Monthly Archives: March 2020

Lessons & Business Recovery Strategies for Retail from China

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*Note: This article was first published on March 30, 2020, and it has been updated on May 19, 2020

Predicting the Road to Recovery: Key Findings & Insights for Retailers on tackling the impact of Covid-19 *across China, Singapore, India and the Middle East

 

Roughly 50 days later after the initial lockdown, China has successfully stunted the spread of the virus, and the country is not only witnessing the recovery of economic fundamentals but showing signs of upward momentum.

China’s economic scale, strong resilience, digital penetration and flexible macro policies are among the major factors which led to the rapid recovery. We believe there are some important lessons to be learned from China on how to successfully deal with this epidemic and chart out a road to recovery in the coming months.

 

Our position as a leading omnichannel retail solutions provider for more than 400 retail brands in China, India, SEA and the Middle East has offered us a ringside view of how the epidemic unfolded. We collated data for 50+ brands across 10,000 stores in these three regions to understand the impact on retailers, the timeline as it unfolded and measures that can be taken to minimize the negative impacts of the epidemic.

 

We are happy to share with you these insights as you go about strategizing and planning your road to recovery during this crisis

 

TL-DR:  In this article, we have tracked and analysed :

 

  • Covid-19’s category-wise impact on China’s retail sector
  • Key findings and insights on Covid-19’s impact in China before, during and after the lockdown period in Wuhan
  • Key findings and insights on Covid-19’s impact in Singapore before and after the Dorscon Orange Alert + expected recovery timeline for Singapore’s retailers
  • Key findings and insights on Covid-19’s impact in India + expected recovery timeline for India’s retailers
  • Key findings and insights on Covid-19’s impact in the Middle East after the nationwide lockdown + expected recovery timeline for retailers
  • Recommendations on charting a road to recovery for retailers

 

Covid-19’s Impact on China Retail

 

Recovery Period: 6th March 2020 to 15th March 2020

 

Overall, the epidemic has had a large short-term impact on the Chinese consumer market, and retail sales of goods have fallen sharply. From January to February, the total retail sales of consumer goods fell by 20.5% (YOY) while the retail sales of automobile and petroleum goods fell by 37% and 26.2% respectively; catering revenues fell sharply by 43.1%, and room revenue of accommodation businesses fell by nearly 50%.

 

Finding 1: Over 65% Drop in Average Sales per Store and a 79% decrease in Customers per Store

 

 

Finding 2: There was an increase in retail sales starting from March 6th,2020

 

After just 8 weeks since the initial lockdown, the retail market in China appears to be in the early stages of recovery. This is indicated by the surge in two key metrics: Sales Per Store & Customers Per Store in the past few weeks. 

 

Pre-lockdown : 1st Dec 2019 to 25th Jan 2020
Lockdown Period: 26th Jan 2020 to 5th March 2020
Probable Recovery Period: 6th March Onwards

 

Compared to the lockdown period, in the “Probable Recovery Period”-starting from March 6th (we are calling it PRP as we see a surge in related metrics, need to see if this is sustained) retailers witnessed 22% increase in sales and 43% increase in customers.
*Update as of 19th May 2020
Finding 3:  Store footfalls have reached 65-70% of base levels (1st week of January) starting from the first week of May

 

Finding 4: Sales per store which took a big hit during the lockdown is slowly coming back to similar levels as last year

 

Key Insight
  • We are seeing an uptick in sales and customers after 6th March 2020. If we consider this date as a cutoff period, it has taken around 1.5 months for recovery to start after the Wuhan Lockdown (25th Jan to 5th March).
  • It took around 3 months for sales and store footfalls to reach pre-COVID levels in China.

 

Covid-19’s Impact on Singapore Retail

 

Expected Recovery Period: Ongoing

 

*Timeline Reference :
Prior to Dorscon Orange Alert : From Jan 1st-Jan 23rd,2020
Post Dorscon Orange Alert : From Jan 24th-27th Feb,2020
Probable Recovery Period : Ongoing

 

Singapore witnessed a perceptible drop in retail sales but not as significant as that of China. A possible reason could be that Singapore has managed to contain the infection fairly well and avoided a lockdown. Our analysis of sales and customers per store data of  10 leading brands across 1000 stores also reiterates the positive outlook for the Singapore retail market. 

