The retail sector in Indonesia is projected to witness a growth of 13.8% CAGR by the year 2024. The reasons for this growth are attributed to the following factors.
- The retail market in Indonesia is fairly organized and companies are expanding their stores and are also looking at new areas to promote business
- Hypermarkets, supermarkets and other retail chains are replacing the unorganized sector. The retail sector is neatly compartmentalized into the above-mentioned sections and more, such as convenience stores, pharmacies, department stores and drugstores
- Indonesia has a large population. The middle class is growing in terms of purchasing power and modern spending habits. Household spending accounts for more than 50% of the nation’s GDP
- Credit costs are lower, there is an increase in employment and social welfare is expanding
- The food and beverage (F&B) industry in Indonesia is lucrative and attracts foreign investments into the country. It is supported by the raw material that is produced by fisheries, agriculture and plantations
- Indonesia is one of the largest producers in the world for coffee, palm oil, cocoa and fish and the surplus is exported abroad. Even though it imports processed food, dairy and wheat, the government is working out policies that will reduce the dependence on imports
- There is healthy competition in the retail landscape of the country. Even though some players have been dominating the market, small and mid-size companies are taking the help of product innovation and technological advancement to tap new markets and increase their presence
- Many retail brands are switching their business online. With internet connectivity becoming more affordable and robust, customers are feeling comfortable and secure on ecommerce platforms. Mobile commerce is also helping the growth of the online retail business
- The rise in tourism, the preference of customers for local brands and an increase in marketing activities are some more reasons for the healthy growth of the retail industry
The COVID-19 Scare
In May 2020, the retail sales index reduced by 20.6%. As per a survey conducted by Bank Indonesia, the sale of clothes, as well as recreational and cultural spending, took a huge nosedive. It was the biggest dip since the year 2008. The Coronavirus pandemic has shaken and shattered the Indonesian economy, even as the above survey says that things will improve in the near future and the economy will open up in the next three to six months.
A change in the Retail and Consumer Landscape
Even though the Covid-19 pandemic threw up a lot of challenges, there have been opportunities for retailers to conduct businesses differently. As the ecosystem gears up to meet the requirements of demand and supply, the ecommerce sector seems to be the beneficiary, as buyers and sellers go online to do business. Online businesses in Indonesia are expected to have a 50% GMV growth in the year 2020. The user base for the ecommerce sector is expected to grow up to more than 12 million users. Under normal circumstances, it would have taken about 2 years to reach this figure.
In the new normal of 2020, consumers prefer to have a safer, convenient and contactless way of doing business and hence the mobile wallet payments are also expected to see a significant usage adoption. OVO, Dana and GoPay are some of the big players in the market.
Consumers are getting cautious and are being careful about how they spend their money; since the future is uncertain at this point in time. Convenience and value for money are the two main factors that are driving spending habits.
Customer Loyalty Programs in Indonesia
An interesting scenario is developing in the retail industry landscape in the country. With an increase in the ecommerce business, retailers will find it pretty challenging to engage customers and maintain brand recall. Conversely, new players will find it rather easier to enter the market, given the situation of lower marketing costs. Traditional loyalty programs might not work in the current situation. Here is looking at new customer loyalty and reward program software trends in this sector.
The customer base is going to be a good mix of Gen X and Y to Baby Boomers – from letters and landlines to Face Time, Snapchat and Mobile Commerce. So it becomes very important to keep them engaged and connected, by using different modes of communication, that is convenient and comfortable for each of them
Data-driven Reward Programs
It is more important than ever to collect data about customers, using loyalty programs. Customer personalization can happen only when there is a significant data pool to work with. Using business intelligence tools and AI, companies will now fuel their marketing efforts towards robust customer engagement.
Customers in today’s times expect a high degree of personalization and say that personalized experiences drive them to be loyal to certain retail brands. This trend is seen in the B2B space that is trying to match customer experiences that are available in the B2C sector. Companies will now have to work towards improved segmentation and relevant communication, to offer this kind of service.
