Now, shopa­holics dou­ble up as Ali’s mar­ket­ing squad

China Daily (USA) - - BUSINESS - By BLOOMBERG

Meng Cui Yi spent al­most $90,000 at Alibaba’s on­line mall in the past year. The 33-year-old restau­ra­teur buys pretty much ev­ery­thing there — Burberry ap­parel, La Mer skin­care prod­ucts, fur­ni­ture, gro­ceries and more. Af­ter Alibaba’s an­nual Sin­gles Day sale last year, Meng’s pur­chases were piled so high out­side her Shang­hai apart­ment her busi­ness­man hus­band could barely get in the door.

Meng’s lav­ish spend­ing habits earned her an in­vite to Alibaba Pass­port, or APass, an exclusive re­wards pro­gram. APass is a mashup of Face­book, Ama­zon Prime and the Amer­i­can Ex­press Black Card. Its 100,000 mem­bers get the usual perks — deals, trips, per­sonal ser­vice — but are also en­cour­aged to join on­line com­mu­ni­ties of shopa­holics who blog and talk up Ali baba.

Rolled out about two years ago, APass has helped Alibaba per­suade the well­heeled shop­pers trawl­ing its Tmall and Taobao shop­ping em­po­ri­ums to keep spend­ing.

That’s cru­cial be­cause Alibaba is strug­gling to main­tain rapid-fire growth.

Just last week, Sin­gles Day sales grew at half the pace they did the year be­fore.

Mean­while, the com­pany is try­ing to ward off grow­ing com­pe­ti­tion from ri­vals like JD.com, which is start­ing to at­tract ur­ban big-spenders.

“Stand­ing still is not an op­tion be­cause com­peti­tors are nip­ping at their heels,” said Dun­can Clark, founder of in­vest­ment ad­vi­sory firm BDA China and an early ad­viser to Alibaba. “It’s very much worth their while to take care of the high rollers.”

Like any pre­mium re­wards pro­gram, APass pushes ex­clu­siv­ity by set­ting a seem­ingly high bar for mem­ber­ship. To make the cut, a cus­tomer must drop more than $15,000 a year on Alibaba’s e-com­merce sites, though the com­pany says mem­bers typ­i­cally spend more than $45,000.

Spend­ing is just one cri­te­rion. Shop­pers also re­ceive a user score, based in part on the fre­quency and cred­i­bil­ity of their in­ter­ac­tion with other cus­tomers. The higher the score, the more likely

Stand­ing still is not an op­tion be­cause com­peti­tors are nip­ping at their heels ... ”

founder of in­vest­ment ad­vi­sory firm BDA China

Dun­can Clark, they are to be in­vited to join APass.

“APass mem­bers love to share,” said Hai Wang, Alibaba’s head of cus­tomer ex­pe­ri­ence and in­no­va­tion. “Ev­ery day in our APass Mem­bers Zone, a lot of mem­bers are shar­ing their daily life sto­ries, shop­ping tips and show­ing off their shop­ping lists. A good num­ber of APass mem­bers are ver­i­fied blog­gers.”

Meng is Alibaba’s dream cus­tomer. “I talk to other APass mem­bers ev­ery day,” she said.

“I never ac­tu­ally buy any­thing from phys­i­cal stores un­less I’m go­ing out with friends or some­thing.”

Meng’s loy­alty got her in­vited to the in­au­gu­ral APass an­nual meet­ing, one of 50 mem­bers se­lected. Held in May at Man­darin Ori­en­tal ho­tel in Shang­hai, the splashy event in­cluded a buf­fet din­ner, lucky draw and an awards pre­sen­ta­tion — at which Maserati was voted Most Beloved Brand. Chief Mar­ket­ing Of­fi­cer Chris Tung gave a speech.

Re­wards buy loy­alty and then are turned into mar­ket­ing op­por­tu­ni­ties. In early Septem­ber, Alibaba took 10 APass mem­bers on an all­ex­penses paid, nine-day va­ca­tion to Italy where they vis­ited aMaserati fac­tory, La Perla’s flag­ship lin­gerie store and vine­yards op­er­ated by vint­ner Mez­za­corona. Por­tions of the all-ex­pens­e­s­paid trip were streamed live on the Tmall app and Youku Tu­dou, a video site Alibaba Chair­man JackMa ac­quired last year.

The com­pany said the vine­yard tour was viewed 400,000 times and boosted sales.

Public dis­plays of loy­alty from its most elite cus­tomers also could help Alibaba buff its rep­u­ta­tion.

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