 

The Findings 

 

  • Prior to Dorscon Orange Alert: From Jan 1st-Jan 23rd,2020 sales per store was 18% lower and the number of customers per store was 8.5% lower compared to the same time period in 2019
  • Since Dorscon Orange Alert: From Jan 24th-27th Feb,2020 sales slumped by 45% and the number of customers per store was 26% lower compared to the same time period last year.
  • Currently: From 28th Feb to 1st March, we saw a sudden surge in sales and customers per store. Post 1st march,2020, we are observing 34% decline in sales per store compared to the previous year (compared to 45% drop during Orange Alert), and 10% decline in the number of customers per store(compared to 26% drop during Orange Alert) 

 

Key Insight 

 

  • We have been getting reports of the retail market being back to normal (even though tourism is severely impacted), with footfall in malls is now 95% of what it was before.
  • Although the number of customers per store has increased post the Orange Alert, we have not noticed a significant jump in sales indicating customer reluctance in spending

 

*Update on 6th April 2020

 

  1. With the impending lockdown, the recovery period is predicted to be delayed further, at least until the end of May/Mid-June.

 

Business Recovery Prediction for Singapore

 

The retail sales recovery period for Singapore seems to have started and expected to be ongoing. However, with the ever-increasing restrictions imposed on the movement of people in malls and restaurants, the recovery trends may be inconsistent and could deviate till the end of April.

 

*Update on 6th April 2020

 

  1. The business recovery prediction in Singapore is expected to be delayed until the end of May/Mid-June due to the recent announcement of the nation-wide lockdown indicate, however, we foresee a faster recovery period of 1 -1.5 months in Singapore compared to the 2.5 months in China.

 

Covid-19’s Impact on India Retail

 

Expected Recovery Period: First Week of May

 

*Timeline Reference :
Prior to lockdown: From Jan 1st-March 25th,2020
Lockdown Period:Ongoing
Probable Recovery Period:1st week of May

 

India seems to have entered  Stage 3 of the Covid-19 outbreak, however, the government has stepped up its effort and is leaving no stone unturned in fighting the epidemic. The epidemic broke out when the Indian economy was already reeling under a slowdown in consumption for everything from cars to confectionaries.

 

Lifestyle and fashion retailers are likely to be impacted most due to the restrictions and lockdowns, resulting in demand squeeze in the short-term. However, we expect the combination of young demographics, rising disposable income and the positive headroom growth for organised retail to mitigate many of these challenges in the long term.

 

Finding 1 

 

  • Until 16th March, the consumer retail sales and walk-ins did not see many dips compared to last year, this could be due to festive shopping (Ugadi, Gudi Padwa, Navratri etc).
  • However, the India consumer retail witnessed a big drop in sales by 46% and 55% fall in the number of customers per store from 17th to 25th March, which is expected to drop further in the coming weeks due to the ongoing nation-wide lockdown.

 

*Update as of 19th May 2020

 

Finding 2: Multi-brand Supermarkets witnessed ~70% drop in YoY sales

 

Finding 3: Single Brand Apparel Outlets have witnessed a spike in sales from 1st week of May

 

Business Recovery Prediction for India

 

Considering the ongoing recovery trends observed across China and Singapore, and provided that there is no further extension on the lockdown, the retail sales recovery period for India might kickstart from the first week of May.

 

Covid-19’s Impact on Middle East Retail

 

Expected Recovery Period: Third Week of May

 

*Timeline Reference :
Prior to lockdown: From Jan 1st – March 25th,2020
Lockdown Period: Ongoing
Probable Recovery Period: 3rd week of May

 

The first case of coronavirus in the Middle East was reported on January 23rd in the UAE. Since then, the outbreak has spread to Saudi Arabia, Iran, Syria, and Iraq, with Iran being the worst hit. The epidemic is expected to have a severe impact on the region’s retail market since tourists, especially Chinese shoppers, account for a significant chunk of sales to the Middle East’s luxury goods market. Governments in the Middle East have put in place a series of measures to contain the highly contagious outbreak with several nations going into indefinite lockdown mode.

 

Finding 1

 

 

Our data shows a steep decline in sales and customers per store post-March 15th, which is expected to deepen after UAE’s announcement of lockdown on malls and stores.

 

*Update as of 19th May 2020

 

Finding 2:  The luxury retail sector is badly hit with sales dropping by 90% compared to last year

 

Finding 3:  There has been an uptick in Apparel sales from the first week of May

 

Business Recovery Prediction for the Middle East

 

Although the governments continue to impose lockdown, trends and experts indicate that retailers in the Middle East may start observing an uptick in their retail sales from the third week of May 2020 provided there are no further lockdowns imposed by the end of April.

