Cash, Credit or Ali Pay?

Volume 17 Letter 5

What is the difference between Sales and Marketing? Go online and you’ll find a lot of interesting answers that do little to quell the debate. In many organizations marketing is nothing more than sales support developing fancy brochures and placing media advertisements in traditional and online channels. Here’s one definition that might help clear up some of the confusion:

Sales is about changing customers’ minds so they will buy something. Marketing is about changing customers’ behaviors so they’ll continue to use something.

Last month’s newsletter was on Apple and how they failed to successfully launch Apple Pay in China. So, we know Apple lost – but who won and how did they do it? The answer to that question is a great marketing story about how a company changed people’s purchasing habits.

Ali Pay is part of the giant Alibaba corporation that North Americans may remember was partially owned by Yahoo. Ali Pay grew out of the Alibaba online shopping network as a mobile payment system. Wave your phone at a scanner or a UPC code and transfer payment from your account to the store. Ali Pay competes with Apple Pay, WeChat Pay and PayPal. Collectively these four companies control most online payments worldwide. Ali Pay today has a commanding 65% market share in China where online payments will soon surpass cash and credit cards as the preferred payment method. How has Ali Pay succeeded where so many others have failed and how did they get consumers to change their payment habits? Like many great marketing strategies, the answer is remarkably simple.

Cash, credit card, debit card or some combination of each describes most payment behaviors. Ali Pay recognized early on that how you pay for your groceries, street food or store items is largely a habit &endash; and habits as we all know are tough to break! To interrupt one consumer habit and create a new one, a product needs to deliver substantial benefits. Ali Pay created the benefits and formed new purchase behaviors crushing the competition. This is how they did it.

When Ali Pay launched their online pay system they took a different tack from the other online pay systems. Rather than burning their marketing budget on creating great ads and hiring celebrities they spent their advertising money demonstrating the benefits of on line payments. As an enticement, Ali Pay offered to demonstrate to their customers the advantages of Ali Pay by paying for half their groceries if they used Ali Pay at the checkout counter. As one consultant said to me “the discount was so significant that even my grandparents bought a smart phone so they could use Ali Pay!” By the time the promotion was over they had created a huge customer base familiar with, and already in the habit of using Ali Pay! Consumers no longer reach for their wallets to pay for items – they reach for their smart phones. If a measure of a marketing campaign’s success is to get customers to change their habits in favor of your product or service then this one was a stellar success. What can Ali Pay teach us …

  1. Marketing is about changing behaviors: Ali Pay got people to reach for their smart phone rather than their wallet to make a payment.
  2. Benefits demonstrated can be more powerful than communicated: While other online payment companies simply advertised the benefits of online payment, Ali Pay found a way to demonstrate them by providing a discount on something everyone needs.
  3. Simple is best: Paying for groceries was a brilliant choice in marketing strategy. It gave the target segment a compelling reason to use Ali Pay and it changed their purchasing habits. Remember that what looks so simple can take time and some very creative thinking to develop.

Today with over 400 million customers in China and over half a billion worldwide Ali Pay is the dominant player in the online pay market. Don’t stop selling, but isn’t it time you started changing your target segment’s habits? Start marketing!

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