term customer relationships. Brand members show high levels of loyalty, a higher repurchase rate, and are a strong source of traffic to retailers, fueling their growth.
 
Compared with never-ending new customer recruitment, membership programmes help reduce user maintenance costs. These programmes provide valuable insights on marketing and product trends which help retailers offer differentiated services and marketing campaigns. Brand membership programmes also help create repeat customers, further reducing marketing costs and bolstering profits. 
 
To support its merchants in the quest for loyalty, Alibaba helps brands launch, develop, and maintain their loyalty membership programs through different models: start-up, development, and expansion. These models are driven by four attributes: location, key indicators, operation prioritisation, and structure building — which empower brands to develop a consumer-centric membership strategy.
 
To date, over 40 brands on Tmall, Alibaba’s e-commerce platform, have developed loyalty membership programmes that have surpassed ten million members, and 600 brands have over a million members. 
 
As Chui Xue, president of industry development and operation centre of Taobao and Tmall, Alibaba Group, said: “We will continue to research the factors influencing decision-making along the consumer shopping journey in every sector and product category. We will upgrade the shopping experience through tech innovation and even better content to meet the evolving demands of different consumers.”
 
How Tmall members became a major force in pet product consumption
 
To cite an example, this membership model demonstrated its strength in China’s pet industry. Partnering with Alibaba, Royal Canin, a leading pet food provider, effectively recruited target members — owners of sick pets — using several techniques. These included scenario profiling, differentiated educational content, benefits specifically aimed at new members, and free medical checkups. 
 
Through this model, Royal Canin successfully adopted a differentiated, tailored membership programme, which produced record customer engagement. The member enrollment volume for the pet-food brand increased by over 10% compared to the previous cycle, nearly 20 times the industry benchmark. The number of first-time purchases by members increased by 20% compared to the previous cycle. With nearly 1.6 million members in its Tmall flagship store, Royal Canin has secured a growth driver for its long-term development. 
 
According to research from Tmall, spending per brand member and the conversion rate of brand members on the e-tailer are twice that of general members in the pet care sector. During the 6.18 Mid-Year Shopping Festival in 2022, about 50% of the overall sales of mainstream pet product brands on Tmall came from members, and their gross merchandise value (GMV) has become a long-term growth driver for the pet industry. The number of pet brand members also grew strongly, with a year-over-year growth rate of 60% through the first half of 2022.
 
Incremental marketing tools and initiatives to support membership programmes during 11.11
 
Chui emphasised, “The most valuable consumers in China are on Tmall and Taobao. We have high hopes for this year's 11.11 to be the best engine for our merchants' customer growth. We firmly believe that customer loyalty is the most reliable source of growth for our merchants in the long run.” Alibaba firmly believes that customer loyalty is the most reliable source of growth for merchants in the long run. 
 
During the 11.11 season, Alibaba is showcasing its capabilities in digital innovation, supply-demand matching and loyalty membership management to enable its brand and merchant partners to drive long-term business growth.
 
This year, Alibaba will provide merchants with new tools and solutions to further grow their membership programmes. These initiatives, among others, will fuel participating brands’ success during and after 11.11. The solutions on offer include strategic marketing, livestreaming and SEO support as well as other initiatives focused on operations, technology, logistics and consumer experience.
 
All these are built on the most expanded quality consumer base in China and Alibaba’s solid digital know-how accumulated through its own membership management programme. Alibaba’s Tmall and Taobao see a retention rate as high as 98% among its consumers who spend over RMB10,000 (approx. $1,400) annually. As of June 2022, there are more than 123 million such consumers on the two platforms. Additionally, Alibaba’s ecosystem-wide premium loyalty membership programme 88VIP has over 25 million members with annual average spending of more than RMB57,000 (approx. $7,900), which reflects the high-quality consumer base with strong purchasing intent on its platforms. 
 

 

 

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