Why Brands Banding Together Can Be Stronger Than Working Alone
Loyalty programs have been shown to significantly increase average basket size and repeat sales for brands. However, single-brand loyalty programs are not without their share of limitations. From a customer’s perspective, the most glaring one is the restraints around reward catalog and redemption opportunities. A coalition loyalty program solves this problem by offering a wider assortment of incentives built around low, medium, and high-frequency shopping partners. Furthermore, the lower cost structure of coalition programs compared to individual programs, allow businesses to pass those savings on to the customer as more attractive incentives.
What Is a Coalition Loyalty Program?
Often called “shared loyalty programs”, coalition loyalty is a unique concept in which multiple brands join together in a partnership and offer a joint loyalty program. Not to be confused with “umbrella loyalty” or “group loyalty” (where businesses with large brand portfolios offer a loyalty program across individual brands), Coalition Loyalty is in play when many unrelated brands band together to offer customers rewards that can be earned from a variety of participating brands, with options to redeem rewards at the brand of their choice.
Imagine a scenario where you frequently earn points every time you shop at your favorite grocery store, racking up even more points when you fuel your vehicle at a partnering station or while traveling with partner airlines, and finally being able to redeem your points on a new phone from an associated electronics outlet, or a gourmet meal at that restaurant you’ve been dying to try. Coalition Loyalty turns this into a reality.
From a consumer’s point of view, coalition loyalty is an uncomplicated way to collect points while shopping at more than one brand and avoiding the irritation of managing multiple apps on their phone or cards in their wallets.
Although the advantages for customers are straightforward, what are the potential advantages for brands?
How Brands Can Benefit From Coalition Loyalty
Expanding Networks With Cross-Promotions
By their very nature, consumers always try to maximize their own benefits, and those belonging to a coalition loyalty program look to accumulate as many reward points as they can, as fast as they can. For this reason, they are more likely to alter previous shopping habits to make purchases with other brands in the same network. When brands within a coalition sell bundled products or promote other participating brands for complimentary services, it strengthens customer loyalty towards the coalition and encourages more frequent shopping across the coalition. As an example, the BLUE Loyalty program* (operating in the GCC and Egypt by Al Futtaim Group).
The program drives loyalty and sales for all participating brands (such as IKEA, Kate Spade, ACE Hardware, Guess, and more) with 2-for-1 offers that incentivizes their +200k loyalty members to earn greater cashback and rewards when they make purchases with two or more brands.
Promoting Brands With Longer Purchase Cycles
A coalition loyalty program can promote products with a longer purchasing cycle by supplementing them with short-purchase-cycle products and brands. For example, bundling a monthly phone connection with an annual cable connection can drive greater sales for both businesses. With a coalition loyalty program, consumers often collect a smaller number of points from regular operations and look forward to collecting a lot of points from bigger purchases. This ‘coalition network effect’ builds and maintains greater top-of-the-mind awareness that all the participating brands benefit from.
Earn Rewards Faster
One of the main advantages of a coalition program for the consumer is that aspirational rewards can be earned within a reasonable time. Studies estimate that consumers can earn between three and ten times as much reward value from a coalition program than from a single operator loyalty program.
Lowering Costs And Risks
The costs for running a coalition loyalty program is usually shared between the multiple brands within the program, and any risks that arise will not fall solely on one company (when well executed!). Furthermore, because the costs are lower than with individual loyalty plans, businesses may be able to pass those savings on to the customer as more attractive incentives
Building Up Smaller Businesses
Small and Medium-sized enterprises may not yet have established enough trust or the network reach to successfully execute their own individual loyalty programs. Coalition loyalty programs can provide a huge boost to small niche businesses because they can benefit from the network reach of the coalition. It can be a cost-effective way to offer their customers a variety of attractive benefits that they would not be able to provide without the support of other businesses. For example, VIG Group runs TAP TAP*, a coalition loyalty program with a mix of well-established brands as well as smaller and niche brands.
Through the 32 participating brands, the program has an estimated customer base of 13M, which all participating brands (especially those with smaller audiences) can benefit from.
Improving Customer Experience With Shared Data
Brands within a coalition can obtain richer insights about their customers by agreeing to share transactional information and customer data about preferences and purchases between brands participating in the coalition loyalty program. This can help individual brands fine-tune the experience they offer customers by being predictive and practical to a customer’s needs.
Cutting Out The Noise
An intelligent coalition loyalty program must take an omnichannel approach to communication, and ensure that customers are not bombarded with too many offers in one week, or the same message from multiple brands on different channels. A coalition loyalty program can leverage customer engagement data and can harmonize engagement to cut through the noise.
