In the first part of this two-part blog series, we touched upon why CPG loyalty is important and what are the latest trends to keep in mind for CMOs while executing brand marketing strategy. In this part, we take a deeper look at the challenges that marketers must address while building a loyalty program.
Imagine a customer walking into a grocery store. Their eye catches colorful packaging embossed with not just brand names but offers and prizes.… In this intense battleground, how is your brand going to stand out in the aisle?
CPG loyalty programs: Challenges faced by marketers
One thing that stands out as the biggest hurdle when implementing loyalty programs for CPG brands is that brands in this sector often lack direct relationship with customers. They are mostly reliant on retail stores for inputs. This dependency leads to several challenges. Some of them are stated as below:
- Limited Customer Database: CPG manufacturers have no physical avenue to capture customer information (transaction data) since it is heavily reliant on the Point of Sales (POS) integration. This creates a vacuum between the brand and the customers and limits customer acquisitions and data capture. Capturing data will go a long way for companies to stay consistently relevant to consumers.
- High Marketing Cost: Consumers are regularly bombarded with ads and billboards on a daily basis. While it’s no cakewalk to come up with catchy content, the engagement through these mass campaigns and advertisements is limited, with no personalization. Generic promotions and offers may not be relevant to every customer, leading to low engagement and redemption.
- Quickly evolving customer preferences: Customer preferences change more rapidly in the CPG space than any other industry. Take the apparel industry, for example – fashion trends change quite frequently in a span of just few months. CPGs are typically low cost items with various competition products available in markets. This contributes to low customer retention with the brand, as customers are inclined to make compromises in their purchases if the preferred products are not available.
- Heavy reliance on retailers: Over the decades, there has been massive seismic shifts in the CPG landscape, in terms of advertising and promotion. While manufacturers wielded this power in the 1980s, the power shifted to the retailers in the 1990s, as they had full access to the POS and scan data. In the current scenario, the power lies in the hands of the customers. The consumers’ choices are heavily driven by social media and information. Therefore, it is important for companies the embrace these shifts and let it drive retail strategies.
- Difficulty in predicting profit: Due to the lack of direct communication between brands and customers, it becomes extremely difficult to measure cumulative customer value over time, to increase the customer loyalty necessary to maximize the Customer Lifetime Value.
- The inevitable competition: While competition exists in all sectors, but it is far more intense when compared with other industries, given that CPGs are fast moving products with the risk of customers switching brands at any moment. It’s challenging for companies to break away from this clutter with brands offering same products and prizes.
CPG loyalty program: How to design an effective CPG loyalty program
- Data is the key ingredient: To stand out in the grocery store and build brand loyalty, data becomes the key pillar for engagement strategies. Today’s consumer is constantly researching, shopping, and engaging with brands online, producing new data sets every minute. CPG brands can collect this data, unify data silos across all such touchpoints using platforms and solutions. The unified data should contain omnichannel consumer interaction, data from supply chain, marketing, and secondary research data, resulting in an all-encompassing view of the touchpoints. This holistic customer data management strategy is a prerequisite to build a valuable loyalty program that maintains dialogue between brand and customers, leveraging customer feedback on products and offering discounts to tailor better engagements. This also sets a platform to share information on product benefits and new product launches, apart from hyper-personalizing messages. Brands can also incentivize customers who share personal information in exchange of rewards and an overall transparency from the company, given that consumers have become increasing intentional about the data they share.
- Digital strategy brings customers closer to brands: CPG brands are now looking to stay relevant with the digital transformation, investing in direct-to-consumer models. Brands must then focus on leveraging digital channels for an optimum loyalty program, and cultivate the desirable behavior of purchasing online. Mobile applications and Microsites serve as the primary interface of interaction between brand and customers, thereby reducing reliance on retailers and trade partners. This creates a win-win situation for both consumers and brands – while consumers experience ease-of-use through digital channels, customer acquisition, data and reward redemption can be easily facilitated for brands.
Several large CPG brands have taken their first steps in this digitized journey. For example, Colgate dove in to a digital-first marketing campaign for their new electric brush that is targeting millennial users. Paired with innovative messaging, this push for ecommerce sales has given the company an edge over competitors, and hopes to deepen its bond with consumers.
- Focusing on brand values and ethics: After several months of intense research, Nestle recently launched the vegan KitKat. The company came up with the 100% plant-based alternative to the popular chocolate bar after huge consumer demand. Veganism is just one of the recent trends in the consumer landscape that CPG brands must incorporate in their brands. As we have already seen that 40% of the global consumers are Gen Z, and it has become an important marketing strategy to align products based on their needs. As the newer variants of products get launched, it is paramount to use loyalty programs to boost sales. Consumers can be incentivized to use these new products. Brands can also introduce personalized offers for consumers based on previous purchases and preferences.
Capillary’s pioneer in CPG sales, Kunwar Keshav emphasizes on observing the new generation’s needs, saying: “The era of conscious consumption is here, and the newer generations are watching brands more closely for sustainable packaging and marketing. While these new-age concerns need to translate into the present production strategies, brands can use loyalty programs as a medium to transparently communicate about such process changes and messaging.”
- Incorporate Gamification elements– Gamification is especially useful in increasing customer engagement for CPG brands. Brands can apply games like spin the wheel as a way of unlocking rewards, providing incentives to customers to stick to your brand via awarding of badges and stickers. Gamification can boost non-transactional interactions and drive short-term behavior change like product awareness and trials. When Kellogg’s launched Krave, they hoped to direct the marketing at younger consumers. So, the breakfast cereal company made it a point to launch the product in social media channels for the first time. The brand launched a Facebook treasure hunt game that offered daily prizes and giveaways.
Let’s future-proof your brand with agility…
In a recent Harvard Business Review article, Janet Balis (Partner at EY Consulting) writes 10 sharp marketing truths that emerged after the pandemic. While many of them reiterates the importance of customer-centricity, one of the pointers discusses about how agility has become a marketing approach rather than a technology process. In terms of building CPG loyalty, this requirement to implement agile marketing strategies is an advantage.
The Consumer Packaged Goods (CPG) sector growth soared by almost 5 times in 2020!
However, forecasts also suggest that this growth may slow down, owing to small business competitors. Is a comprehensive loyalty program, an answer to the shifting consumer preferences?
