2016 C-NPS: Interpreting the power of consumers

Rethinking brand loyalty is urgent, says Chnbrand

In a survey released on Monday, consumers in the country show lower loyalty to brands of products and services than in the previous year. The report is published by Chnbrand, an organization that evaluates both domestic and international brands in China.

The findings, the report said, suggest that Chinese brands have room for improvement to win over customers and gain their loyalty.

The survey, called the China Net Promoter Score, or C-NPS, is calculated by subtracting the percentage of customers who are detractors of brands from the number of consumers who are promoters. The scores range from minus 100 to 100 - a score of minus 100 means every customer is a detractor, while a mark of 100 means unanimous approval.

The newly released survey polled consumers from Dec 1, 2014, to Nov 30, 2015, across 33 cities in China. Face-to-face interviews were conducted with 14,400 people aged 15 to 60 whose age, gender and income were selected randomly.

The survey evaluated about 5,500 brands in 139 categories. The net promoter score is used by many leading companies in China and abroad and aims to help Chinese companies to predict their growth potential.

The first C-NPS report, published in January 2015, polled consumers from Oct 1 to Dec 10, 2014.

New findings of 2016C-NPS

The overall C-NPS mark of minus 1.1 in the 2016 report is a dramatic drop from the positive score of 4.7 in the 2015 report.

Brands for durable goods had the highest score - 9.6 - among three sectors that also included fast-moving consumer goods and services. Brands for fast-moving consumer goods declined to minus 3.6 from the previous report. Compared with the net promoter score in South Korea, China lags 50.5 points, meaning there is great space for Chinese brands to improve consumer loyalty.

In the fast-moving consumer goods sector, fashion goods, engine oil products, kitchen storage containers and cigarettes performed well, with fashion goods brands scoring a mark of 3.9. The food industry had the worst performance in the fast-moving consumer products sector with a score of minus 6.2.

According to the 2016 C-NPS report, the information and communications technologies industry had a score of 13, the highest score in the durable goods sector, but it was still 3.8 points lower than the 2015 report mark.

Household appliances and home furnishing had scores of 9.7 and 7.8, which were declines of 7.6 and 7.7 points when compared with the 2015 report.

In the service sector, general services, which includes communications, aviation and hotels, had the highest score of 7.3.

Top brands by region

Domestic brands accounted for 62.6 percent of brands that enjoyed the highest scores from consumers in 139 surveyed categories, up 4.5 percentage points from the 2015 report.

Among the 87 most recommended Chinese brands, 29.9 percent are based in Guangdong province, earning the region a top ranking. Brands from Beijing accounted for 19.5 percent, ranking second, and Shanghai came in third with 11.5 percent.

Brands from the United States continued to account for nearly half of the most recommended international brands. Japanese brands came in second with 17.3 percent, British brands 11.5 percent and French brands 9.6 percent.

In the service sector, Chinese brands accounted for an overwhelming 86.8 percent of the brands that received the highest scores from consumers, 7.8 percentage points higher from the 2015 report. New top-rated Chinese brands included Haier (for washing machine) and Joyoung (for its juice extractors) and others.

Among the top brands in the daily-use commodities sector, 66.7 percent were international brands. Domestic brands that led in the sectors of drinks and drug and healthcare products included Snow (beer) and Yunnan Baiyao (adhesive bandage).

All the most recommended brands in Web services and general service fields came from China, like eLong (online tourism service) and ZJS Express (express delivery service).

C-NPS and C-BPI

Another of Chnbrand's national surveys, the China Brand Power Index, or C-BPI, rates a brand's overall strength among consumers as a result of long-term market recognition. The C-NPS survey, on the other hand, relies more on consumers' feelings of using the products and services and their emotional dependence on brands.

Among the top C-NPS brands in this year's report, 35 percent of them had top C-BPI scores for 2015, including Lock & Lock (for kitchen containers) and Alipay (for its third-party online payment service). These brands have solid brand strength, customer relationships and strong words-of-mouth power.

The other 65 percent were not top C-BPI brands, such as Safeguard (liquid soap), Castrol (engine and lubricant oil) and Amblem (integrated kitchens). Though these brands have relatively weak brand power, they have good brand-consumer relationships and strong potential for sustainable growth.

Analyzing the tendencies

In analyzing the changing tendencies of Chinese consumers, Chnbrand noted that among the 119 subcategories evaluated in the C-NPS report in both 2015 and 2016, 109 had declines in scores.

The 13 subcategories with large declines in scores - all by more than 15 points - saw sweeping changes in brands at the top position. The drops occurred for fabric softener, laundry detergent, disinfector, soy sauce and vinegar brands.

One reason for this, Chnbrand said in 2016C-NPS, can be tied to changes in the marketing environment.

First, the development of the Internet made it possible for more companies to accurately convey the latest information to consumers and conduct sales promotions through e-commerce platforms more frequently, offering more options to them. As a result, consumers were able to change their purchasing decisions frequently and grew less loyal to specific brands.

Second, the large amount of information on e-commerce platforms makes it easier for consumers to identify and learn more about the products or services they need. Brand recognition is playing a less important role in helping reduce consumers' risks, Chnbrand said.

Vital brand value

The 2016 C-NPS report said brand value still influences consumers' buying decisions and will become more important.

It said enterprises cannot rely merely on promotions for their long-term development. Brand value can attract consumers steadily and over the long term.

The report said that because excessive information on the Internet can easily distract a customer's attention, companies must use more resources to attract potential buyers, which may be expensive and in vain. In fact, the decision-making process depends more on perception when information is superfluous. Word-of-mouth reputation and brand recognition are key to a consumer's perception.

Net promoter score - or NPS, as an indicator of consumers' recommendation will - is based on two conditions: communication value and communication will. Communication value refers to the brand's strength and the characteristic of a product or service that consumers can clearly identify with and remember. Communication will reflects a good brand-consumer relationship and consumers' willingness to recommend the brand to others.

The C-NPS report suggested companies should develop a systematic strategy to provide differentiated consumer experiences.

According to the report, consumers that have had a good experience will not only buy the product or service again, but also tell others about the experience.

A special consumer experience can be from a company's product, service or its employees.

The 2016 report said evaluation scores from surveyed customers who have used a certain brand for a long time was higher than the average. Users that loyally support a brand are the foundation of a high NPS, it said.

Lastly, the report said keeping a good brand-consumer relationship and paying attention to the relationship over the long haul are vital for consumers to continue to buy a brand's specific product or service.

For more information, visit www.chn-brand.org, www.chn-brand.org/c-nps or contact 86-10-62250811. The publication of graphics and charts from the C-NPS report should be authorized with Chnbrand's official confirmation letter. All research information is not allowed to be used for advertisement and marketing purposes.