“We are not giving them more than a year in India. You cannot succeed here if you focus on an online-only strategy. The vast majority of users are in smaller towns and villages and buy from traditional retail. If you do not advertise heavily, they won’t even know you exist!”
Thus spoke a very senior executive from one of India’s leading smartphone brands in 2014 when Xiaomi arrived in India. The Chinese brand had come to India with a range of devices that were tailor made to cash in on the market the Moto G and the Asus ZenFone 5 had created – well-specced devices at surprisingly low prices that were available mainly online, and not from traditional retail. However, unlike those two, Xiaomi insisted it would not be trying to grab the spotlight with any major ad campaigns on traditional media. Instead, the company said it would be sticking to social media and word of mouth to get the word across.
In a market whose vast majority of users were not even online, it seemed a recipe for disaster. Even when the company’s initial products sold out in virtually seconds, a lot of the coverage still seemed focused on how selling online only was not a long-term strategy for the brand, and how it seemed to be doing well only because it was dealing with a limited number of units targeted at a small number of users. “We sell more phones in a week than they sell in a month,” one CEO boasted.
Fast forward to today, and the company has been ranked number two in the Indian smartphone market behind the mighty Samsung for the final quarter of 2016, with a double-digit market share in that period, and was also the number one player in the online smartphone market.
And while the brand has not strictly adhered to its initial “no advertising in traditional media” and “only online” stance, the fact is that it still is nowhere near other players when it comes to advertising and using traditional retail. It also still often uses the much-maligned flash sales model that results in limited availability of devices and often a number of disgruntled customers. And yet, it ended Q4 2016 with a 10.7 percent share of the Indian smartphone market, online as well as offline, well ahead of more prominent spenders like Oppo, Vivo and Gionee.
So what exactly makes Mi click in India?
Well, I think it is two things: communication and communities.
Yes, I know there will be people who will say that this is a gross oversimplification (and a convenient alliteration) and will point out that Xiaomi’s biggest strength is its ability to offer very good configurations at surprisingly low prices, bolstered by its recent made in India initiative and increased offline presence. But casting an eye at the market will reveal that there were players offering comparable and even better hardware at comparative prices within a year of Xiaomi’s arrival in the market, and well, there are several brands with a much stronger presence in offline media. None of them (with perhaps the notable exception of Lenovo) have, however, been able to command the sort of loyalty that Xiaomi seems to have at the moment.
No, what I think has made a massive difference to Xiaomi in India has been the fact that it has almost tended to over-communicate. Rather than follow the routine “talk to the media when there is a launch” policy that most brands follow, Xiaomi’s communications team tends to keep in constant touch with members of the media, and are surprisingly accessible and well-informed. We have also had many impromptu requests for catching a quick coffee with executives from the company for informal conversations – the company was easily amongst the most accessible in the industry and it helped that most of its spokespersons (be it Manu Jain or Hugo Barra or Jai Mani) were very articulate. The result? Smoother communication flow and better awareness of the company’s stance on various issues. The benefits of this were most evident when Xiaomi was embroiled in a controversy involving a memo from the Indian defence services that evidently asked its personnel not to use Xiaomi phones. Rather than ducking the spotlight, the company responded consistently right through the crisis and get its stance on the matter across effectively.
Another dimension of its communications strategy was the almost manic attention the company paid to its product launches and briefings. Yes, it did have (until recently) arguably one of the most charismatic presenters in the tech world in Hugo Barra, but the presentations were still marked by lots of detail and very careful organization. The same went for briefings where Barra and/or Mani literally walked media persons through products step by step in multiple sessions rather than putting everyone in a single room in a single session to save time. Once again, the result was better awareness about the product, more intense conversations and greater familiarity with the company’s personnel.
Then there was the company’s focus on building communities or what it called Mi Fans. Yes, many tech brands in the country have forums and social network presence but perhaps none (at least not on the smartphone side) has leveraged them as well as Xiaomi has. And just as in the case of the media, the company has kept its communication with its community consistent, and not an event or contest centric. Fans get mentioned on social networks, queries on forums often get replies and the company has events centered around them which are at times more carefully organized than even media interactions. Round that off with generous freebie handouts at events and you have perhaps the most organized community by a phone brand in the country. Yes, there have been occasions when the presence of fans has been a bit of a poisoned chalice (remember the fracas at the Mi Max launch in India last year?), but by and large, Xiaomi is one of the few brands in the country that has a fan following that seems close to fanatical.
Small wonder that when Xiaomi took out a release marking its ascension to number two status in the Indian smartphone market, its India head, Manu Jain, promptly thanked the Mi Fans for their support in it, saying “Our great results in 2016 were made possible because of the love from our Mi Fans who have driven our success to new heights…” We know there will be the odd cynical roll of the eyes at that, but at the end of the day, those fans have managed to generate a lot of word of mouth promotion for a brand whose name was mispronounced by one and all in India less than three years ago (for the record, it is pronounced “Shao-Me”).
Of course, just how long the Chinese brand can rely on this rather awesome twosome we know not. Logic suggests that sooner rather than later, Xiaomi will have to go in for a much stronger offline presence and perhaps invest more in “conventional” media advertising. But then, logically, the brand had no chance of being number two in the Indian smartphone market by following the strategy that it has chosen. Mr. Spock would be disappointed, but we do not think Messr Jain, Mani and Co. would be too bothered about that. Not right now, anyway.