Enter CPG loyalty. A clear path for CPG manufacturers to improve repeat sales and build a strong relation with distributing retailers and customers. This is a two-part blog series where we will unveil the length and breadth of CPG loyalty. Let’s dive into how loyalty programs have in the past and will transform the CPG sector revenue game.
CPG loyalty programs: In retrospect
Little did we know that CPG loyalty programs evolved since 18th century from the simple act of American retailers distributing special copper tokens to regular customers! Let’s take a look at the timeline from the past where retailers promoted repeat sales:
While these loyalty programs hooked customers, CPG brands had no structure behind crafting these programs. CPG marketers then did not have enough customer data to make strategic decisions based on customer preferences. They did not even have access to the point of sales at retail stores. While getting third-party data was an alien term, it did not allow them to build a deeper connection with consumers. But now in today’s digital age, ecommerce and loyalty programs give CPG brands the opportunity to create this direct connect.
The sudden shift of CPG brands towards loyalty programs explained
Post Covid and global economic slowdown, the first instinctive reaction of consumers was to stock groceries and other essential products. Owing to the huge demand, the average basket size went up but many consumer goods brands went off the shelf quickly. During this time, consumers stepped aside and opted for (a) alternatives to try other new brands or (b) purchase economical substitutes due to the reduction in household income caused by the pandemic. This posed a huge opportunity in incentivizing buyers not to shift their loyalty towards a specific brand through offers, discounts and other freebies.
The global CPG consumer profile report suggests that more than 40% of the consumers are from Gen Z, who chose products based on their personal values and interests. While in 2010, the common trend was to save money and opt for cheaper labels, principled values and views are a priority for consumers today. Therefore, CPG brands need to brace themselves to encounter such radical changes in customer behavior, attitude and engagement through loyalty programs.
CPG loyalty programs: How it benefits brands
- When customers enroll into a loyalty program, they also provide credible data on their buying preferences, giving brands an opportunity to understand them better.
- Companies can nudge customers to provide feedback, leading to improvised and relevant products.
- By introducing engaging aspects like gamification plugin in loyalty programs, engagement level with the brand goes up.
CPG loyalty programs: How Capillary benefits CPG brands with loyalty programs
CPG loyalty unfolds into two broader categories – While a business-to-business (B2B) loyalty program strengthens the connect with the retailers, a Direct-to-consumer (D2C) loyalty program would give brands an opportunity to directly reward consumer. At Capillary, loyalty experts ensures a brand’s core objective is considered before designing a CPG loyalty program. Let’s take a look at the two brands that leverage CPG loyalty programs using Loyalty+.
- D2C loyalty Programs
A multinational personal care products manufacturer uses Capillary’s lifecycle marketer, which is an omnichannel campaign manager to capture customer database via multiple channels like the offline stores, ecommerce platform, Facebook etc. and run targeted promotions. The brand now has better visibility, seamless customer journeys and is able to reward them at various touch points in the journey, thereby increasing repeat sales.
- B2B loyalty programs
One of the most-loved app-based loyalty program set up by Jotun in the Middle East does it really right. The multinational chemicals company wanted to enhance their relationship with painters across Middle East, persuading them through rewards to promote Jotun paints. Their loyalty program had achieved almost 50,000 registrations in 2 years, resulting in a conversion of 45% of repeat shoppers thereby building a brand advocacy as well.
CPG loyalty programs: Features
- Gateway to a more data-driven marketing: While CPG manufacturers and retailers have never really collaborated for customer data, challenges posed by Covid had pushed them to mutually exchange data. Even in the absence of the pandemic situation, experts suggest that the manufacturer-retailer collaboration is critical for both day-to-day business and long-term values. A Mckinsey survey, shows that winning CPG companies use databases shared by retailers to analyze the shoppers’ baskets and demographics, leading to focused marketing and rewarding programs. Clearly, big data is enabling CPGs to be more accurate than before, through syncing social and transactional data.
- Connected packaging: Packaging is the one of best ways for CPG brands to reach directly to consumers. Also known as connected packaging, it allows shoppers to point their smartphone at a QR code printed on a package, which acts as an access portal to product information, incentives, and other ways for them to communicate with the brand. With this solution, CPG brands have been seeing higher interactions with customers in categories that are typically considered low-engagement, such as cleaning and laundry products.
- Authenticity over trendiness: Freedom to express, straightforwardness, openness to diversity – these are some words that we can use to describe Generation Z. Their ‘search for truth’ behavior also translates to what they look for in stores. Therefore, Gen Z want all the information they can get about a brand and its image — from product to packaging and marketing. Staying true to the brand’s promises is crucial for marketing campaigns. It could be your brand following sustainable practices or providing health benefits it claims to give. These are the kind of moral values and promises that consumers of today are looking for.
- Social media marketing strategies directed towards Gen Z: Generation Z was also the first one to be born after internet was commercialized, therefore digital experiences are a non-comprisable part of their lives. While social network usage patterns may vary across the world, it is obvious that most consumers are on social media, and frequently use it to find or post reviews about products. Incidentally, CPG products and social media have one thing in common – they are used every day. So it naturally makes sense for brands to promote their marketing campaigns on this medium. Marketing in social media also opens the doors to influencer marketing, another catchy trend among brands. This is a phenomenon where online influencers promote or review products in favor of a brand. In a survey by Influencer Marketing Hub, 90% of the consumers felt that influencer marketing was effective. The industry is expected to grow to up to $13.8 billion in 2021.
CPG loyalty programs: The evolution
The pandemic has stunned the world economies, changing customer behavior and undermining traditional CPG marketing strategies. To push past this struggle to revival and win the competition for customer trust, pivoting to a marketing strategy with a robust loyalty program is the best way forward. In the next part of this blog series, we discuss the different challenges in implementing CPG loyalty and how brands can design their rewards programs agilely, paving the way to tackle any major crisis and achieve long-term success.
While the pandemic has overstayed its welcome by now, the evolving consumer behaviour is here to stay. Breaking free from the work-from-home during the week and compensating for the lost time in shopping malls through revenge shopping, the dynamics is definitely shaking up the sleepy retail markets.
Clearly, the pandemic accelerated the online shopping trend. In India, it is forecasted that the ecommerce market will grow up to 25-30% annually in 5 years to reach up to $140 billion by FY26. In the same report by Bain & Company Inc., it is mentioned that this growth would be especially evident in Tier-2 Indian cities, accounting for four of every five consumers.