Growing Individual Brand Awareness
At its core, a coalition loyalty program aims to increase the number of people enrolled. The inclusion of complementary coalition partners reduces variety-seeking behavior as customers will favor a program that is offering them a one-stop destination for their point-earning activities.
*Capillary is a proud partner of VIG Group and Al Futtaim Group for these initiatives
Examples of Great Coalition Loyalty Programs
Around the world, prominent brands are adapting their proprietary programs to capture the value of multi-partner coalitions. As a result, coalition programs are thriving.
One of the largest coalition programs in the Middle East region is Air Miles ME, which operates throughout the UAE, Qatar, and Bahrain.
With a diverse range of partners such as HSBC, Sharaf DG, Careem, Booking.com, Damas, and more, the Air Miles ME program has enrolled over a million members and has delivered over 760,000 rewarding experiences to its members since launching in 2001. Members can collect and redeem Air Miles with partner brands both in-store and online (via the website and mobile app), also allowing them to access their Air Miles profiles whenever they need. The Air Miles program delivers a stellar customer experience, made possible with customer data, and understanding how their members want to be recognized and communicated with.
PAYBACK is another leading coalition loyalty program, launched in Germany in 2000, and currently claiming more than 600 online partners and 35 retail companies in Germany.
After immense localized popularity, the program has spread to multiple countries. In India, PAYBACK was launched in 2010 and is today one of India’s largest Multi-Brand loyalty programs with over 100 million members, and more than a hundred partner brands, such as Big Bazaar, Hindustan Petroleum (HPCL), ICICI Bank, BookmyShow.com, MobiKwik Wallet, and more.
The program offers members omnichannel loyalty linked to their mobile number or loyalty card number and targets members with personalized promotions to increase their point earnings. PAYBACK offers participating partners insights from a huge repository of customer data across all partners, allowing companies to tailor their offerings to customer requirements, and subsequently measure the success of their campaigns. Partners also benefit from an exclusivity agreement, which means that their competitors cannot use PAYBACK as a marketing platform.
Avoiding The Pitfalls
Although coalition programs offer multiple benefits, there are certain aspects and pitfalls that participating brands should watch out for.
Brands joining a coalition program need to ensure the reliability of the program since customers often tend to regard the loyalty program as if it were owned by the partner. This means any disappointment in the program can spill over to participating brands.
A major learning from successful coalition programs is that it is crucial to involve companies that offer ancillary or complementary products and services— not competitors.
To be successful, a coalition program should launch with major brands in the respective verticals. This is to ensure the maximum share of consumer wallets. This also allows the data collected to be more representative of the target market.
It’s clear that there are multiple benefits for brands that are part of a coalition loyalty program. However, in order to strike success, brands need to set clear goals for building long-term consumer loyalty and strategize intelligently to ensure there’s no brand dilution by participating in the program.
The loyalty landscape in Malaysia is not what it was a year ago.
There have been multiple factors impacting customer priorities. For one, the economic impacts of COVID have been significant, with the unemployment rate spiking to a 30-year high of 5% in July 2020, and GDP contracting to -17% for Q2 2020. Secondly, the Malaysian government, as a measure to prevent the spread of COVID, has implemented the Movement Control Order from 18 March 2020 to 31 December 2020, resulting in a ‘homebody economy’. Apart from these reasons, there has been rapid adoption of technology within the populace – the number of Malaysians who are internet users and smartphone owners has risen from 25% and 1% in 2010 to 80% and 84% in 2019—notably altering customer spending and brand loyalty.
The Evolving Loyalty Landscape in Malaysia
Malaysian retail markets have traditionally been reliant on promotions—42% of sales in 2019 were a result of a price discount, and 75% of shoppers in 2020 try to take advantage of special offers and deals (Nielsen Shopper Trends Report 2020). However, this does not mean brands in Malaysia should always use discounts and promotions to strengthen sales. Some categories perform well organically and should not rely heavily on discounts to experience an uplift.
Malaysia remains a vibrant mix of ancient cultures along with modern influences—a reality that is reflected in hawker stalls and bustling traditional markets, situated in the same vicinity as glittering mega-sized shopping malls—but Malaysia’s customers have evolved to be tech-savvy, and now use every option available to them at their fingertips; the smartphone penetration today is recorded to be nearly 90%. Today the majority of Malaysians, 81%, consume a combination of both traditional and digital media, while only 19% of Malaysians solely consume traditional media. The expanding internet coverage, technological advancements, and choices of media formats have created new opportunities for consumer experience; opportunities that move beyond traditional loyalty programs. We’ve covered this extensively on Ecommerce Trends in Malaysia.
