Ringing up sales

Smartphone maker scores big with unique micro blog strategies

Though foreign companies are still fine-tuning their micro blog strategies, domestic companies have edged ahead in China and made considerable gains with their prime-mover advantage.

Take the highly crowded and competitive market for smartphones in China. In a market dominated by global brands like Apple, Samsung and Nokia, one would hardly expect to see a domestic brand, Xiaomi, carving a niche for itself with its unique approach.

Xiaomi is also an excellent case study of a Chinese company that has tasted marketing success with its micro blog plans. Like most of its global peers, one would have expected the Chinese company to have a nationwide network of offline stores to push sales. But Xiaomi does not have any physical store in China and conducts most sales through online platforms.

Last year, Xiaomi teamed up with Sina Weibo for two successful online sales campaigns, both of which saw nearly 2 million re-posts.

In December, the company put up 50,000 smartphones for sale on the Sina Weibo platform.

"My initial expectation was that at least 500,000 people would sign up for this deal," says Li Wanqiang, vice-president of Xiaomi Corp. But the outcome was far beyond his expectations.

The original post was re-posted nearly 2 million times, with 1.3 million netizens signing up and expressing interest in buying a Xiaomi phone. The initial 50,000 units were sold out within five minutes, Li says. The company's followers on Sina grew from 760,000 to 1.52 million in just three days.

Xiaomi's micro blog marketing plans, however, started in June 2010, but were largely focused on enhancing interaction between consumers and the company.

The company initially used the micro blog to collect feedback and for subsequent product improvement. But that has changed and the micro blog is now Xiaomi's most important after-sales platform, considering that the company has a team of more than 30 to handle customer services and content production online.

With more than 1.6 million followers on Sina Weibo, Li says that his brand Xiaomi is more of an Internet brand, with R&D, production and sales all based on the Internet. "Promotion and sales on micro blogs can reduce overall costs and also help prompt feedback from users," he says.

"What we see most in SNS marketing is the convenience it offers to consumers, especially in aspects like after-sales service."

Lei Jun, founder and chief executive of Xiaomi Corp, says that his company's DNA is its openness.

"MIUI, our Android-based aftermarket firmware for cell phones is open for developers to design various apps for use without phones. At the same time, our research team is constantly working on developing new products based on micro blog feedback."

The company says that on average it gets around 10,000 requests from users daily, and has an average response time of 15 minutes for each query. To further streamline operations and reduce response time, the company will add more employees this year, Lei says.

The company currently has different Sina Weibo accounts for its smartphone brand Xiaomi and for the MIUI operating system.

Lei says that the inherent nature of platforms like Facebook limits the marketing potential for companies. Information can only be spread among acquaintances, whereas with micro blogs, it is more like a media operation for a wider audience.

The company's annual investment in micro blogs is about 5 million yuan (627,000 euros; $804,000) to 6 million yuan for labor costs, and less than 1 million yuan as funds for various campaigns. Lei is quite satisfied with the return on investment so far.

He says that the company now spends less than 1 percent of its revenue on advertising, adding that but for micro blogs, it would have spiraled sharply.

"It is really hard to get any satisfactory results if you spend money on a banner or on newspaper, TV ads. But with micro blogs, we can gauge the feedback immediately."

While word of mouth is undoubtedly the key for Xiaomi's success, micro blogs have helped it build brand image and reputation.

Currently the company has two sales channels, one from their official website, Xiaomi.com, which contributes 70 percent of the sales, and the other from contract operators such as China Unicom, which takes about 30 percent of the sales.

Over half of the sales at Xiaomi.com are from the micro blog. The company sold 7.19 million units in 2012, generating about 12.6 billion yuan in revenue. The aim for 2013 is 15 million units, with 1.5 million units per month.

Xiaomi will hold another sales campaign with Sina Weibo in May. Li says that micro blogs can fulfill companies' various requirements with proper strategy.

"For companies, no matter big ones or small ones, micro blog is a necessity. I would rather reduce my advertising in other channels, if micro blog needs more investment."

Yang Xuebin, a micro blog analyst with iResearch, a Beijing-based research firm, says Xiaomi has done an excellent job with its marketing and brand promotion.

"Their cooperation with Sina Weibo has transferred Xiaomi's intangible assets, its fans, to actual purchases offline, which is a key determinant of micro blog marketing success," Yang says.

She says that while Xiaomi is a typical case of social media marketing, it should now start thinking about other marketing channels.

"Micro blog marketing, no matter how effective, is still part of an integrated marketing strategy, and will not replace existing marketing methods."

(China Daily 04/05/2013 page5)