 

Key recommendations for Retailers on Charting their Road to Recovery

 

Let’s admit it, the short term impact of COVID-19 on retailers will be severe. Few Offline retailers may have to temporarily or permanently shut down stores, few may face cash flow challenges, almost all of them may have to cut costs and reduce overheads. Even online businesses are likely to face delivery restrictions, delays and supply chain disruptions during this time. From our findings, below are a few takeaways on how retailers can tackle this crisis.

 

  • Being Omnichannel = Being resilient

 

From our findings, the most resilient retailers surviving this epidemic are the omnichannel retailers. Brands who invested in enabling a personalized omnichannel shopping experience are experiencing the fruits of their labour. For instance, Chinese apparel brands like Peacebird, Gloria and Youngor who had started their omnichannel digital transformation journeys (through the integration of online and offline channels) experienced a consistent increase in their online sales despite the uncertain in-store sales.

 

  • Live commerce as an emerging trend

 

China has become the epi-centre for live stream commerce. Chinese e-commerce platforms Taobao and JD.com are leading the live commerce world by enabling the live stream viewers to purchase items while they watch. Live commerce as they term it, has become an emerging trend to bank upon amidst the COVID-19 sales slump.

 

  • Merging the offline and the online data to upgrade online selling

 

At a company level, offline teams should coordinate with the online team to divert the traffic to their ecommerce website/app and clear out the inventory. Brands can also improve the quality of customer engagement across relevant channels by merging store behaviour data with CRM data to communicate and notify its customers about store operating hours, delivery timelines or to send any form of notifications. Integrating data across online, social and offline channels can improve the micro-segmentation of customers and enhance the relevance of personalised communication.

 

The Covid-19 epidemic is a crisis unlike anything we have faced in the recent past. We are still on the tip of the iceberg when it comes to uncovering the impact of the coronavirus. However, as the events unfold, retailers should be prepared to accelerate their omnichannel engagement and technology initiatives. Until then, stay indoors, practice social distancing and do your part to stop the spread of COVID-19.

Introduction to Gamification in Reward Programs

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Gamification is the layering of games or game-like activities into marketing or business strategies with the intention of triggering human emotions that can lead to higher sales, customer loyalty and better engagement. When done right, gamification has been proven to induce powerful emotions like excitement, intrigue and happiness amongst the target audience.

 

One of the oldest and simplest forms of gamified reward program is offering a  stamp each time you buy a drink.  Get 10 stamps and the 11th drink is free.  And who wouldn’t like to get a reward?  Reaching a certain stage and getting something in return for it is exciting and fun.  In the online world, earning loyalty points, progress bars and leaderboards leverage our natural instincts of curiosity and competition.

 

Nike has successfully created one of the best gamified programs through their running app Nike+.  It tracks one’s running progress and their journey towards their goals. Each time you go out running, it pushes you to beat your last record besides connecting to your social media, so that you can either compete with your friends or show off to them. This simple but effective loop ensures continuous fuel to your competitive spirit.  Nike+ gets more people out and running and thereby boosts the sales of Nike shoes. This is the psychology behind the success of this running app.

 

Starbucks is another example that uses a very successful gamification program for its loyalty and reward activity.   When customers use their “My Starbucks Rewards”, they get a gold star when they order a drink from their mobile app.  5 gold stars earn them a green status and free rewards such as refills. When the user reaches 30 gold stars, they earn a gold membership with a gold card.  This creates an elevated status and exclusivity. It comes as no surprise that the Gold Card is highly coveted and everyone wants one!

 

Types of Gamification

 

There are so many types of gamification designs, that it is difficult to cover all of them in one shot. For the sake of brevity, we have listed the most common ones :

 

  • Tracking progress

The best way to keep people involved in a gamification program is to permit them to track their own progress.  This type of gamification works when financial goals need to be tracked or for health and fitness programs. For service-based industries, progress tracking gamification works for educational content.  When a user completes a course, a process can be set up, where the progress can be tracked, until the final goal is achieved.  This is a great way of encouraging users and other potential customers to consume more content. Webinars, online content and video tutorials are all great use cases for the progress tracking gamification experience. Certain activities like attending physical events and downloading the company’s ebooks not only add value but give a sense of fulfilment to customers.