Early this year, when Aneesh Reddy (Co-Founder & CEO) conversed with Ashish Dikshit (MD, Aditya Birla Fashion and Retail) of the year 2021; these trends were confirmed. Acknowledging that 2020 is a Black Swan event that brands did not financially or strategically plan for, Mr. Dixit also shared several tips that would help Indian fashion retailers gear up for what lies ahead. Here are the top 5 picks from their conversation:
1.See ecommerce as an opportunity
Will ecommerce eat up offline retail? Ashish says this is an unavoidable question of the year for all the brands. While the downfall of brick and mortar is pretty steep, there has been a democratic and universal shift to ecommerce. Ecommerce is fundamentally creating a new channel, and instead of seeing the medium as a threat, companies should see it as a way to expand their distribution like they have never done before.
2. Don’t miss the big fat Indian weddings!
Ashish was quite optimistic that the big fat Indian wedding would be back to its glory soon. Weddings are exuberant occasions that play a big role in the Indian fashion industry. With further economic growth in the country, the financial migration of lower income to middle income is coming soon in the next decade. These consumers will move from basic essentials to products and service of expression, marking an exciting time for the retail industry.
3. Watch out for casualization and premiumization in Indian consumer’s wardrobe
Typically, brands start out by producing something that they excel at, and hence customers see the value of the product. But over a period of time, brands have understood that the focus needs to shift from the product to the consumer’s occasions, consumption patterns and habits. Therefore, a whole spectrum of clothing arises – from strict formal, to smart formal. This will move to relaxed formals and to smart casuals, and so on. Brands need to watch out for these changes in how people want to dress. Ashish elaborates this as he says, “In my time, we could go to an evening get-together and an office in the same clothes. This started to change. What you wore to a club, what you wore for lunch on a Sunday, what you wore during an important meeting and what you wore on a regular working day, are all different. As the stratification of occasions and wardrobe started to happen, we also continued to evolve the brand.”
4. Let your innovation run wild while starting up
Start-ups are always known to bring their unique ability to bring technology to the table. Among the various ways that data can be used, start-ups can address the tediously long lead time in the fashion industry while creating new outfits. Ashish echoed this thought, “It takes us 9 months to put out a product that goes through designers, supply chain, sourcing, manufacturing and distribution. And then it takes less than 30 seconds for a person to walk in and say ‘No, I don’t like this collection.” Consumer behaviour definitely rules the market.
5.Hold on to your franchise
Ashish further adds that no businesses can survive, if franchises are not successful. Offline stores are now being used to drive fulfillment and are converted into a place of deeper engagement. For example, stores are connecting with customers on video calls to help them shop remotely. In this new default, we will be seeing a lot of change in engagement metrics, where stores and franchises are trying to differentiate and make a mark in their location. Ashish advises retailers not to let go of franchises as their relationship will help grow the business and open more stores.
The fireside chat has even more insights on how your fashion brand can get retail ready in this changing world, tune in to the full webinar here.
Over the past two decades, Singapore has become the hub for everything – entrepreneurial, financial, retail, fashion, cultural… you name it and they have slayed it! In this blog, we will highlight how some of the latest ecommerce trends in the country has led to the dawn of a digitized hub.
Singapore was not new to ecommerce. Even before the pandemic era, there was a major disruption in the retail market with booming ecommerce and closure of traditional shops in 2017. In fact, a survey by Visa in 2014 showed that Singaporeans are the top online shoppers in South East Asia. While 26% of them were shopping online once a week, almost 50% of the shoppers said that they were likely to do all their purchases online.
This was primarily due to the level of internet penetration in Singapore. The digital infrastructure in the country enabled to achieve up to 88%, with a big chunk of the population comfortable with digital payment modes. It was also observed that high preference for online shopping was due to convenience, cheaper prices and direct delivery. While globally ecommerce retail jumped, online sales doubled in Singapore, demonstrating that consumers slid into the retail shift with ease. This also showed evidence that retailers that had an online presence before survived the economic crisis caused by Covid.
And therefore the trend was already set. Ecommerce in Singapore was flourishing, and marketers now have to match the pace of Ecommerce growth by learning the dynamic trends of the landscape. Let’s take a look at what’s trending in online shopping from this boom that retailers can draw cue from:
1) Store in their hands
The younger population of the country emphasize on the higher smartphone penetration. Therefore ecommerce players should lean towards giving mobile-first experiences to achieve a wider online reach. For instance, creating a mobile-friendly webpage can result in better search engine and organic traffic.
Shopee, one of the leading ecommerce platforms started in Singapore in 2015. They later spread in other parts of South East Asia. The platform sells products across different categories. One of the notable features of the platforms is its seasonal and non-seasonal offers, as well as livestreaming with popular social media influencers to gain attention from the youth of the country. Shopee grabbed the mobile-first trend and focused on optimizing user experience on the mobile app, reaching out directly to the younger users in Singapore.
2) Millenial customer experience
A 2020 study by market research consultancy Blackbox and survey firm Toluna said that almost 40% of consumers were not satisfied with their shopping experience. This shows that ecommerce platforms have a lot of scope for improvement which needs to be done by prioritizing the consumer’s needs. Introducing a chatbot to understand the customer’s concerns, also point out that shoppers would prefer an interactive medium to answer their queries. Retailers can consider using Whatsapp as a medium to get closer to the customer and understand their shopping behavior better.
Carousell, one of the world’s largest secondhand marketplace where customers can buy or sell electronics, apparels, used cars, cleaning and repairing services. To achieve empathetic and well-informed customer support, the company has implemented AI automation and data to anticipate customer needs. Carousell’s chatbot is able to find relevant solutions to consumers’ queries rapidly and accurately.
3) Omnichannel retail for stores’ revival
Even pre pandemic Singapore witnessed many traditional brick-and-mortar stores being closed. Covid had accelerated these closures. Omnichannel retail can thus play a role to bring these stores back to life. Stores can act as a pick-up point for ‘click and collect’ models where customers can buy the goods online and collect them at a convenient location of their choice.
RedMart, an online supermarket arm of the Lazada group is one of the top grocery shopping platforms in Singapore. RedMart has introduced many innovative strategies to ensure a seamless experience for consumer. For example, the platform records and automatically saves delivery preferences and commonly purchased items, leading to convenient shopping for the customer and higher conversion rates for the retailer.