Seamless ecommerce integration
Businesses require automation and integration from their loyalty programs, in order to offer enhanced customer experiences. Manual processes need to be replaced by effective automation, to increase the responsiveness from customers.
Gamified loyalty programs
Game-like loyalty programs that have features such as leaderboards, points-scoring achievements and competitive elements are on the rise, to attract customer engagement and loyalty. With digital transformation, customers expect gamification as a feature in their loyalty programs; they also look forward to features that are instant and easily attainable.
Customers are no longer attracted to too many purchases to earn and redeem points because they are knowledgeable and highly informed and there are a lot of options in the market. The need of the hour is to reward customers without them spending any money on making purchases. By creating such a scenario, businesses are likely to form deep emotional loyalty and connect with their customers. Other benefits of an engagement-based loyalty program are lower advertising and marketing costs, through word-of-mouth and social media.
The good news is that in spite of the pandemic and the threat of recession looming over the retail business horizon, the economic leadership of Indonesia is in safe hands and it would be interesting to see what kind of fiscal reforms will be rolled out to handle the present and future scenarios.
Singapore has been hailed in the global community for the quick and effective steps taken to contain the spread of Covid-19. Apart from airport health checks, the country state carried out extensive testing of suspected cases; conducted rapid contact tracing of every confirmed case; confined infected contacts to their homes with strict monitoring and tracking until they recovered from the infection.
Unfortunately, the circuit breaker measures taken to contain the pandemic severely impacted Singapore’s retail sector – sales were down to 40% in April and 52% in May 2020 (compared to April-May 2019). This has been the steepest decline in Singapore’s retail sales since 1986 when the data was first recorded.
A poll conducted by Singapore Tenants United For Fairness revealed that around 6 in 10 retailers are “likely” or “very likely” to close down at least one store and lay-off staff in the next six months.
While lockdown restrictions were eased in June, sales didn’t see much of a revival, mostly due to safety & hygiene apprehensions and the absence of high-spending tourists. Unsurprisingly, retail outlets in prime areas like Jewel, Marina Bay Sands and VivoCity were among the worst hit.
The Silver Linings in Singapore’s Post-COVID Retail Landscape
The solace amidst this collective downward spiral is the 56% growth in sales for supermarkets/hypermarkets and a 9% sales spike for convenience stores and minimarts. Shares of Singapore’s third-largest supermarket chain Sheng Siong rose 39% and RedMart, the Lazada-owned online grocery service, registered 11X more unique visitors on a daily basis during the pandemic.
Grocery and hypermarkets aren’t the only sectors thriving in Singapore’s bleak, post-COVID retail landscape. Ecommerce registered a blistering growth of 125% in May and accounted for a record high of 25% of $1.8 billion in total retail sales for the month.
In a nutshell, the COVID pandemic supercharged what was already one of the fastest-growing ecommerce markets in Southeast Asia. At its current rate, Singapore’s ecommerce sales is expected to hit a staggering US$10 billion in 2020.
Government Initiatives for Boosting Ecommerce
Like its SEA counterpart Malaysia (we had previously covered the Malaysia ecommerce landscape), the Singaporean Government has been supportive of the ecommerce sector and was striving to help traditional retailers adopt digital channels for selling even before the crisis.
The government recently updated its Ecommerce Booster Package to include SME retailers. For those unfamiliar about the program, here’s a brief summary
The Ecommerce Booster Package
Ecommerce Booster Package is a government initiative to help brick and mortar retailers in Singapore to use ecommerce platforms and find ways to reach customers through digital channels.
Here’s what the package includes :
- The program makes it easier for domestic retailers to partner with ecommerce giants like Amazon, Lazada Singapore, Qoo10 and Shopee to expand their reach in the local market.
- Retailers in Singapore seeking to expand overseas can apply for the Multichannel E-Commerce Platform (MEP) Programme. This enables retailers with little or no prior experience in exporting products overseas to do so using digital channels.
- Retailers can also opt for the Digital Marketing Programme to learn strategies to optimize their digital campaigns and increase brand awareness and sales across multiple digital channels.