 

  • Creating different levels of rewards

The Starbuck program shows how creating different levels of rewards creates an atmosphere of excitement, fun, curiosity and competition.  The desire to upgrade from Green to Gold Membership is a great way of keeping users engaged and entice them to buy more coffee. Starbucks mastered the art of using gamification in their loyalty programs and hence they were extremely successful.

 

  • Experiential marketing

Gamification that is used in experiential marketing works very well for big brands that are already well known, who want to create positive feelings and a sense of trust amongst their customers towards their brand. Coke’s Bond 007-themed adventure that offered tickets to the movie Skyfall as the final prize was a classic case of experiential marketing.  The viral video of this program that was shared on social media further helped to popularize this campaign.

 

  • Interactive content with rewards

It would be very exciting if you could convert your entire website into a game.  For instance, you could create a scavenger hunt where your readers or customers look for certain content or answers amongst your blogs, interactive videos or podcasts.  These would be challenges presented to get your audience more involved, engaged and excited. This could also act as a motivator with a reward for the winner, in the form of free subscriptions, a discount or something else that could be of great value to customers.

 

Benefits of Gamified Reward Programs

 

Gamified reward programs offer a plethora of benefits for the brand, as well as to the customer, all wrapped up in a fun and interactive package.  Apart from appealing to the competitive nature of consumers, it’s a great way to introduce new products to potential customers

 

    • Gamification provides a feeling of fulfilment and accomplishment with a reward at the end of each challenge.  Customers’ repetitive actions not only create new habits but are also profitable to your brand.
    • Specific actions of customers can be analysed to find out how they would like to or prefer to engage with your brand.  This could provide your business with valuable customer insights for the future, and help in implementing business strategies
    • A relationship can be formed with customers that go far beyond mere transactions.  They can be encouraged to share their retail experiences on social media, create their own content and take gamified quizzes
    • Providing a gamified experience to customers creates lifelong moments and memories for them.  Encouraging them to take up challenges and getting rewarded at the end of it could create unique retail experiences and encourage higher loyalty towards your brand

 

How to Gamify your Reward Programs

 

The concept of ‘play’ is deeply ingrained in the human psyche. It has a powerful influence over us because it goes as far back as our childhood and was part of our first interactions with the external world, siblings and friends.  It came easily to us because it was fun, competitive and we got to learn a lot from these experiences. Businesses should strive to capture this excitement and involvement when it comes to gamifying their loyalty programs.

 

So, how do you move up to the next level by gamifying your reward programs?  Here are some tips.

 

  1. Make your programs competitive and fun.  Customers get interested and excited, only when the gamification is presented to them in a fun and enjoyable manner.  Experiment with Leaderboard and Foursquare in your programs to keep customers engaged and interested.
  2. When customers are made to feel exclusive or a part of an elite club, they feel that they share a special relationship with a brand.  This goes a long way in creating life-long relationships and loyal customers. The Starbucks case is a very good example of creating an exclusive club for customers apart from regular benefit.
  3. Offering great experiences as rewards can go a long way in creating loyal customers, such as concert tickets, Uber Money and Apple Music Subscriptions. A case in point is Verizon , which offers these perks to their customers and creates memorable experiences for them
  4. Invest in a loyalty program software that lets you reward customers for non-transactional behaviours like social media mentions, reviews, store check-ins, referrals and more.

Conclusion

 

From a brand’s perspective, the need of the hour is to encourage repeat sales, improve customer engagement and deliver a memorable retail experience. A gamified loyalty program is an ideal way to achieve all of these outcomes.

Store Footfall Analytics

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Digital is pushing the frontiers of marketing and customer engagement, especially in retail. From being product-centric in early days, retail has quickly evolved into a full-fledged customer-centric experience. Today, digital technologies and the abundant possibilities of ceaselessly connecting with the customer has paved the way for retail to be a more nuanced, personalized experience.

 

True, retail faces its challenges when it comes to digitalization, given its strong association with being a ‘touch and feel’ experience; something antagonistic to digital.  The industry is also undergoing transition, primarily in reaction to the relentless rise of e-commerce. While offline stores still account for 90% of retail business, their online counterparts are quickly gaining popularity through innovative marketing and focusing on the convenience factor. To keep up, brands are transforming their brick and mortar stores by adopting digital technologies that will retain the attention of today’s distracted customer through optimized, brand-centric in-store experiences.

 

Deploying digital technologies such as IoT, AR/VR, Big Data and Machine Learning in an in-store environment offers infinite, compelling opportunities to retailers.