Top loyalty programs in Malaysia
How do brands and loyalty programs in Malaysia successfully transform the occasional customer into brand loyalists? Below, we peek into the inner workings of some of Malaysia’s top loyalty programs.
Bata, a brand whose mission statement is “to shoe mankind”, is walking the extra mile to reassure customers during COVID. They recently launched a welcome back campaign to advertise the measures they are taking to keep stores in Malaysia safe, like sanitizing shoes before and after trials, temperature checks, mandating masks, and ensuring a socially-distanced shopping experience.
Bata Club is their card-less rewards program, exclusive to Malaysia, that rewards shoppers for their purchases with Bata, with an online microsite enabling customers to log in and view their loyalty status in real-time. Customers can redeem points for e-vouchers and are able to enroll for a lifetime membership when they spend more than RM 50. They get a sign-up voucher of 10 RM and a birthday e-voucher of RM 15.
Bata Malaysia also uses real-time points and an e-vouchering mechanism called Dynamic Voucher System (or DVS) to send relevant offers to customers based on their current purchase, incentivizing their next visit through personalized targeting.
Customers can redeem 150 points for a RM 5 voucher. Customers periodically receive a newsletter with the latest promotions, and personalized offers based on their recent purchasing behavior.
With the exponential increase in digital adoption, one-to-one contextual messaging has become a key differentiator for customers who have become inundated with brand messages and notifications.
*Capillary is proud to partner with Bata for this initiative
AEON MEMBER Card
AEON group had its humble beginnings in Japan as a Kimono fabric seller in 1758, but today stands as one of the largest retailers in Asia. Over the last few decades, the AEON group has made multiple strategic business decisions, including mergers and acquisitions, that have made it a colossal conglomerate in Asian markets, owning and operating convenience stores like “Ministop”, supermarkets, shopping malls, specialty stores, and AEON Retail Stores.
To increase their loyal customers and repeat sales, they’ve introduced prepaid cards in Malaysia, such as the AEON member card, which customers can use for discounts and collecting points at AEON stores and Pasar Raya MaxValu stores.
Additionally, in a bid to embrace digital transformation, AEON has introduced the Wallet app that allows members to go cardless; they can earn, view, and redeem their points in real-time, with state-of-the-art security measures including biometric login, multi-factor authentication, anti-phishing features, and more.
AEON’s Member Card is a popular points-based rewards card where customers can acquire one point for every RM 1 spent, and double the points when they upgrade to a Member Plus card.
Many members claim to sign-up for ‘member day’ discounts, which incentivize them to make purchases on specific days and take advantage of limited-period hefty discounts. AEON members receive rebates worth 5% or 3% every time they shop at an AEON General Merchandise Store (GMS)
The AEON Wallet App is a convenient way for members to access their exclusive benefits right on their phone. The app keeps customers up-to-date with AEON Group promotions, either through in-app promotion banners or push-notifications.
Caring Pharmacy owns 138 pharmacies across Malaysia and provides 12-hours-a-day, 7-days-a-week full-time pharmacist service. Caring Pharmacy drives loyalty engagement with the Shopper Loyalty Program. Starting from January 2019, the Shopper Loyalty Program has been digitally accessible via Caring Pharmacy’s website and mobile app, and have seen more than 300,000 members sign up to be a member.
Simplicity is key when it comes to Caring Pharmacy’s loyalty program. The app allows easy barcode-based scanning for loyalty points. A rolling banner at the top of the homepage allows users to flip through popular vouchers, discounts, workshops, contests, articles, and more. Prominent banners on the homepage promote easy navigation to all active events, promotions, the member’s profile, and health information being offered by Caring Pharmacy. Members enjoy benefits such as birthday treats, get insights into exclusive promotions, discounts, and #IlikeCaring member points and rewards.
Customers tend to reward companies that create an easy experience for them while giving them exactly what they’re looking for. This is the secret sauce to Caring Pharmacy’s loyalty program
With the loyalty app, Caring Pharmacy creates a seamless O2O loyalty experience for members. The brand elevates the overall Customer Experience with personalized engagement and offers based on the customer’s preferences and transactions.
*Capillary is proud to partner with Caring Pharmacy for this initiative
Watsons VIP Card
The Watsons VIP card not only confers members the benefits of earning 5X more points on their purchases, but it also comes with Touch ‘n Go functionality (a huge perk when ‘contactless’ commerce is the order of the day).