Even the famed The Great Singapore Sale (GSS) will be an online affair this year, featuring online deals, virtual workshops, live-streaming experiences and emerging technology like VR and AR to create a “new norm” shopping amid the pandemic. The annual sale, which will be called “eGSS: Shop. Win. Experience” this year, is set to run from Sep 9th to Oct 10th.
Can Ecommerce Redeem Singapore’s Retailers
Honestly, it depends on how retailers react to this crisis and identify ways to capture the opportunity in the digital space. A traditional retailer who is jumping on the ecommerce bandwagon for the first time will most likely be overwhelmed by the cost, resources and technology involved in setting up an online store.
An executive from Singapore’s custom flip-flop brand Fickle Store summed it up pretty well – “Everybody says it’s quite easy, but being able to do it is another thing,”
Based on our learnings in partnering with 400+ global retail brands and first-hand experience in helping large brick and mortar retailers to transition into the online space, here’s how Singapore retailers can make the ecommerce plunge easier, smoother and cost-effective.
Test the waters with social commerce – About 4.9 million Singaporeans access the internet and out of which, 3.6 million are active social media users, which accounts for a 64% penetration rate. This created a perfect substrate for social commerce to thrive. For retailers, selling through social platforms like Facebook, Instagram and Pinterest are great for gauging consumer demand and product affinity with minimal investments and risk. Social commerce selling is also cost-effective as these platforms typically charge 4-5% commissions on a sale compared to 15-30% by ecommerce marketplaces.
Do a hands-off approach with a full-stack ecommerce solution provider – As mentioned earlier, traditional retailers will need to make significant investments to set up an online store – mostly in the form of platform costs, in-house team and logistics. Rather than diving head-first into these unchartered waters and risk making bad decisions, we recommend choosing full-stack ecommerce vendors that take care of all aspects of running your ecommerce business – from setting up the platform, to sales, handling payments, customer service, warehouse management and logistics. This minimizes failure rates and is cost-effective since the vendor is usually paid as a percentage of each sale.
Sell through WhatsApp and ship from store – WhatsApp is the most popular messaging app in Singapore and is used by 73% of the population. Retailers can use WhatsApp Commerce to empower store staff to interact with customers using personalized product catalogues, engage them with real-time videos and complete the payments through a link. The delivery can be done either by a store executive or through last-mile delivery services like SingPost, Pickupp, Lalamove or Go-Go Van.
There exists no playbook to predict the long term economic and social impact of COVID-19. Smart retailers should closely analyze the landscape to identify opportunities and obstacles. The global response to this pandemic has fundamentally altered the reality for retailers. This is a fact all retailers should face and start adapting to.
Indonesia is by a fair margin the largest country in Southeast Asia and is home to nearly 270 million people. The country has attracted the attention of major brands, business conglomerates and investors owing to multiple factors :
- A rapidly growing segment of Middle-class Affluent Consumers (MACs)
- Young population – the median age in Indonesia is 30.2 years and 66.5% of the population is between the age of 15 and 64 years.
- Increase in internet & mobile penetration – 80% of Indonesians prefer to use smartphones to access the internet
- High Ecommerce adoption rates – 90% of Indonesia’s 152 million internet users have purchased online before.
- Rapid Ecommerce growth – Indonesia’s ecommerce market stood at a whopping USD $21.0 billion in gross market value (GMV) in 2019
Customer Engagement & Brand Experience as a Competitive Advantage
The retail sector in Indonesia remains one of the most promising markets among Asian countries and is expected to grow to $42.34 billion by 2023. However, like many Southeast Asian markets, it’s highly competitive and fragmented with few dominant players like Indomaret and Alfamart.
According to a study by SurveySenum, ‘67% of customers in Indonesia switch brands not because of the price or the features, but because of the lack of good customer experience’.
Brands typically engage in price wars and discounts to stay afloat in these commoditized markets but it ends up making a huge dent in the bottom line. Retailers aiming at long term survival and success in the Indonesian market will need to invest in elevating the Customer Experience through personalized, omnichannel engagement, loyalty program enhancements like gamification, social commerce enablement and world-class after-sales support to capture the interest of the digitally-savvy consumers.