4) Love for local
Post Covid, consumers’ interest in local brands is rising. This is a peculiar trend given that several international brands are found in the country. A news report by Strait Times explains that this is because Singaporeans want to support the regional brands to revive them from the Covid aftermath. This trend shows that a huge opportunity lies in partnering with such brands and attracting consumers for the right reasons.
Zalora, a fashion e-retailer that is taking over the street fashion space with its top international and local brands. Not only does Zalora partnered with several local brands through its marketplace where independent merchants can sell their products, the brand is also known for its blogs that contain guides and tips on fashion, beauty and lifestyle.
5) Go Experiential:
While consumers are engrossed in the online shopping world, retailers have come up with compelling reasons to bring customers back to stores through experiential retail. Experiential retail basically focusses on creating an immersive experiences for customers, prioritizing engagement over sales. Upcoming AI and tech solutions like augmented reality, interactive digital mirrors, do-it-yourself sections which allows customers to personalize their desired product would go a long way in building customer experience and eventually a long lasting brand relationship.
Bath & Body Works is an American bath shop brand that operates as part of the Valiram Group in Singapore. Last year, when self-care was gaining importance during the pandemic, Bath & Body Works swooped into the online space in 2020. Using the capabilities of Capillary’s Anywhere Commerce+ tool, the brand aced their ecommerce platform scalability and stability, managing a large jump in sales on the go live day of their website. Besides scalability, the brand also prioritized seamless consumer journey experience and enabled smart search merchandising on the website to resonate with their digital customers.
Digital dreams of a smart city
Thanks to the nudge from the pandemic, Singapore hopes to become a global ecommerce hub. In an interview with CNBC, Ben King (country director at Google Singapore) pointed out at the number of initiatives taken by the Singapore government to cultivate a conducive landscape for ecommerce and digital growth. While early in 2020 Enterprise Singapore announced an Ecommerce Booster Package, the government has now partnered with Google under the Skills Ignition SG initiative to train citizens who are looking for jobs in the digital industry. As Singapore is on the path to build a smart society, the country is gradually moving towards a progressive and increasingly digital economy.
Another bizarre possibility we might see in Singaporean ecommerce, is new found importance of the physical stores. For example, Singapore’s popular fashion e-retailer Love, Bonito has opened its third showroom in Singapore. In a Channel News Asia article, NUS Business School’s Associate Professor Tan Soo Jiuan says, “Brands are opening brick-and-mortar stores in the hopes that diversifying sales can bridge and enhance the consumer’s journey. But this approach will only work if the brand has already built up an online reputation and can drive traffic to their physical stores.”
With ample space for innovation in both online and offline channels, there are many ways in which players can differentiate with customer experience and business strategies. Marketers must not forget that this differentiation is the key to shine in the vast digital landscape of Singapore.
The sweeping and large-scale impact of pandemic has caused consumers to reduce their outlets for spending. While some of this scaling back is caused by limited financial flexibility, a lot of it is because customers don’t have many avenues to spend. Travel has taken a back seat and work-from-home culture has taken precedence further lowering down overall spending power. Given the current scenario, there is one thing that your customers do in abundance – spending time on the internet. In a time like this, marketers must leverage the fact that since consumers are hooked to their gadgets, their customer engagement strategy needs a total makeover.
In our last blog on emotional loyalty where we talked about how brands can emotionally engage with consumers, today we will look at behavioral loyalty and how it can delight consumers’ in-between transactions by closely observing customer behavior. Simply put, Behavioral loyalty is the ability of brands to retain loyal customers by adopting strategies to reward members’ non-transactional behavior.
Through behavioral loyalty, brands can (a) segment customers based on high or low engagement frequency, and (b) reward customers based on key elements like purchase behavior, occasional purchasing, engagement levels, user status, participation in customer feedback and more. As we move ahead, we will describe how behavioral loyalty has leveraged the shifting consumer behavior in UAE.
The current UAE consumer landscape
In 2019, the UAE’s retail market was valued at $55 billion, according to market reports site Report Linker. Before the Covid-19 pandemic, the country was witnessing rising per capita income and was gearing up with its growing tourism industry, increasing population of foreign workers, extravagant Dubai Expos and a large number of development projects.
But 2020 brought a major change to the economy due to the pandemic driven changes like closure of offline stores. And UAE was no exception. A study by Mckinsey showed that 95% of the consumers in UAE changed their shopping behavior. People were willing to explore different stores for their regular products and started experimenting with other brands. This forced a lot of brands to revisit their loyalty initiatives and strategies to remain relevant.
2021, however, started well for UAE market given there was an incredible pent up demand. The country is geared up to splurge again albeit, cautiously. The rapid vaccination drive (UAE being one of the most vaccinated country) will definitely help drive footfall back to retail stores. Retailers’ challenge however would be to retain their loyal customers and adopt strategies to ensure customers don’t churn or migrate to other competing brands. In such a situation, adopting behavioral loyalty elements can act as a lever to build a mutually rewarding relationship between the retailers and consumers.
How marketers can benefit using behavioral loyalty
1) The shift to online shopping: In the Consumer Pulse Survey conducted by Mckinsey, 54% UAE respondents have responded that they have tried a new digital shopping method during the Covid lockdown. Many UAE customers are therefore warming up to digital methods, and are realizing the ease behind getting what they want in just a few clicks.
Marketers’ perspective: Brands can get much closer to consumers by building an omnichannel loyalty program. This further gives the brand endless opportunities to delight their customers by rewarding desirable behaviors. For instance, customers can unlock bonus rewards when they link their loyalty accounts to their online purchases. Customers can be incentivized higher when they pick-up online orders against getting them delivered. Those who engage more by writing reviews or visiting specific pages or watching videos can be rewarded using a behavioral loyalty program.
2) Brick and mortar stores rule the roost: Thanks to the fast and vast vaccination drive in the country, UAE is one of the first countries to open up its malls post the lockdown. And consumer trends too point out that buyers regain the touch and feel experience of offline stores, especially for goods like clothes, footwear and electronics. With appropriate guidelines in place for restaurants, consumers are feeling more confident and safe to dine-out,
Marketers’ perspective: Customers visiting stores once they have reopened can be incentivized when they ‘check-in’ into the stores. Customers can be offered options to pre-order and pick up items during ‘lean’ hours. These socially desirable behaviors can be rewarded using the loyalty programs. Premium tier customers can be given options like assisted shopping or options to visit stores in specific slots with limited number of other customers in stores.