Customers can redeem points for items on offer, or be eligible for seasonal discounts on a wide range of products. One of the more sought after features is that the VIP Card comes with dining privileges where members can get discounts at selected restaurants, with a vast array of restaurants to choose from. Watsons’ members are offered discounts, as well as complimentary dishes. Apart from rewards and discounts, Watsons offer members a range of helpful and personalized content around wellness, chronic disease, calorie counter, skincare, make-up, and more.
The brand offers a great group loyalty experience for its customers by partnering with other brands to offer exclusive discounts for members. Participating merchants include San Francisco Coffee, Crab Factory, and Milkcow, to name a few.
The promotions and offers have an expiry date, so members are encouraged to redeem often, thereby increasing program engagement.
Members earn one point for every RM 1 spent, and 2x points on Watsons products and 5x points during birthday month
Petron Miles Card
Petron’s MILES cards are more than a loyalty program for fuel, they come with unique privileges for members. Apart from allowing members to earn limitless points at over 600 Petron Service Stations in Malaysia, members can also earn points when they renew car insurance with AIG, Malaysian Airlines’ Enrich Programme, PLUS Expressways’ PLUSMiles Card, and AirAsia.
Points can be redeemed for fuel and convenience store purchases, and members receive special deals and discounts at Petron’s partners. A key highlight of this card and the points is that there is no expiry date, which gives member’s the benefit of collecting and storing points for as long as they want.
Flexibility and no expiry: Limitless Points at over 600 Petron Service Stations in Malaysia, and point-redemption on various services, from fuel to air miles
With the Petron Miles ‘Value card’, members are entitled to 24-hour Towing and Roadside Trouble Assistance, and Year-round Personal Accident Insurance and Medical Reimbursement
Digital transformation has accelerated faster than expected since the arrival of COVID-19, and virtual engagement will need to be a substantial new focus area forcustomer loyalty programs. Consumers are increasingly valuing connections with brands that are reliable through periods of disruption, that strive to know them as individuals and personalize engagement with them, and offer them an omnichannel shopping experience.
As customer priorities shift, it is more important than ever for brands to leverage strong customer analytics, adaptable to dynamic factors. The necessity, however, is that brands need to complement customer analytics with actions to better engage customers and make smarter business decisions. Brands heeding customer priorities will continue to lead.
Six months into the pandemic and the economic impact and fear from COVID-19 has brought striking shifts in consumer behavior, foreseeably for a long period. Globally, there is an accelerated rise in internet adoption, allowing users to stay connected and carry out essential daily tasks in trying times of social distancing. In the U.S., about nine-in-ten adults (93%) say that a major interruption to their internet service during the outbreak would be a problem in their daily life, including 49% who foresee an outage being a very big problem.
Brands continue their efforts to adapt to business disruptions and changing customer behavior. One example is the increasing number of brands offering cashless and contactless delivery to customers—hence providing customer convenience and safety, and also adapting to the new consumer mindset. Life in the post-COVID world may look drastically different, yet customer experience has been crucial for promoting loyalty, retaining customers, encouraging brand advocacy, and that remains true during the pandemic. Pre-pandemic, customers were partial to brands that provided unique, personalized experiences—studies conducted have shown that customers increase their spending when they receive positive, personal shopping experiences.
The current demand for shopping experiences are those that limit physical touchpoints and interactions with other human beings. Self-service solutions powered by the likes of Artificial Intelligence, facial recognition, and infrared technology can make online and in-store experiences better for customers. Recent COVID-19 retail trends like BOPIS (buy-online pick-up in-store) and curbside pickup have gained in popularity. When compared to the previous year, orders placed online and picked up at stores in the month of April 2020 more than doubled, according to Adobe Analytics.
In a bid to help brands strengthen their business in the COVID era, Capillary has added new features to our platform. Read on.
Growing Leads via Social Media
A new wave of digital platforms is emerging to offer multidimensional engagement and entertainment to users. Platforms like Instagram and TikTok may have once been viewed as those that cater to Gen-Z and young digital natives, but they have now exploded in popularity across all demographics, thanks in no small part to the COVID pandemic. In America, almost 50% of surveyed consumers have increased their social media use, according to eMarketer. In China, social apps are completely transforming the Ecommerce landscape, and Ecommerce is converging with livestreaming to quickly become the prefered shopping experience in Southeast Asia. For the uninitiated, Livestream Ecommerce involves brands and influencers leveraging livestreaming platforms to showcase products, try them, and rate the experience to viewers.