Factors Driving the Digital Transformation

On the face of it, digitalization for a brick and mortar retailer translates to new ways to engage and excite the customer to create incredible experiences and ́ ‘stories’. But there’s more to this narrative than building smarter store environments. Below are some factors that spur the adoption of digital technology across conventional retail stores.

 

In-store technology —  whether in the form of virtual product lanes and trials, interactive kiosks or smart displays — helps to blur the distinction between online and offline shopping experiences for the buyer.

 

It helps the brand to take the centre stage in the customer psyche and the buying channel becomes inconsequential.

 

A novel, immersive experience at a store helps build brand recall and customer loyalty. Smart use of virtual/augmented reality can enhance store ambience, entertain visitors and build a memorable shopping experience through personalized interactions.

 

Moreover, there are obvious cost savings that technology brings in; especially in terms of efficient staff and inventory management. A greater advantage to the retailer is the effortless mapping and analytics of data related to customer behaviour that AI-powered footfall counter and similar technologies help gather. Needless to say, such data can be valuable in planning future brand marketing.

 

Lately, the growth of omnichannel commerce solutions has further fused the online and offline retail businesses for brands. Omnichannel buying enables offline smart stores to act as extensions of the brand’s online presence. For example, many brands such as Starbucks, Van Heusen, Zivame, Pepperfry, Adidas offer buyers the option to buy online and pick up the orders at physical stores. This becomes a true win-win for the buyer and the seller, owing to the flexibility and convenience that incorporated.

The Digitization Impact on Offline Store Experience  

Given the plethora of technologies available, physical stores selectively deploy technology based on the specific business goals in target. Once the goals are defined, enabling technologies can be chosen and implemented.

 

One obvious goal for a retail brand is to enhance the overall shopping experience, for every customer who walks in. Another is to boost store footfalls.

 

Let us look at some in-store technology use cases below:

  • Augmented Reality

Headsets and devices to help users superimpose digital environments in real-life environments. Many brands deploy devices built on augmented reality to enable customers to experience the product. Car makers such as BMW and Range Rover use AR devices to allow users to experience the vehicles without physical driving.

 

  • Virtual Reality

A number of retailers have taken to using VR to show virtual products to the customer. This is convenient when you don’t have the product available in-store. For example, in its store in Amsterdam, Marks & Spencer has a virtual, real-life size dress rail on a touchscreen, allowing shoppers to browse through the latest offerings. Another instance is IKEA building a VR store experience through pop up stores in the Middle East, where visitors can view, and shop IKEA’s furnishing products by wearing VR headsets.

 

  • Artificial Intelligence

AI has multiple applications in a physical store. The most familiar instance is that of Amazon Go, which deploys AI to track purchases and enable a seamless buying experience, in a cashierless store. The landscape of AI applications in physical retail is still unravelling itself. Some instances include the deployment of voice AI to get customer service and enable customized store settings, interactive dressing rooms and self-checkouts based on AI systems. The future possibilities are endless.

 

  • Facial recognition

China is considered a leader in the adoption of facial recognition to enhance in-store retail experience. Customers pay by scanning their faces, which in the database are linked to payment details; shopping is seamless and the entire process beats identity frauds. Another benefit is that shoplifters can be identified by the system as soon as they enter the store.

 

  • In-store sensor technology

Allows for use of in-store analytics capabilities to drive better customer experience. While sensor technology pertains largely to on-the-go-billing and merchandise tracking — for eg., RFID, and sensor-fitted shelves to spot misplaced stock– the benefits reflect in boosted sales, merchandise management and enhanced store layout, among others.

 

Way Ahead

When a customer visits a store, it gives the brand an opportunity to create a delightful and memorable experience. Digitization can play a major part in  creating these lasting relationships with your customers by :

  1. Offering multiple options such as interactive kiosks and AI-powered bots to reduce the stress on the sales personnel. This self-service environment makes for happy shopping experience for the visitor. Use of AI-powered bots at the store can assist sales by gathering customer data without staff intervention. Similarly, AI-powered kiosks support self-service to a great extent by auto-matching customer preferences to product recommendations.
  2. Bridging the online-offline divide in retail business through omnichannel commerce – for instance,  allow shoppers to pay online and nudges them to visit the store for order fulfilment. Or allow in-store customers to place orders online and deliver it to their doorstep.