3) New found love for local: In 2020, the global supply chains were affected and many international goods could not reach store shelves. This is when consumers shifted to local brands products. A report by NielsonIQ suggests that across the globe people are gravitating to home-grown heritage. This has especially been true for perishable goods like dairy products and meat.
Marketers’ perspective: Loyalty programs can be tweaked or enhanced to ensure that customers earn more when they add local brands to their cart. Customers are increasingly looking for relevance and would shop more with businesses that are committed to social causes like promoting local businesses.
4) Ease of payments: With the surge in ecommerce platforms, UAE consumers are also expecting top-notch digital payments services. Since 2020, there has been a spike in the use of cash on delivery, and over time buyers have drifted to using digital wallets like Apple Pay and Google Wallet.
Marketers’ perspective: Consumers in UAE are looking for flexible payment options. So, it is important that the ecommerce platforms of brands seamlessly integrate all of the commonly used payment options. To ensure that consumers get the extra benefit, retailers can provide special offers across the various payment options.
5) The coupon and discount hunt: UAE is the third-richest country with respect to GDP per capita. But the country’s economy did not escape from the effect of the pandemic, which affected household income and spending. The drop in income has resulted in UAE consumers becoming price conscious, and buyers are seeking ways to save through discounts and offers. Talkwalker claimed that many international brands are being associated with deals and discounts.
Marketers’ perspective: When consumers are looking for great deals and value, it’s a good idea to include personalized deals in loyalty programs. This makes the customer feel special and would stick around with the brand for a long time. The hunt for coupons can be packaged into a game to keep customers engaged ‘in-between’ transactions and to reward engagement with the brand on digital channels.
Implementing behavioral loyalty programs creatively
Behavioral loyalty programs can be shaped creatively depending on the products. In fact, Capillary’s loyalty program enabled one of the leading fashion retailers in UAE to get a boost in their overall average transaction value. Our loyalty program triggers bonus points to customers when they shop on specific days of the week, thereby encouraging more store check-ins. This program also incentivize customers with additional benefits for buying from multiple categories.
Our loyalty experts share some more ways where retailers from different sectors can adopt behavioral loyalty at the right time and reward customers:
- A customer who buys a pair of running shoes may not revisit the store for at least 6 months. However, retailers need not wait that long to engage with the customer. To encourage the customer to regularly use the product, customers can get access to content that help customer with their running basics, posture and nutrition. Customers who consume the content or are able to maintain a streak of consecutive workouts can unlock badges that they can share on their social media pages.
- In an apparel store, if the customer has purchased a shirt, the brand can delight customers with personalized offers on pants or other accessories to pair with the shirt, encouraging more store check-ins and purchases
- Loyal customers entering their regular aisles in a supermarket can find QR codes across their favourite products and can avail exclusive offers and discounts.
Consumer relationships with brands are likely to change and evolve post pandemic. Innovation will be the driving force. While agile marketing strategies will help brands thrive during changes, levers like behavioral loyalty programs can up the ante on customer engagement. To know more about how changing consumer behavior can be the gear for your loyalty program, get in touch with our experts and chart a new customer loyalty strategy for your brand today.
The story began in 2006 when the Indian retail sector was in the midst of a boom. Odds were stacked up against upcoming retail players as global sports brands had already swooped in and grabbed big chunks of the market share. Naysayers created a sense of doubt for upcoming brands as they believed “There is no space for a fourth brand after three other global brands have filled up the bases.”
But this did not deter PUMA, Abhishek Ganguly and his team. In a bootstrapping business journey, PUMA India had grown from a few stores to creating a wide gap from competition with 35% market share in 2019.
“There’s no proven formula for a global brand to establish afresh in a new market, or a recipe for success. However we have had a gradual growth and we made no decisions that we had to take back.”
In an engaging conversation in our recent fireside chat ‘Forever Faster in the Changing World’, Abhishek Ganguly (Managing Director, PUMA India & Southeast Asia) talks about PUMA’s journey in India, strategies behind building the brand, and the excitement of influencing the way people live through sports and lifestyle. Here are the top 5 takeaways from PUMA’s digital and agile journey.
1) Out and loud with an online strategy
All great retail brands need an evolving customer interaction, and PUMA’s focus was to become a favorite brand with compelling retail strategies. Not only did they become the first brand to bring loyalty in India, but also began a strong digital outreach in 2009, at a time when retailers thought of ecommerce as a threat to brick and mortar. PUMA began collaboration with Myntra and Flipkart fashion, before establishing their own website. Abhishek also emphasized that channel differentiation and pricing tools are very important parameters to be fine-tuned while balancing online and offline channels.
2) Agility is the word of the moment
Changes in the retail industry were happening even before Covid, and leaders should sense and learn these changes. The team at PUMA India constantly hopes to ‘fail fast’, accept the failure and be in a constant learning mindset, enabling the brand to stay relevant to the period.
Agility goes hand in hand with innovation according to Abhishek. “By agility, I don’t mean mindless speed, but quick thinking, acting, and spreading that action throughout the organization.”
3) A people-first culture
What do you do to make Monday morning interesting for your team? That’s an important question every leader should ask themselves. Abhishek believes that employees work better if they are in the best frame of mind which directly impacts productivity and therefore it is vital for a business to ensure that their employees are positively influenced.
4) Finding the core in the startup ecosystem
How can the store interact with customers hyper-locally and bring in a personalized touch to the store? Abhishek has always been interested in technology-driven startups. He looks for innovative solutions in the angel ecosystem from the offline retail’s inventory and customer engagement point of view.
5) Sports inspires you to be a better leader
The global sportswear brand has always been passionate about cricket and has been associated with other sports like football. Abhishek wanted to keep the brand locally relevant to India by signing up with legends like Virat Kohli, KL Rahul and many IPL players. The brand has especially hit the jackpot with Virat Kohli as the cricket sensation has a huge social media following.
When drawing parallels between leadership and sports, Abhishek admires the ‘never give up’ attitude and inherent team spirit culture in sports. He said that leaders must develop an athlete’s mindset to face the uncertainties. To know more about their retail strategies, personalized engagement, agile management; watch the entire fireside chat discussion here.