Indonesia is a Gold Mine for Omnichannel Marketers
With over 170 million internet and social media users, Indonesia is home to one of the largest digital audiences in the world. As of January 2020, online penetration in the country stood at a whopping 60%.
For most Indonesians, social media is a convenient way to contact families in remote locations of the archipelago, allowing them to stay in touch with friends and also keep up-to-date with the daily news. The most popular social networks in Indonesia in terms of adoption rates are YouTube (88%), WhatsApp (83%), Facebook (81%), Instagram (80%) and Line (59%). However, Indonesia’s social media audience isn’t merely large, they are also very active. The average Indonesian spends 3 hours and 26 minutes on social media every day. This is a significant spike compared to the global average of 2 hours and 22 minutes.
Indonesians are also heavy mobile internet users. A Google Consumer Barometer survey found that 81% of Indonesians prefer to use a smartphone to access the internet, with only 3% preferring the desktop. A recent report by iPrice supports this, indicating that 87% of shopping in Indonesia is done on a mobile device.
On the other hand, there is a steady stream of low-income consumers continually moving into the middle-income segment and they are becoming increasingly sophisticated in how they engage with brands and decide what to buy. This will fuel a further increase in tech-savvy consumers who are ‘channel-agnostic’ and expect to receive personalized experiences in real time across email, SMS, social media, website and mobile apps.
Top 5 Customer Engagement Trends in Indonesia
While discussing trends, it’s important to remember that brands should adopt new technology or platforms not because it’s the latest buzzword but rather critically evaluate how it contributes to a better experience for their customers. On that note, here are the top 5 customer engagement trends prevalent in Indonesia.
The blurring lines between social media and commerce
Social commerce is gaining rapid momentum in Indonesia thanks to the higher social media penetration. Brands are finding it easier than ever before to start selling through Instagram and WhatsApp Commerce by engaging customers with real-time videos and personalized product catalogues.
According to Indonesia’s Ministry of Finance, 64% of all ecommerce transactions in 2019 occurred through social media. The Covid-19 crisis provided a further boost to the adoption of social commerce in the region. While establishing a social commerce strategy, it’s important for brands to deliver a personalized customer experience by integrating it with their existing tech stack like loyalty platform, marketing automation and CRM.
Indonesians have a higher distaste for Ads
While there is a growing trend of ad blocker adoption across the globe, it has seen explosive growth in Indonesia. A staggering 58% of mobile users in Indonesia have enabled one or more types of adblocker. In comparison, mobile ad blocker adoption rate is 28% in India, 13% in China and 1% in the US and UK. It is apparent that consumers are not interested in generic advertising and it is crucial for brands to use highly personalized engagement to drive high-value conversations.
The rise in demand for personalized, real-time, cross-channel engagement
On any given day, Indonesians use a plethora of digital platforms like WhatsApp, YouTube LINE, WeChat, Instagram, Facebook Messenger, Email, Mobile App, SMS etc. They are also increasingly judging brands based on how it interacts with them across these channels. Unfortunately, one of the key challenges that Indonesian marketers face is managing the sudden surge in data brought about by this rapid digital adoption by customers.
This often leads to disjointed and ineffective customer engagement, which ultimately leads to a negative Customer Experience. Our experience with retailers in other emerging economies like India, Saudi Arabia and Malaysia clearly indicates that a combination of Customer Data Platforms (CDP) and cross-channel engagement solutions like X-Engage can significantly improve customer engagement through unified data pools, hyperpersonalization besides delivering higher campaign ROIs.
Gamified loyalty programs will be key to drive deeper engagement
Gamified loyalty programs are simply engagement-oriented reward programs that focus more on the non-purchase aspects of customer engagement. Unlike traditional loyalty programs which are heavily focused on earn/burn aspects of a transaction, these new-age loyalty programs are geared towards the digital consumer who wants to be rewarded for social actions like reviews, comments, shares, retweets etc.