Taking into consideration the large consumer audience using social media platforms, Capillary now allows new or existing users to login to your Web store with their Facebook/ Twitter/ Google credentials. These settings can be enabled through the AnywhereCommerce+ dashboard.
Store2Door now supports a chatshop feature, which will allow customers to directly connect with their nearest store without the store staff initiating the conversation with the customer. To enable this, brands can share a Chatshop page on their social media sites (through Stories, Posts, or Promoted Posts). Customers can click on the link to learn all the stores they can connect with on Whatsapp. This allows customers to enquire about catalogs, ongoing promotion, and get their order placed.
Showcasing Products Based On Customer Priorities
Ecommerce websites offer consumers the convenience of viewing all available products in one place. However many customers become overwhelmed by the sheer volume of available choices online, and often lose patience after navigating a few pages of products.
By enabling Dynamic Listing within Capillary’s AnywhereCommerce+ platform, brands can list their products (or specific categories of products) according to dynamic factors like Product Popularity, or Inventory Volumes, Order Recency, Catalog Sequence, or even a combination of parameters.
It would be recommended for brands to set their default product listing based on popularity, and provide consumers the option to view products by pricing, or other factors. Partly due to the severe economic impact of COVID across the globe, 68 percent of consumers in April indicated they spent less because of the pandemic, up from 49 percent in March (a 39 percent increase); and 35 percent of consumers indicated they spent significantly less in April, compared to only 22 percent in March (a 59 percent increase).
Enabling dynamic listing allows customers to browse products based on their own shopping priorities, and receive recommendations of popular products in their specific category and price range, like they would with store staff assistance.
Prioritizing Hyperlocal Commerce and Inventory Management
As consumers are getting conditioned to make purchases online, the growing trend of hyperlocal commerce facilitates faster delivery from the closest available store. With Capillary’s Anywhere Commerce platform, brands can enable rules to deliver orders from the closest store, or closest common store (for orders containing multiple products).
However, since many stores are also facing challenges regarding stock excess and shortages, brands can, alternatively, define rules to allocate an order automatically to a specific location/warehouse (for example, a rule stating that all electronic products must be delivered from a warehouse in Bangalore).
Brands can even modify their price list to define unique prices for products according to stores, or user groups, or order quantity, or specific date range, or even transaction channel. Product prices can vary for any one of these parameters or for a combination of parameters, allowing brands to incentivize customers to make purchases while keeping a check on expiring or excess inventory.
The global Coronavirus crisis has toppled global economies, and people across the world are apprehensive about their health, safety and financial security. Times like these call for brands to truly put customers’ priorities first. By putting your customers’ interests first and innovating your brand accordingly, this can be a time for your company’s brand to lead.
Almost six months into the global coronavirus pandemic and retailers across the globe continue to be severely impacted. Even countries that are no longer under lockdown orders are still witnessing a steep drop in footfall in retail outlets. In a recent webinar organised by Trust for Retailers & Retail Associates of India (TRRAIN), major associations anticipated a 25-30% impact on business, with a multiplier effect on subsidiary industries and lasting job losses. Since the outbreak of COVID-19, retailers are facing challenges around health & safety, supply chain management, labour shortages, consumer demands, disruption in cash flow, and pricing.
Interestingly, the overwhelming opinion from research firms is that global consumer behaviour will evolve due to the coronavirus for the foreseeable future. One reason for this is that new mindsets and habits are being created as life goes on in lockdown-induced quarantine. And for many consumers, the continued fear and apprehension for their health and safety will push them to find innovative new ways to make purchases and create a ‘new normal’.
While consumer demand continues to be volatile, new commerce trends are emerging in countries reporting a slow uptick in the economy; trends like store reopenings with increased social distancing measures, increase in online grocery shopping, social commerce (according to emarketer.com, up to 51% of U.S. adults have been using social media more), live-streaming commerce (most prominently in China and Southeast Asian markets), and other trends. Although it would be difficult for businesses to make accurate long-term strategic decisions during this volatile period, it is imperative for CXOs to revisit current business and operating models in the face of the new normal.
We believe the businesses who emerge as leaders from this crisis will be businesses that adapt swiftly. Capillary has been analysing the impact of Covid-19 on retailers across the globe and evolving our solutions to help retailers quicken their pace towards recovery.
Taking your store to your best customers: Introducing Store2Door+
Although online commerce has been on an upward trend in the last decade, the coronavirus pandemic has accelerated the growth of ecommerce like never before. This change can be witnessed across all demographics; even the senior citizen demographic has demonstrated a 195% increase in ecommerce activity from January to March, and there has been a spike of more than 130% in online shopping across all demographics. Consumers are buying products online and picking them up in stores at +500% greater volume than prior to the pandemic, according to research from Kibo Commerce.