The race between competitor brands in the Middle East has recently become very intense. Almost 70% of the population is less than 30 years of age with a dynamic purchase behavior. Unless brands build a robust feedback system to understand customers’ needs, buyers could easily jump to another brand to find their desired product. Therefore, brands must focus on constantly improving shopping experience, review feedback regularly and set up omnichannel interaction to attract the digitally savvy youth.
A quick poll during our fireside chat on ‘The CX Revolution: Growth Strategies and Future Outlook’ pointed out that most retailers hope to delight customers and gain their trust through their customer experience strategies. In fact, that is the holistic and big picture that 15-year-old fashion and lifestyle brand REDTAG is looking at. With over 200+ stores across GCC, REDTAG has been beating competition by its winning CX strategy. If your brand is looking at making inroads in the Middle Eastern market, here are 5 differentiating ways to build a next-gen customer experience.
#1. A loyalty program isn’t enough. Personalized loyalty program is the key
What’s in it for me? This is a common question in the consumer mind when they first choose brands. And implementing a personalized loyalty program that involves listening to your customers and delighting them beyond the transactional aspect of brand interactions could be the differentiating feature between you and your competitor.
#2. Addressing feedback timely and wisely
Quick response to customer feedback goes a long way in delighting customers, and in turn results in higher repeat sales. REDTAG gives huge importance to customer requests and as a policy, the brand ensures that customers get the exact products they were looking for. The brand enables store managers themselves to source the products and deliver it to the customer, resulting in satisfied testimonials from buyers.
#3. Retail is Detail: Data-driven engagement, from start till forever
Once the initial contact has been established with customers through loyalty program enrollment, brands must remember not to stop there and find ways to keep triggering excitement elements. Data-enriched personalized communication can keep customers engaged with the brand. The data can help predict the store visiting pattern and push customers to buy more by issuing instant vouchers.
#4. Omnichannel campaigns, keeping up with the trend
Earlier, retailers would focus on horizontal marketing campaigns and post ads in generic channels. With the advent of big data, brands have tons of data to help them segment customers and engage with them in the platforms that they are present in. For example, Snapchat is a popular platform in Saudi Arabia and it would not make sense to campaign on another platform which is barely used. The covid pandemic has further pushed the need to opt for digital channels.
#5. Domain Specialization
The most obvious differentiator from your competitors that buyers are looking for is – what are customers looking for in your brand? It’s important to provide the best from the domain you are in, and the hint to understand that again comes from what the customer is looking for. REDTAG achieves this swiftly by nominating personal stylists that answers customers’ queries on fashion and helps them to quickly find products that they are looking for.
#6. Aim for x+1 and never an x-1
The beauty of customer experience is that it is constantly evolving, and retailers can constantly learn and adapt to new customer behavior and emerging retail technologies. For more insights on CX strategies, Middle Eastern retail, and how you can emerge a winner amid competitors, check out our exclusive discussion with Mr. Shehbaz Shaikh (Chief Retail Officer, REDTAG).
Two customers A and B walk into a grocery store. Customer A visits the store every first week of the month, and shops with an organized list. They stick to previously used brands or opts for a product with the most discounted price. Meanwhile, Customer B is a frequent visitor and chooses products based on desires and facts that they learnt about a particular brand. Psychology categorizes Customer A as a rational consumer and Customer B as an emotional consumer, and marketers need to take note that these days, consumers are increasingly shopping like Customer B.
When the pandemic began, the immediate customer trends showed a major dip in consumption. However, in the second half of 2020, a part of the overall spending bounced back, and studies showed that this uptick can be explained by consumers’ motivation to seek an external stimuli’. This helped them to feel better during lockdown restrictions. Another report by the Zeno group shows how Malaysians, amongst other Asians, did a lot of emotional consumption during the pandemic year. Consumption was driven by how much the customer agreed with a brand’s values. The survey also found that almost 91% of Malaysian consumers stopped buying from brands they disagree with.
With evidence of ‘cancel culture’ (practice of withdrawing support to a brand) and comfort buying during pandemic, it certainly seems like this is a crucial time for brands to appeal to customers through emotional loyalty.
Elements of emotional loyalty
Emotional loyalty aims to bring consumers closer to the brand by creating trust and belief in the brand’s vision. It involves understanding what the customer feels to create a personalized interaction with them – right from advertising up to the purchase of the product. Research by Forrester suggests that making customers feel appreciated that encourages them to spend more with a brand and recommend it to friends and family. This clearly shows that emotional loyalty is the easiest way to foster loyalty and retain customers through thick and thin. The Data and Marketing Association describes the ‘3Ps’ approach to achieve the best of emotional loyalty.
Partnerships: Brands must seek to create a partnership with the customer, to exchange valuable information with them. Examples of a good partnership includes rewarding certain behavior such as advocating for the brand, sharing feedback and product reviews.
Purpose: Loyalty programs must be connected to issues that resonate with the customers values. In recent pandemic times, health and sustainability have been important topics that concern a majority of the population. Initiatives related to these topics would play a role in capturing consumer attention.
Personalization: All loyalty programs would be incomplete without the element of personalization and emotional loyalty is no exception. Personalized communication and offers can make the customer feel special and included, and can lead to more repeat sales.
Why Malaysians are rooting for emotional loyalty
Let’s take a look at recent customer trends in Malaysia, which demonstrates how buyers warm up to brands that understand and share similar views with them. What does an average Malaysian consumer look for in their brands, apart from the product or service itself?
In Malaysia, there has been a year-on-year increase in Google searches like ’metal straw’, ’eco shop’ and ’hybrid car’, proving that consumers are very conscious about the environmental issues faced across the world and they want to do their part by choosing products that are sustainable and don’t harm the environment. Experts say that incorporating sustainable business strategies is an inevitable step towards the future, and it is best that retailers start planning for this as soon as possible. Brands can create an incredible journey towards sustainability and get customers to follow them along the way, and therefore building the buyer’s confidence in the products.
Halal versions of products
With 60% of its population practicing Islam, Malaysia is a major producer of halal goods in Asia. Halal is an Arabic word that means permitted by the Islamic law and it is commonly applied to food, pharmaceuticals and cosmetics. Therefore it is not a surprise that there was a 550% year-on-year growth for searches like ‘Toblerone halal and ‘Ovaltine halal‘. There is also major demand for halal cosmetics. This is a clear indicator that brands must respect religious beliefs, making consumers feel understood.