- Location-based mobile interactions
Considering the high smartphone penetration in Indonesia, it’s no surprise that several brands are experimenting with wi-fi beacons and very granular IP addresses to deliver location-based promotions and offers. While the technology has been so far used by shopping malls to invite shoppers to download a proprietary app to get access to exclusive details and sale information, we expect this trend to be adopted by Single Brand Outlets (SBSs) and large department stores. For brands, there is also an exciting possibility to use location data to improve their social media strategy by engaging customers across Facebook, WhatsApp, Instagram etc.
While Indonesia’s geography and fragmented topography render it unique, the audience shares similar behaviour and aspirations as other emerging markets in Asia. The winning playbook for brands is to understand their customers, invest in AI-powered digital/technologies and analytics, and seize the opportunity to engage customers in a highly personalized way to improve brand loyalty and sales.
In a sense, the Covid-19 pandemic has changed the way we work, shop and communicate with people more than any other technology in the recent past. As more people start working from home, they are sticking to basics, stepping outside only to buy essentials and are constantly worried about the risks of getting infected in crowded places like malls and supermarkets.
Being associated with Capillary Technologies, which works with the majority of retail brands across India, South East Asia, Middle East and China, I was able to witness these shifts in consumer behaviour and retail trends from close quarters.
Covid-19 Epidemic is Creating a Paradigm Shift in Consumer Behaviour
Spurred on by a trifecta of smartphone penetration, cheaper 4G networks and increasing consumer wealth, the Indian ecommerce market was expected to grow to US$ 200 billion by 2026.
That projection was based on customer and market research in a pre-Covid 19 world. But in the last 2 months, both the market landscape and consumer behaviour has altered beyond recognition and there is clear indication that the industry will hit the US$ 200 billion mark much sooner.
Some of the key consumer behaviour changes, according to a survey by NRF
- 9 in 10 consumers have changed their traditional shopping habits.
- More than 50% of consumers have ordered products online that they would normally purchase at the store
- Nearly 6 in 10 consumers say they are worried about going to the store due to fear of being infected
While some of these changes are no doubt temporary, others will be permanent. As the community moves beyond the ‘survival’ mode, the digital-adoption momentum is likely to carry forward and become permanent. This inflection point will be primarily shaped by two major shifts in customer behaviour – the reluctance to mingle in crowded public places and higher propensity for digital adoption.
As the recent Mckinsey study in China suggests, consumers are likely to opt for online shopping even after the outbreak ends, especially for categories such as groceries and personal care. This trend is likely to continue long after the lockdowns are called off as people would still be apprehensive to visit crowded areas like malls or supermarkets.
A survey by eMarketer revealed that nearly 60%-85% of internet users across China and South-east Asia have avoided crowded public places to mitigate the risk of contracting the virus.
In short, the Covid-19 outbreak and 2020 will mark a tipping point for the adoption of ecommerce and mobile commerce platforms.
The Emergence of a New World Order in Retail
We believe retail is at an inflection point – and this is the start of a “A New World Order” in terms of how consumers shop and the way the retail industry operates. Retailers will need to be agile in adapting to this zeitgeist, since the prognosis for brands that miss inflection points is not great —cases in point, Kodak and Nokia.
Under this New World Order, retailers across diverse categories cannot rely entirely on their offline presence even after the lockdowns are called off. They will have to inevitably adjust to the new norms of online buying. This will become even more relevant for categories like groceries and personal care where previously the propensity to buy online was low.
The Leaders, Survivors & Laggards in this Retail New World Order
This “New World Order” as we envision it, could force every retailer to embrace omnichannel ecosystem and converge the operations of their online and offline stores. Not doing so, will mean suffering huge loss in revenues. So who will be the leaders, survivors and laggards in this New World Order?
The leaders would be agile retailers, who upgrade to an omnichannel ecosystem and constantly introduce innovative shopping experiences by analyzing the new buying behaviour. They would be closely followed by the survivors – pure-play digital platforms who have their own e-store and are sell on major online marketplace platforms.