 

Once businesses have mapped business goals to technology and implemented it, it is vital to measure impact and gauge the ROI prior to scaling. In fact, planning your investments on digital technologies must accompany pre-defined measuring mechanisms to check if the technology meets pre-set branding or business goals. In simple terms, the digitization efforts must favour the customer as well as the business. To stay on track,  your business must build a consistent performance assessment system.

 

 

 

 

Smart Store of 2020 – How Digital is Redefining the In-store Experience

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Digital is pushing the frontiers of marketing and customer engagement, especially in retail. From being product-centric in early days, retail has quickly evolved into a full-fledged customer-centric experience. Today, digital technologies and the abundant possibilities of ceaselessly connecting with the customer has paved the way for retail to be a more nuanced, personalized experience. 

 

True, retail faces its challenges when it comes to digitalization, given its strong association with being a ‘touch and feel’ experience; something antagonistic to digital.  The industry is also undergoing transition, primarily in reaction to the relentless rise of e-commerce. While offline stores still account for 90% of retail business, their online counterparts are quickly gaining popularity through innovative marketing and focusing on the convenience factor. To keep up, brands are transforming their brick and mortar stores by adopting digital technologies that will retain the attention of today’s distracted customer through optimized, brand-centric in-store experiences. 

 

Deploying digital technologies such as IoT, AR/VR, Big Data and Machine Learning in an in-store environment offers infinite, compelling opportunities to retailers.

 

Factors Driving the Digital Transformation

 

On the face of it, digitalization for a brick and mortar retailer translates to new ways to engage and excite the customer to create incredible experiences and ́ ‘stories’. But there’s more to this narrative than building smarter store environments. Below are some factors that spur the adoption of digital technology across conventional retail stores.

 

In-store technology —  whether in the form of virtual product lanes and trials, interactive kiosks or smart displays — helps to blur the distinction between online and offline shopping experiences for the buyer.

 

It helps the brand to take the centre stage in the customer psyche and the buying channel becomes inconsequential. 

 

A novel, immersive experience at a store helps build brand recall and customer loyalty. Smart use of virtual/augmented reality can enhance store ambience, entertain visitors and build a memorable shopping experience through personalized interactions. 

 

Moreover, there are obvious cost savings that technology brings in; especially in terms of efficient staff and inventory management. A greater advantage to the retailer is the effortless mapping and analytics of data related to customer behaviour that AI-powered footfall counter and similar technologies help gather. Needless to say, such data can be valuable in planning future brand marketing. 

 

Lately, the growth of omnichannel commerce solutions has further fused the online and offline retail businesses for brands. Omnichannel buying enables offline smart stores to act as extensions of the brand’s online presence. For example, many brands such as Starbucks, Van Heusen, Zivame, Pepperfry, Adidas offer buyers the option to buy online and pick up the orders at physical stores. This becomes a true win-win for the buyer and the seller, owing to the flexibility and convenience that incorporated. 

 

The Digitization Impact on Offline Store Experience  

 

Given the plethora of technologies available, physical stores selectively deploy technology based on the specific business goals in target. Once the goals are defined, enabling technologies can be chosen and implemented.

 

One obvious goal for a retail brand is to enhance the overall shopping experience, for every customer who walks in. Another is to boost store footfalls.

 

Let us look at some in-store technology use cases below:

 

  • Augmented Reality

Headsets and devices to help users superimpose digital environments in real-life environments. Many brands deploy devices built on augmented reality to enable customers to experience the product. Car makers such as BMW and Range Rover use AR devices to allow users to experience the vehicles without physical driving.

  • Virtual Reality

A number of retailers have taken to using VR to show virtual products to the customer. This is convenient when you don’t have the product available in-store. For example, in its store in Amsterdam, Marks & Spencer has a virtual, real-life size dress rail on a touchscreen, allowing shoppers to browse through the latest offerings. Another instance is IKEA building a VR store experience through pop up stores in the Middle East, where visitors can view, and shop IKEA’s furnishing products by wearing VR headsets.

 

  • Artificial Intelligence

AI has multiple applications in a physical store. The most familiar instance is that of Amazon Go, which deploys AI to track purchases and enable a seamless buying experience, in a cashierless store. The landscape of AI applications in physical retail is still unravelling itself. Some instances include the deployment of voice AI to get customer service and enable customized store settings, interactive dressing rooms and self-checkouts based on AI systems. The future possibilities are endless.

 

  • Facial recognition

China is considered a leader in the adoption of facial recognition to enhance in-store retail experience. Customers pay by scanning their faces, which in the database are linked to payment details; shopping is seamless and the entire process beats identity frauds. Another benefit is that shoplifters can be identified by the system as soon as they enter the store.

