🎙️ LVMH Innovation Award Winner Michel Tjoeng: Social to Commerce with ChatLabs
Come with us for a deep dive on the Chinese digital ecosystem as we explore social commerce and how ChatLabs is using AI to create the next-level personalization strategies for luxury brands.
Hello Tech Powered Luxury listener, and now reader!
🎙️ This week, we are thrilled to bring you an exclusive interview with Michel Tjoeng, the pragmatic technologist who co-founded ChatLabs. We explore his path and bring on the insights from beginning to end: starting as child with a passion for computers and UI, obsessed with customer experience (which child isn’t, really) to working with the biggest luxury group in the world, LVMH.
🌟 Are you new here? Welcome to our amazing community - keep reading to discover everything about Tech Powered Luxury, our Community Rewards and how this newsletter came to life.
✨ I’m Beatriz Barros and I’m very excited to have you reading us today!
👀 TL;DR
50% scientist, 50% marketer. This is the self-declared composition of Michel Tjoeng, co-founder of ChatLabs, the 2023 LVMH Innovation Award winner startup that is revolutionizing social commerce in the West.
Michel brings the best of the social commerce dynamics that exist in China and applies them to Western luxury brands. Prepare for a masterclass on the digital Chinese ecosystem, customer relationship management and creating the next-level personalized customer journey.
He thoroughly believes that personalization is efficient when it considers current consumer behaviour and interests, and his background gave him the cards needed to play a game that can get very complicated, very fast: how to work with the massive amount of data that informs who your customer is, what they want to see, when and how they want to see it?
Keep reading as we dissect the complexity and the beauty of ChatLabs.
💎 Exclusive Question 💎
Who has been your most unexpected mentor, and what did they teach you?
“My first mentor in my career was a Canadian digital strategist called Tim Dolan, who I was lucky to work with when I started in the strategy team for an agency called Blast Radius (later acquired by WPP). Tim taught me early on that the ingredients for a successful strategy are balancing consumer motivation and business goals.
To be successful one needs to always stay intensely curious about how consumer behaviour is changing in the digital world and the fundamentals behind businesses and industries.
When you can find the intersections between both, you can truly create magic.”
Michel Tjoeng really did learn his lesson well. Before we explore how he’s creating magic with ChatLabs, we take a step back to give a much needed context on why this innovative endeavour requires your attention.
Michel’s professional career starts at an ecommerce agency, when websites were the center-piece of online brand experiences. As he progressed into digital transformation consulting, he dived head-first into omnichannel projects.
What does that mean? He focused on integrating online and offline transactions, customer and transactional data to orchestrate a seamless consumer experience regardless of the touchpoint where the consumer interacts with a brand.
From my personal experience in this industry, these are complex projects that involve many brand components and departments, a lot of technological integrations and, in order to be well strategized and executed, best-in-class know how on how the industry works on the brand side and on the tech side as well.
After setting up and running the project, he eventually moved to the client’s side as Global Head of Digital and Customer Experience for De Beers. There he put his eyes on something that is still a very hot topic for luxury brands in the West: China.
🐉 The Chinese Ecosystem and its consumers
I would need at least 5 newsletters to successfully deep dive on the topic of this title. Let’s start with some key concepts:
42% of luxury sales are driven by Chinese High-Net-Worth Individuals, which represent 0.3% of the population. Overall, 40% of China’s GDP comes from online commerce.
Chinese luxury consumers will represent 35-40% of the global luxury market by 2030, in a study by Bain & Company.
The digital ecosystem in China is sui generis. That means the customer journey revolves around a whole different set of apps and interactions. Some of the most important ones are:
WeChat (think direct messagging meets payments meets social media);
Xiaohungshu aka Little Red Book aka RED, which is the preferred social media for luxury product search and engagement;
Douyin, the Chinese TikTok;
Taobao Live, a livestreaming commerce platform owned by Alibaba;
Tmall and JD, which are marketplaces central to sales, much more than the brand-owned websites (in industry jargon, “.cn”, as opposed to the Western “.com”).
Everything is different because of a massive firewall around the country, limiting Western technology and social media to enter Chinese grounds. No Google, no Instagram, no WhatsApp, therefore there is no replicating the same logic and experiences and expecting for your strategy to work.
Think of how this impacts the whole brand strategy from the West to China, and how certain business dynamics change. Customer Relationship Management (CRM) in the West is mostly done via email with brands managing a database that usually collects data from transactions and informs personalization based on past purchases and shown interest.
The customer segmentation and consequent marketing automation activities that come from this data (think SMS activations, email campaigns, social media sponsored posts, discounts or invites to brand experiences) derive from a one-way approach, for as personalized as we like to say it is.