The laggards in this race would be the pure-play offline retailers who are still waiting it out with the hopes that old buying habits and the demand will be restored post the lockdown period.
What Retailers will Need to Rethink in this New Scenario
Prior to the Covid-19 epidemic, traditional enterprise retailers were focused on driving growth, and acquiring market share with physical stores as their epicentre. Increasing traffic to their online store was not a major focus and took a backseat compared to driving footfalls to their physical stores. Brands had made peace with the volume of online orders and the reduced margins from online aggregators as long as the orders kept flowing in.
Historically for omnichannel retailers with both online, offline and marketplace orders (who serviced orders across a physical store, their own e-store and the marketplace) the average orders and the % margin distribution for online orders looked something like this.
*These numbers are based on our research data from our top 10 retail customers across China, South-east Asia, India and Middle east. We have assumed a common 30% commission for marketplace orders and the common margins observed by retailers.
Approximate Online-Offline Split in Buying Trends for Traditional Brands before the Covid-19 Slowdown
|Type of e-orders
||Volume of Orders
|Online orders mainly serviced by aggregators
As the consumer behavior changes, retailers will witness an increasing dependency on the online orders. Projecting on some of the behavior and channel mix we are witnessing in markets like China, the volume mix will look something like as depicted in the table below. As dependency on the marketplaces increase (and hence their clout), so will the possible margins being charged by them.
Expected Online-Offline Split in Order Volume and Margins in the New World Order
|Type of e-orders
||Volume of orders
|Online + Marketplace orders
Retailers will have two options. They can continue to fulfil orders via online aggregators and hence lose a higher chunk towards margin, and affecting bottomline. Or they can set up their own brand.com in order to restrict the revenue bleed (not to mention also reaping other long lasting benefits viz. fostering brand loyalty etc.). Nike pulling back from selling on Amazon to focus more on its direct-to-consumer business being a case in point.
Will this spell the end of Offline Retail?
As much as I claim that the New World Order will be ruled by online buying patterns, we also realize being innovative with different store formats can become a differentiator for brands competing in similar categories.
For instance, an omnichannel retailer can differentiate itself from online aggregators by transforming few of the stores into experience zones to offer an experiential buying experience. We will see more of such strategies being deployed by brands on the lines of omnichannel furniture retailers like Urban Ladder and Pepperfry, but in more diverse sectors
In these times of crisis, retailers are increasingly using physical stores as fulfillment centers to turn inventory over quickly and cut losses. Omnichannel retailers, who innovatively utilize their physical store space will inevitably be the winners of this new world order.
How Retailers can Quickly Adapt to this New World Order
With continued uncertainty, I predict that brands that are currently the most receptive and agile in adopting these new norms of customer behaviour will prevail than those who wait it out. So, what can retailers do to cope with these constantly changing buying patterns and quickly cope with the new world order.
- Digitization should become a priority
Based on data from our clients in China, the Covid-19 crisis has clearly favoured omnichannel retailers when it comes to minimization of the negative impacts. Therefore, offline retailers must approach the lockdown period as an opportunity to build a strong online presence.
Retailers with an online presence, must capitalize on the recovery trends by introducing innovative ways of fulfilling orders – be it establishing an Online-to-Offline(O2O) platform or building sophisticated digital logistics and payment reconciliation capabilities to be in the lead in this race to recovery.
- Focus on improving the visibility of own e-commerce website
The only way retailers can combat the increasing order volumes and diminishing margins from their online aggregator counterparts would be to focus on improving the visibility of their e-store.
As part of these efforts to improve online visibility at a reduced cost, brands should also capitalize on their existing customer data to drive traffic to their own online website. This involves using robust retail CRM and marketing automation systems to take control of existing customer data.
- Become innovative with personalized engagement
Brands will need to improvise and capitalize on online personalization efforts to differentiate themselves from their competitors and online aggregators. Personalized engagement will play an important role especially in selling essential category items (groceries, medicines and personal care/wellness items) as consumers seek increased communication and trust about the quality of these products.