 

  • In-store sensor technology

Allows for use of in-store analytics capabilities to drive better customer experience. While sensor technology pertains largely to on-the-go-billing and merchandise tracking — for eg., RFID, and sensor-fitted shelves to spot misplaced stock– the benefits reflect in boosted sales, merchandise management and enhanced store layout, among others. 

 

Way Ahead

 

When a customer visits a store, it gives the brand an opportunity to create a delightful and memorable experience. Digitization can play a major part in  creating these lasting relationships with your customers by :

 

  1. Offering multiple options such as interactive kiosks and AI-powered bots to reduce the stress on the sales personnel. This self-service environment makes for happy shopping experience for the visitor. Use of AI-powered bots at the store can assist sales by gathering customer data without staff intervention. Similarly, AI-powered kiosks support self-service to a great extent by auto-matching customer preferences to product recommendations.
  2. Bridging the online-offline divide in retail business through omnichannel commerce – for instance,  allow shoppers to pay online and nudges them to visit the store for order fulfilment. Or allow in-store customers to place orders online and deliver it to their doorstep.

 

Once businesses have mapped business goals to technology and implemented it, it is vital to measure impact and gauge the ROI prior to scaling. In fact, planning your investments on digital technologies must accompany pre-defined measuring mechanisms to check if the technology meets pre-set branding or business goals. In simple terms, the digitization efforts must favour the customer as well as the business. To stay on track,  your business must build a consistent performance assessment system.

The Rise of Engagement Based Loyalty Programs

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Your customers don’t buy your product. 

 

They buy your promise.

 

In today’s world of infinite brand options and glocal markets, product differentiation is tough to keep up with, market domination is short-lived, and share of voice ever diminishing. So, how does a brand increase its sales? By transforming its relationship with its customers and making it worth their time and money to become lifetime loyalists. 

 

The Changing Loyalty Scenario

 

Some time ago, customer loyalty was measured merely by transactional metrics, such as the share-of-wallet, and the value of lifetime purchases. That was an era of transaction-based loyalty marketing. Brands incentivized customers to spend more in less time through points-for-purchase programs, use-before-it-expires vouchers, and buy-two-get-three offers. It did help in fetching more revenue, but it lacked a holistic approach. Mostly, it saw customer value in the moments of purchase, which looked more like dots across the customer lifecycle and thereby missed the arc of engagement where multiple moments-of-truth existed, and if managed well, could lead to a virtuous cycle of wealth creation.

 

Today, the paradigm of customer loyalty marketing has shifted from one with a rational, transactional focus to one based on emotional engagement.

 

It has been necessitated in part by the new generation of ‘connected’ shoppers – those highly conscious and vocal about their persona and their ideologies concerning purchase decisions. These digitally connected shoppers have enormous power to influence new purchases – by posting a product review on Amazon, referring the brand to a friend over Messenger, or recommending it proudly through Instagram. And they exert this power not because they want to buy something but because they want to engage, express and emote feelings. 

 

Thus, engagement-based brand loyalty programs that build emotional bonds with your consumers and nurture a relationship of trust and joy become far more relevant in today’s world where every consumer is a potential influencer.

 

Introduction to Emotional Brand Loyalty

 

When customers are emotionally loyal towards a brand, they keep coming back, to meet specific emotional needs (as opposed to merely transactional needs) – which may be ideological or social. Take the case of Dove’s ‘real beauty’ philosophy; it doesn’t only sell a bar of soap but reinforces the idea that ‘natural is beautiful.’ Thus it creates emotional bonds with women who ‘like to feel’ the same way. Or take the case of TOMS Shoes, which donates a pair to a child in need for every pair of shoes it sells. Customers who want to make a difference keep coming back to TOMS and ‘feel’ good about it!

 

There are three shades or ways of emotionally connecting with a brand, better known as the three components of emotional loyalty – Affinity, Attachment, and Trust. 

 

Affinity means ‘I like the brand,’ and is the first step towards a deeper emotional connection. It doesn’t, however, guarantee brand loyalty when given cheaper, or more convenient options. 

 

The second level of emotional loyalty is ‘Attachment.’ The customer feels cared for, and brand interaction is personalized and relevant. There may even be special privileges that keep the customer coming back.