However, this leaves us with a big question: are traditional retailers doomed to end up last in the post-COVID-19 world?
We don’t think so; rather this is an incredible opportunity for traditional retailers to pivot to an omnichannel retail strategy. Based on our conversations with traditional retailers in SEA, China & the Middle East, the major resistance to ecommerce adoption centred around initial investment costs, lack of in-house tech experts, implementation timelines and ROI. That’s why we set out to launch Store2Door+– a new module in our Anywhere Commerce suite that: has minimal setup cost, requires zero in-house tech expertise or coding, can go live in less than 7 days and ensures highest ROI through an outcome-linked pricing model.
Here’s how Store2Door+ helps traditional retailers adapt swiftly to the new normal :
Leverage existing CRM data to personally connect with customers through Whatsapp Business, and empower store staff to close sales over Whatsapp. With Store2Door+, retailers can take their business online in just 7 days.
Store2Door+ allows sending personal recommendations and communication to customers through Whatsapp messaging, a platform that boasts of high message open rates (over 90%). Store2Door+ helps retailers drive greater store sales, especially in disruptive times when customers are apprehensive about visiting stores
Targeting the right customers: With the Store2Door+ app, store staff can view a list of customers who are most likely to respond to a particular product recommendation based on their past purchasing history and other CRM data
Assisted shopping experience: By creating a personal connection, and sending customized recommendations and real-time videos, the store stylists provide a very compelling shopping experience for their customers (far better than the online shopping with chatbot assistance)
Connecting remotely: Store2Door+ allows store staff to sell products to their best customers 1:1 over WhatsApp business, and keep in touch with loyal customers even remotely.
Streamline communication: For multi-store retailers that already have marketplace or ecommerce presence, or for retailers who want to drive store sales separate from regular ecommerce, Store2Door+ can enable a streamlined flow for sending daily communications to the top customers
Leverage existing resources: Store2Door+ integrates CRM data and leverages your existing loyalty member base to drive sales, and reducing customer acquisition costs. Leverage offline stores as fulfilment centers, and fulfil orders from the nearest store with a minimal delivery timeline.
Based on results from pilot programs, Store2Door+ contributed 19% of loyalty sales in best performing stores, and 5% on average in remaining stores.
Driving greater conversions through contactless interactions
With the rampant rise of Covid-19 cases globally, consumers are plagued by fear of infection. Since physical experiences are no longer possible, ‘no-touch’ or contactless interactions have become the new standard expectation. Various retail leaders are adapting by creating contactless transaction processes. For example, Walmart is testing a store without any cashiers or conveyer belts at checkout lines, with the intent of speeding up checkout times and preventing the spread of coronavirus by limiting human interaction.
Here are some recommendations from Capillary to improve in-store safety, and increase customer confidence:
Brands must improve in-store purchase experiences during the pandemic through contactless payment, digitizing receipts, as well as digitizing personalized promotions. Retailers can do this via an app, SMS, email, QR codes for payment, and other options.
When customers visit stores, retailers should cross-sell, up-sell, and drive greater conversions with real-time, rule-based dynamic vouchers. The dynamic voucher must be digitally rolled out to customers upon an in-store purchase, based on the loyalty-tier of the customer, product purchased, or other factors like churn probability, Customer Lifetime Value (CLV) etc.
Optimizing Costs with Targeted Promotions
Companies today are facing major cash-flow shortages. It becomes imperative for brands to strike the right balance in spends across the marketing, sales and service functions, in order to maintain the right customer experience. Although customer engagement, marketing and support become more difficult during economic downturns and turbulent times, they become all the more important to drive strong customer experience, trust, and more revenue in the long-run. In a recent analysis of retail and online brands, Digital Commerce 360 found that brands that pulled back on marketing spend during COVID-19 are now seeing their online sales struggle. Similarly, according to KPMG, it’s even more vital during these unprecedented circumstances for companies to have a single view of the customer, shared by the Marketing, Sales and Service functions, so they can react quickly to their fast-changing needs and expectations.
Capillary’s solutions allow brands to do that and more:
Channel-based promotions: Omnichannel marketing and engagement can improve noise to signal ratio for customers, especially in times where they are being bombarded by communication and promotions from multiple brands. The key is to optimize your costs by targeting customers on only their favourite channel of communication to improve response rates. For instance, a user might have higher response rates to Instagram ads when compared to Facebook, and this behaviour might change based on whether he’s on a mobile device or a desktop. X-Engage lets you control communications and engagement based on these specific criteria and conditions.