In China, the approach to CRM changes as it’s embedded into social media dynamics. There we work with Social CRM, where data from your followers feeds your CRM database, and communication channels such as WeChat’s broadcasts and livestreaming videos are much more two-sided and with an infinitely bigger reach.
“You have all these apps where people are connecting to. So you go and look at the brand story, at particular products and all of that information goes into a database.
So we know what you're interested in before you've actually bought something as opposed to after. Then you can do segmentation and marketing automation on the back of that, and you can integrate that into the store as well.
The people physically in the store - guess what they use to communicate with the clients? Also social media.”
This translates to a customer journey that happens through and on social media, all the way from discovery to prospecting, from interest to consideration and going physically to the store to connect with the sales associates. This is usually done via WeChat or WeCom, the latter is the ‘professional’, clienteling twist on the previous, guaranteeing that the data and conversations go to the brand and are not owned by the sales associates themselves.
It makes sense now why it’s called Social CRM, doesn’t it? It’s on these social media channels that customers can interact with the brand, make purchases and are followed up on for any after sales activities.
“If you walk into a luxury store in China, it's very common to connect on social with a sales advisor there. You would never do that here, right?
Like you walk into Cartier and go, ‘shall we be friends on Instagram?’
That just doesn't happen here.”
📲 Social Commerce and AI
Traditionally, brands have relied on past purchase data to guide their outreach, but Michel believes in the power of behavioral profiling. By focusing on what customers are interested in now, rather than what they bought last year, ChatLabs delivers highly relevant content that resonates with each individual. However, this approach presents significant operational challenges, such as analyzing massive datasets and creating tailored content for diverse and ever-changing customer interests.
Michel’s extensive knowledge of the dynamics of social commerce in China led him to propose the best of what social media can offer in terms of insights on consumer behavior and engagement, applied to Western customer journeys. Brands are well aware of the need of personalization, content creation and having a unique voice on social media, but often that doesn’t translate to the experience you have on ecommerce websites, which is where the transaction happens.
Way less than 50% of social media traffic converts into sales because the experience is not coherent, and it requires a shift on the mindset of the consumer: on social media you’re in non-thinking mode, looking for inspiration and entertainment. When you force that consumer into a website with menus, rules, sorting, filters etc you force them to literally activate another part of their brain, and that’s where the magic ends.
How does ChatLabs solve this?
They create an immersive brand experience by generating personalized content feeds for brands like Tiffany & Co and many others. When users interact with an Instagram or Facebook ad, they're seamlessly transitioned to an experience hosted on the brand's subdomain, powered by ChatLabs's SaaS technology.
This platform mimics the native social media browsing environment, making the transition so smooth that users often don't realize they've moved from social media to a brand-controlled space.
“We've trained an entire generation of people now on one type of interaction modality, which is swiping, right?
Essentially what we're doing with that traffic is we are giving the consumers a much more immersive, social-like experience. We take them to an experience which doesn't have navigation, that doesn't have search, that doesn't have a menu.
We take them where they are very used to, which is a ‘for you’ feed. They're also very used to it being very personalized: everybody's TikTok or Reels feed in the entire planet is unique because the algorithms learns what you're interested in and then they show you the relevant content.”
ChatLabs’s AI-powered segmentation pushes the right piece of content for each user based on their personal preferences. This allows brands to tell their stories and engage users in ways that aren't possible on a traditional product page, maintaining the feel of social media while enhancing the brand experience. And increasing every possible KPI you might look at.
Head to Spotify to watch and hear all about how this amazing startup caught the eyes of LVMH executives and led ChatLabs to win the Innovation Award in the Data and AI category during the 2023 edition of VivaTech.
🎁 Community Rewards
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🎙️ Upcoming Conversation: David De Patoul & Richard McSweeney - Co-Founders, Strike Digital
Stay tuned next Tuesday to discover how to build a blockbuster brand online, from Fashion to Beauty and so much more with the founders of Strike Digital.
See you next week,
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🪄 Our weekly newsletter is curated by Beatriz Barros, a seasoned expert in luxury and technology based in Milan, Italy. A dedicated collaborator of Tech Powered Luxury, Beatriz applies her expertise as a Fashion & Luxury Business Consultant at Retex—Italy's forefront company known for integrating strategic acumen with operational excellence to solve complex retail-oriented projects for fashion & luxury brands. Additionally, she educates aspiring professionals at Polimoda, renowned for its focus on Fashion Design & Business in the vibrant city of Florence, Italy - also where she first met Ashley during one of her lectures on the future of luxury: a match made in academic heaven. 🌈