 

The third and the most potent shade of emotional loyalty is ‘Trust.’ When the brand consistently fulfils its promise time and again, through every touchpoint, it earns emotional loyalty in the real sense.

 

Benefits of Engagement-Based Loyalty

 

According to Forrester Research, emotion is the #1 driver of loyalty. A study by Capgemini further reveals that ‘Consumers with high emotional engagement’ buy the brand 82% of the time whereas ‘Consumers with low emotional engagement’ buy it only 38% of the time. That’s interesting to know for marketers. But how is emotional brand engagement superior to transactional incentives in achieving brand loyalty? Let’s delve into the unique benefits of building engagement-based loyalty among your customers:

 

  • Encourage Positive Brand Conversations

By associating a reward for non-purchase actions by their customers, such as referrals, reviews, shares, or blogging, a brand can connect with many more customers as opposed to only those who end up making a repeat purchase. Thus, a brand can generate rich conversations around the product, which are long-lasting and serve as an asset for brand image. 

 

  • Unearth Hidden Customer Insights

When a brand offers its customers a safe and comfortable space to emote and engage, irrespective of whether they ultimately buy a product, it can observe otherwise unknown facts about their behaviour, preferences, aspirations, and find interesting sweet spots for meeting customer needs that are ever-evolving. 

 

  • Earn Friends, Not Just Customers

A friend in need is a friend indeed. Here we are talking about emotional needs. A customer may want to know more about an item from other users, may wish to speak to the brand representatives, or try a product for free. These behaviors may stem from a need to get assurance, feel secure, or allay any fears about using the product. An engagement-based loyalty program appreciates these needs and thus forges lasting friendships. And not surprisingly, purchases naturally follow, soon after.

 

Thus, engagement-based loyalty programs facilitate an emotional connection between the brand and its customers. They help you cultivate champions who wear your brand on their sleeve and make it a trusted name among their peers.



Best Practices for Engagement-based Loyalty Programs

 

While emotional engagement is much more holistic than a transactional one, building a loyalty program based on customer engagement is also much more complicated. Brands have to think about the indirect bottom-line impact of the various ways in which customers may engage with them. It requires a smart approach with the ability to connect the dots between customer interactions and future purchase actions. Let’s discuss some best practices to adopt when formulating your engagement-based loyalty program!

 

  • THINK TOMORROW

Engagement-based loyalty programs are for the long haul. Hence, the program specifics and execution must fit in with the brand’s vision, long-term goals, and personality. Right from the start, even the timelines to measure the impact of these programs must be longer. A monthly sales target, for example, is a bad idea when assigning objectives to your emotional-loyalty marketing initiatives. Positive word-of-mouth, say over six months or a year, makes much better sense.

 

  • KEEP IT SPECIFIC AND MEASURABLE

It is vital to gauge the performance of engagement-based loyalty marketing to assess the effectiveness and fill any gaps. Each program must have specific goals attached to it – say for advocacy program, it could be the number of positive reviews and impressions received (for those reviews). Similarly, for referral programs, the goals could be ‘the number of referrals generated’ and ‘the monetary value of referral purchases’ that follow.

 

  • COMMUNICATE THE REWARDS CLEARLY

What’s in it for your customers? While yes, a happy customer would willingly engage with your brand, there is always a cost associated with that for every customer. Some may be hard-pressed for time; others may not have enough motivation. It is, therefore, essential to stimulate them to act by clearly telling them about what they stand to gain on engaging with the brand in specific, meaningful ways.

 

  • MAKE IT ACHIEVABLE BUT NOT TOO EASILY

Meeting the engagement criteria to be eligible for the rewards must require a healthy degree of effort from your customers. Something too easy to do may attract less than sufficiently motivated customers and something too complicated, may discourage most of them. Also, there must be different levels of engagement achievable gradually, i.e., over some time. It will ensure that your customers do not end up exhausting the various engagement options too soon, and will keep them interested for months if not years.  

 

  • LIVE UP TO THE BRAND IDENTITY

Last but not least, your engagement loyalty program must have your brand DNA in it. Every customer touchpoint, when rolling out the plan, onboarding the customers, or rewarding them for positive and meaningful engagement, must reflect the promised brand personality, values, and philosophy. Together these will strengthen trust, which itself will further reinforce loyalty.

 

Together, the above principles will help you design a winning brand loyalty program that has a healthy mix of transactional and non-transactional components and treats your customers as people and not just wallets.

 

To conclude, as Philip Kotler says – satisfied customers do the best advertising.