Brands can deploy personalized engagement beyond discounts or offers by keeping their consumers posted about their internal developments – be it about the store operations in their nearest neighbourhoods or even to just convey words of empathy and care about the current situation. For instance, restaurants can actively communicate about the hygiene steps they’ve taken to increase confidence amongst customers. Personalized engagement platforms can enable brands to also communicate about shifting their operations online and reallocate some of the store credits that can be redeemed online.
To sum it up, we all knew the world was turning digital. A new order was being established. But for all we know, the pace has suddenly increased exponentially. It is at our doors, knocking down the traditional walls right now, as opposed to by 2030 as we all were expecting. This New Order will require a paradigm shift in strategy from brands. Only the agile ones will survive. Only the ‘Truly Omnichannel’ ones will prosper.
Does your loyalty program and customer engagement programs account for changing customer preferences?
With over 7 billion global cell phone subscribers and nearly 1.7 billion active social media accounts online, the world continues to rapidly digitize. With ever demanding customer expectations, retailers need to continuously innovate with technological solutions that go beyond the online transactions.
As a retailer, you can leverage the ubiquity of mobile phones and the growing popularity of social media to ensure customer satisfaction while driving footfall and conversion rates. So let’s ask the key question: Does your loyalty program and customer engagement programs account for changing customer preferences? Consumers today don’t like stacking up their wallets with loyalty program cards. They prefer an easy and adaptable mobile app loyalty program.
The Different Facets of Digital Loyalty Programs
Technology acts as an enabler in designing loyalty programs that encourage customer adoption and customer loyalty. Depending on your mobile loyalty application vendor, you can set your own rewards or use pre-defined rewards. The following three steps outline the prerequisites for implementing a successful digital loyalty program:
Define the program goal and the target audience: It is necessary to first identify the primary goal of the loyalty program (increase in repeat customers, increase in average order size, decrease in customer churn, etc.) and the intended target audience.(high loyal customers, repeat customers with high order size, etc.)
Set and measure ROI objectives clearly: While your loyalty program should motivate your target audience, it should also ensure positive ROI for the business. A well thought out loyalty program should consider the needs of both your customers and your brand. Merely setting goals is not enough; you need to ensure that there are credible means to measure these goals and incorporate mechanisms to improve upon existing systems.
Promote your program through the right channels: Again, merely implementing a loyalty program is not enough, you need to promote it wisely. Social media, email marketing, and mobile marketing are the main channels you can use to successfully build program awareness. You can also use various other creative means by using content promotion and syndication tools to promote your programs.
Executing a Successful Digital Loyalty Program
Capturing customer information is a prerequisite to execute any successful loyalty program irrespective of the channels they were acquired from.
Typically, a customer’s mobile number is often used as a unique identifier for a program registration. Customers may need to enter their mobile number into a kiosk at an outlet; alternatively an in-store device may automatically recognize their phone and punch a mobile card. For home deliveries, a QR code on the receipt can be scanned to add loyalty points. Online purchases also automatically add points to the customer’s account. Your mobile loyalty program should easily integrate with email and social media so that you can send tailored offers to repeat customers based on their buying patterns; and customers can share offers via social media to earn additional loyalty points.
Payment disruption players such as Google Wallet, Apple Pay and a surge of other prominent players such as Paytm, Citrus, etc. are changing the way people transact at retail outlets. Your mobile loyalty app should be able to integrate with these popular payment options. Ideally, using a payment app at checkout, you should be able to fill the bill details, add a customer’s loyalty points, and incorporate any available discount coupons. It is also important to keep track of customer trends while integrating loyalty programs across mobile and social channels.
The total value of mobile payment transactions in 2016 is forecasted to grow by nearly 210%. Retailers need to capitalize this opportunity and devise the best coupon offers, loyalty program deals, discounts, and other campaigns that can be accessed through mobile wallets.
So, go ahead and stay competitive by building an omnichannel loyalty program that incorporates the demands of today’s digitally savvy customers.
Image Source: PYMNTS