Capping discount amount: Capillary’s Anywhere Commerce platform now allows brands to create promotions specifically for discounted or undiscounted products, and even cap the Percentage Discount Amount on the product.
Focus on your “Top X%” customers: Although the personalization fabric is typically woven with months or years of customer data, the new normal has shifted customer behaviour and user preferences beyond anyone’s imagination. To avoid irrelevant recommendations and wasteful spends, a key method is to use smart segmentation to focus on your “Top X%” customers and have a dynamic campaign based on real-time user behaviour.
Wishlist communication: The pandemic has resulted in retailers facing challenges around stock shortages. On the other hand, lockdown relaxation is seeing a release in the pent up demand around non-essential goods. Capitalize on this trend by triggering wishlist notifications for items when they’re back in stock based on real-time inventory levels of the product.
Optimizing order allocation: The ability to predict and manage demand has never been more important. With smart order allocation, optimize costs by allocating orders based on the store nearest to customers, or improve the customer’s experience by directing them to promotion-specific stores
In these turbulent times, business leaders should align their financial sustainability with the core elements of operational excellence and customer experience. Brands that can pivot and seamlessly adapt their customer experience in these times of crises will certainly come out stronger.
Unfortunately, that’s what it felt like when membership cards are unwillingly thrust into the customer’s hand every time they stand at the checkout counter. (Worse, more than once, from the same retail outlet!)
And we wondered what to do with those pieces of plastic competing for space in our humble wallets – with other more important items like our IDs or Debit cards and, of course, the cash, back when we used to carry bundles of it on ourselves.
Today, times have changed.
We do not think twice before saying an emphatic NO to those loyalty cards and a big YES to purchase freedom! Mainly because customers have now realized how restricting and rigid such loyalty programs have been. Thankfully, retailers have understood it too. And the ‘Digital India’ boom, complemented with the demonetization and growth of ‘Digital Wallets,’ has played a suitable catalyst.
Loyalty Programs: A Key Piece of the Personalization Puzzle
Loyalty programs today are turning as ubiquitous as the concept of retailing in India. Location or physical presence no more limits the act of selling and purchasing. So why should they limit earning and redeeming rewards for loyalty? The flexibility of claiming benefits across locations, channels, and even industries and categories of consumption is fast becoming available to the average shopper. The foundation holding it all together and making it possible rests on accurate and updated data collection at an individual level. One can call it ‘personalization without the need for person-to-person contact.’
While the customer expectations from brands and retail stores haven’t changed, digitization has indeed transformed the way to meet those expectations. A customer still needs the very same things that he or she needed in the age of in-store-only retailing, i.e., ‘A special treatment.’ You may think, ‘Oh! How do I offer that in the absence of face-to-face interactions between brands and consumers’. But omnichannel customer insights integrated with cutting-edge loyalty program platforms come to the rescue. They bring back the good old days of ‘intimacy’ in retail.
It is time to move away from ‘least common denominators’ in designing their loyalty marketing initiatives.
Rethinking Loyalty Programs for the Digital Age
Brands shouldn’t ‘bucket’ their customers, anymore, for the sake of simplifying marketing communications.
In fact, with today’s intelligent technologies, you need not worry. There can be as many buckets as the number of customers you have.And rewarding them with loyalty has to allow for as many possibilities.
So, Isha may want to redeem her shopping points in a beauty parlour of sorts, or Abhay may wish to sample your new shaving products for free. Sudha may be interested in flat discounts on MRP, and Vikash, being a mariner, may want a lifetime of free shipping, worldwide!
When retailers open their minds to a variety of possibilities in serving their customers and delighting them time and again, they will be able to merge new-age convenience with the old-world customer service.
Retailers from more mature markets like the US and Europe – such as Sephora, Starbucks, and Costco – are enjoying the benefits of rethinking their loyalty programs. Many Indian retailers have also seen quantifiable value from such realignments – in the form of lower Customer Acquisition Costs (CAC) and higher Lifetime Value (LTV).
On that note, let’s look at some of the best loyalty programs in India.
Best Loyalty Programs in India
Launched in 2016, Amazon Prime has garnered massive year on year success with membership in India crossing the 10 million mark in 2019. Amazon’s Prime loyalty program provides recurring lifelong benefits such as free shipping, faster home delivery, and exclusive access to entertainment content via Prime Video. It also offers significant discounts on ‘Prime Day’ – its annual sales event. What makes it tick is the enormous value that consumers see in return for the membership fee – which is just Rs 999/- per year.