Much like all other countries, Malaysia has seen a lot of suffering during the pandemic, and people are looking for experiences that spark joy. In a non-pandemic scenario as well, positive experiences created by brands inspire trust and advocacy among customers. Buyers remember the brand for positive and optimistic marketing messages and they’re more likely to recommend products friends and family.
For example, KFC Malaysia launched the #KepciKitchen campaign in early 2020 to creatively engage customers. The brand encouraged customers to share photos of how they eat KFC chicken by giving them a chance to win delivery vouchers.
Expert views also suggest that familiar things make customers feel better, at a time of crisis. Therefore, making personalized recommendations and introducing localized goods can be favorable strategies to boost sales.
Adding on to the positive brand messaging, brands need to create meaningful contributions to causes that customers are involved in. The pandemic situation has brought the entire community together, and it’s an essential time for the brand to show up for the cause.
During the pandemic, popular home improvement store MR.DIY ran a donation campaign called ‘You Share, We Donate’. In this campaign, the brand aimed to encourage customers to share the company’s social media posts for a good cause – for every Facebook share of their short film, the company donated RM1 to the Malaysian Relief Agency.
There are many such examples from various brands, ranging from small stores to large conglomerates who have managed to build an optimistic brand image during tough times.
People buy emotions, not things
In the book ‘How Customers Think: Essential Insights into the Mind of the Market‘, author Gerald Zaltman demonstrates that 95% of purchasing decisions are made through unconscious urges. Therefore, all evidence is pointing to emotional loyalty being the fastest way to carve a niche in the consumer’s heart. As customer priorities in Malaysia shift, it is more important than ever for brands to leverage emotions in their rewards program. Find out how you can include emotional loyalty in your campaigns / brand emotional connection and loyalty campaigns by talking to an expert.
The pre-Covid levels of retail revenue in India seem farther away now. While many retailers hoped that 2021 would be the year of recovery, the second wave of infections have dampened their pace. Even the financial services company Nomura has revised its growth expectations for India from 13.5% to 12.6% in the new fiscal year.
Should retail industry too fall for the second-wave and revise its revenue chart? At a time like this, Indian retailers can avoid panic and instead make some wise and proactive measures. A popular Harvard Business Review article called ‘Roaring out of recession‘ talks about how “post-recession winners” came out flourishing from the 2008 financial crisis. It describes how the winning companies reexamined every aspect of their business which will help them reduce their operating cost. When the slowdown turns around, the companies’ efficiency would not be impacted as their operating cost has been lowered before. It is this progressive mindset that can help retailers during the Covid slowdown seen across the Indian subcontinent today. One way to reinvent customer experience is by introducing a new marketing strategy that compliments the current retail scenario – a phygital strategy.
Dimensions of phygital retail world
Phygital elements transforming the retail industry
Customers today have grown to love shopping online and show comfort in their own digital spaces for most retail experiences. That said, the touch and feel of traditional retail as well as live demos for product services are irreplaceable. Retailers thus would need a combination of online and offline experiences to build retail customer engagement. This is where the concept of Phygital enters the current retail landscape today. An amalgamation of the words physical and digital, it was coined by the Australian advertising agency Momentum in 2013 as they introduced the word in their motto. In the retail sense, the term has gained prominence recently, referring to the blending of best online and offline features of the shopping experience. An everyday example of phygital retail would be a typical consumer who always shops with a smartphone in hand, often checking product details to help them choose.
An effective phygital retail strategy ideally focuses on three I’s – immediacy, immersion, and interaction. While immediacy and immersion comes from the digital realm, Interaction is from the physical world.
3Is of Phygital Retail Strategy
- Immediacy: Making the customer experience as fast and as seamless as possible
- Immersion: Making the consumer feel connected to the brand experience
- Interaction: All possible communication needed during the purchasing process.
The three I’s can be applied in various permutations and combinations in a retail business ranging from the catalogues and the products till the sales and customer service. For example, robotic digital signage and demand sensing in catalogues can help customers find product and immediately check stocks for the particular item. Similarly, chat bots and AI algorithms can speed up the selling process, while targeted marketing campaigns can encourage cross-selling and upselling.
How Phygital is reinventing Indian retail customer trends
Technologically India has been a fast growing country with a big stake in the AI revolution. However, digitization may be a work in progress in the retail industry, as AI solutions are yet to be fully translated in stores across India. Let’s take a look at some customer engagement trends which show that phygital retail needs to be an essential part in every brand strategy in India.
- AI will rule the future: Artificial intelligence will make marketing more human-centric. Marketers now have access to advance tools of AI to speedily collect user data and set up a shopping experience relevant to the customer.
- Traffic in offline stores will stay low: Even as the second wave of the pandemic has caused customers to order from home, this trend will continue post the pandemic. Some of them will make fewer trips to the store, so each experience should count.
- Self-service: Nobody likes the long queues in check-out counters. Definitely not in the time of social distancing. Customers are looking for the quickest ways to find the products they want and one-click checkouts.
- Providing personalized experience everywhere: Whether the shopper is online or at the offline store, the experience at both locations should be personalized.
- Value-consciousness: Increasingly, customers are going to constantly evaluate the quality, price, and discounts on all the products they choose.
While many retailers in India in the current scenario are trying to compete in the ecommerce space with large players like Amazon and Flipkart, phygital could be a better way to go, as this strategy remains largely unexplored by many brands.
Indian brands that embraced phygital strategy
While some brands in India have already begun applying phygital retail strategies, some are in the exploratory stages. In fact, apparel brands including Asics, Fabindia and United Colors of Benetton have used Capillary’s ‘StoreMax’ solution which allows store managers or staff to engage with customers on WhatsApp. Through this solution, offline stores can send personalized recommendations to customers and accept the orders placed by customers through phone calls, on WhatsApp or online portal. The offline stores then become fulfillment centers where they help in providing minimal delivery timeline.
Phygital retail is not restricted to just apparel sector. Grocery retail and supermarkets are known to be benefitted largely. Brands like Spar and Namdhari in India, have taken up phygital strategies to ensure quick deliveries by recommending products based on their previous purchases and creating a seamless option of same-day delivery of orders.
Predictions on the retail industry’s future scenario shows that offline stores are not dead yet. People like seeking solace by visiting stores and we could see consumers coming back to shopping malls and markets when Covid restrictions would ease. However, contactless retail will be of high importance till the pandemic is over. This emphasizes the need of creating a phygital experience for a brand for its customers. It’s time to go phygital!
Did you know that there is a better way to make your new customers behave like they have been buying your product for 10 years?
Yes, you read it right! Your brand can attain this from refining customer experiences through an accessible rewards program. A good reward’s program can become the reason for consumers to pick you over your competition. Even for smaller businesses, studies have shown that customer retention is a more effective way to grow business. And this can be achieved by building customer loyalty. Now, let’s study how brands can build this experience for the Indonesian market.
Building rewards program in the Indonesian market
Step 1: Understanding how rewards program can help Indonesian retailers
Several trends say that the Indonesian retail market will see an inferior growth in the next 4 years due to the pandemic. Research by Technavio shows that the market could progress with a CAGR of 4%, whereas pre-covid research had predicted a CAGR of 6%. In this market outlook, customer loyalty plays a major role in establishing a brand’s foothold in the industry.
Step 2: Studying Indonesian Customer Demographics
The next step in building a strong rewards program is to understand the consumer. Before we detail out the demographics of the Indonesian market, it is imperative to consider two factors – (a) what consumers think and (b) what factors determine their consumption. Let’s take a look at some interesting consumer trends in the last year that Indonesian brands can take advantage of:
Post-Covid consumer demographics in the Indonesian market
- Post-Covid household income: Due to covid, many Indonesian households have been affected with pay cuts and job losses. The pandemic has given consumers a reason to be frugal with their spending. A McKinsey report showed that almost 60% of consumers have experienced reduction in savings in 2020.
- Hope for a better economy: Despite money woes, there is optimism in the air. PwC’s Consumer Insights Survey claims that 64% of Indonesian consumers feel confident that they would be able to spend more in the near future.
- Increase in online shopping: Buyers jumping on to online platforms has been the trend across the globe during the pandemic, and this effect has been very prominent in Indonesia. Before the pandemic, shopping through online channels was almost a non-existent option as people preferred shopping at traditional marketplaces.
- Memberships and Discounts: Membership programs have been successful in generating customer loyalty in western countries. And it is a feasible plan for Indonesian retail as well. Buyers from the country also prefer lucrative discounts.
- Health conscious youth: 85% of Indonesia’s population is under the age of 55. Among these are the young consumers who are also increasingly conscious about health and wellbeing.
- More women use multichannel: In a survey by Snapcart global, it was concluded that women between the 25 to 35 age group are more likely to compare best deals across channels before buying. Men over the 35 years age group are likely to be loyal to a brand, as they want to be efficient while shopping.
Understanding that all customers are not equal and have different consumption behavior is the first step in realizing the benefits of loyalty. Knowing these nuances will help in creating an efficient rewards program that addresses the needs of customers.
Step 3: How to build an effective rewards program in Indonesia
Now that we have discussed what choices Indonesian consumers make while making purchases, we can use these pointers to design a suitable rewards program. While building the framework of the program, it is important to keep in mind the brand’s business objectives and aim to provide value to customers. Here are some features that may help Indonesian brands create impactful customer loyalty:
Marketer’s guide for enhancing rewards program in Indonesia- An overview
- Choose a system of coupons and deals: Owing to pandemic effects, Indonesian consumers are always looking to save more money and therefore want more discounts and deals. So a rewards program involving coupons, discounts and points would be of direct help to consumers. Indonesian consumers are also confident that the country’s economy would get better soon, and this system may slowly push them to spend more.
- Boosting online channels: Covid has certainly pushed consumers to online channels, and it is important for brands to consider providing rewards on digital platforms apart from the offline stores. Most Indonesians have moved to online shopping only in the past year, and are gradually warming up to the platform. Therefore, the rewards program must be seamless and easy to use.
- Keep the rewards simple: Easy to earn and easy to redeem – this must be the policy of the rewards programs in Indonesia. Customers cannot be inconvenienced and shouldn’t be made to wait too long for their reward. The deals, discounts or points must be immediately available to them. They should also be able to quickly redeem them. One useful idea can be to print the coupon along with the bill so that it is quickly usable. At Capillary, many brands opt for this feature, also known as Dynamic Voucher System (DVS).
- Gamification: Gamifying rewards programs is a lucrative idea to boost more sales especially in Indonesia, as people are using the online platforms more often. Spin the wheel, scratch and win, and pick and win linked to discounts and deals would encourage more purchases among Indonesian buyers. This would also help increase the brand’s app usage and website visits.
Step 4: Learning from loyalty frontrunners who achieved enhanced shopping experience
A study of other top programs in Indonesia can also be a good hygiene check while developing the right rewards programs. Here are success stories from two brands who have emerged as leaders in enhancing their brand experience with their rewards programs.
The Erajaya group has an interesting rewards program called the Eraclub program to personalize interaction with customers, understand customer behavior patterns, and reward the customers with the right offers. Their program is a tiered membership, with points and discounts provided on selected products, which is an integrated loyalty for offline and online platforms. They also give personalized instant offers based on customer preferences. This well-developed program helped the company get more than one million new member registrations in 2020, 75% loyalty sales contributed by members.
A look at Erajaya’s rewards program features
Kanmo Retail group, on the other hand, launched their Kanmo Circle program, which also provided tiered memberships. The company focused on special birthday discounts and points redemptions. Kanmo ran campaigns with personalized offers based on customers’ historical purchase data. The group achieved 94% loyalty sales contributed by members with 140,000 new members in 2020.
At Capillary, we have helped 100+ create robust loyalty programs with the consumer needs in mind. Our products can directly help increase sales and conversion with its AI-powered CRM software and rewards programs.
Indonesian Rewards Program: The Road Ahead…
Developing a loyalty program is hard in a country where consumers are actively searching for new brands, experiences and promotions. But the landscape is expected to change. With a slow but sure growth in the Indonesian retail market, demand for various goods is also expected to rise. To create suitable rewards programs in Indonesia, it is important to have a deep understanding of consumer behavior in the country and prioritize customer engagement. So, the time is ripe for investment in a loyalty program that can put your brand ahead of competitors.