Going beyond its core product, Club Mahindra launched a lifetime vacation ownership program for its members. They discovered unique insights about the profile of family vacationers, their annual spending capacity, and the experiences they expect from a vacation. Thus, Club Mahindra designed a ‘value-for-money’ model of timeshares where a family could enjoy a mix of activities for not just relaxation-seeking adults, but also for adventure-loving kids and bonding-seeking grandparents.
Shoppers Stop First Citizen Club
Another popular loyalty program, which is a household name among Indian consumers, is the Shoppers Stop First Citizen program. Although a card-oriented and tier-based loyalty program, it offers tangible benefits to the members. Some of the benefits include exclusive previews of new products, out-store offers, home delivery of alterations, and valet parking. The points are earnable across its pan-India stores as well as online. It is a win-win for both the retailer and the shopper.
Starwood Preferred Guest
With over a hundred (100) properties all over India and partnerships with ten (10) other worldwide premium hotel brands (The Westin, Sheraton, W Hotels, St Regis, and Le Meridien), Starwood’s loyalty program is sure to offer advantages to its members. There is no cost to enroll for the program, and visitors can earn a point for every US dollar spent. Simplicity, flexibility, and fairness in their loyalty rewards accumulation and redemption options mean that members inevitably profit.
Taking a spend based approach as compared to a ‘miles flown’ approach, Club Vistara makes it simpler for its travellers to estimate, accumulate, and redeem points. Crossing roughly 2,000 Club Vistara points, members can enjoy a redemption ticket in Economy class. Loyalty benefits are also substantially ‘portable.’ They not only cover a host of experiential and preferential facilities during air travel (lounge access, business class check-in, and boarding and baggage handling priority) but also include crossover benefits with Singapore Airlines and banking partners such as Axis Bank.
Encircle by Titan
Titan takes a holistic approach to loyalty across its different brands (Tanishq, Fastrack, Titan Eye Plus, etc.). It also pares down points accumulation and redemption model to ‘1 point earned equals 1 rupee’. There is no minimum threshold to start redeeming points and no additional fee to become a member. Right from the very first purchase, a customer can start earning reward points. These points are usable in multiple ways – reduction in the subsequent purchase bills, anniversary offers, sneak peek into new launches, jewellery or eyewear clean-ups, and appointment reminders.
The Times Group’s loyalty program, Times Points, is genuinely digital and ingenious. It rewards its viewers and readers for the time they spend on its partner platforms such as The Times of India, The Economic Times, Navbharat Times, Maharashtra Times, NewsPoint, HDFC-TimesPoint Debit Card, and many others. Every user action, including likes, comments, or video views, takes you one step closer to the tangible benefits – in the form of deals and discounts across 200+ brands such as Amazon, Shoppers Stop, Myntra, Paytm.
A common theme across all these successful loyalty programs in India is ‘care for the customer.’ Indians being value-conscious, it becomes all the more important to earn trust and make it easy for consumers to derive benefits. Once a brand crosses the chasm, there is no looking back!
Even before the COVID pandemic crisis swept across the world, Customer experience and engagement (CX) was quickly overshadowing price and product as a key brand differentiator.
With COVID-19 essentially halting traditional store footfall and physical retail, digital engagement and experience have become even more important in helping brands retain mindshare and maintain customer loyalty. So how do brands go creating non-transactional, personalized engagement at scale?
Engaging an anxious & comfort-seeking audience
Prior to creating an engagement strategy, it’s vital for brands to consider the shift in behaviours, priorities and attitudes brought about by the crisis. The COVID pandemic has resulted in several consumer behaviour shifts like rapid depletion of trust in institutions, especially healthcare systems; a deepened focus on financial stability and mental well being; spike in digital content consumption and social media usage and the desire for a safe, sheltered environment.
Marketers seeking to establish long-term connect with consumers in these troubled times will need to :
Solve for specific consumer concerns.
Align messaging towards values that matter most to worried consumers
Offer products and services that seek to provide comfort in times of panic
Avoid the temptation to bombard consumers with salesy campaigns
During the coming weeks, brands need to be sensitive to consumers’ needs and rethink their marketing and advertising.In short, they need to empathize and engage, instead of selling. That might mean pausing certain campaigns for certain products, and adjusting the copy and creative on ads to better speak to the realities of the COVID-19 pandemic. For instance, Hershey removed ad spots that showed people hugging while sharing chocolate bars, and replaced them with commercials featuring product close-ups and KFC paused a campaign dedicated to its classic ‘fingerlicking good’.
Based on a survey by Gartner, here’s how consumers expect brands to address coronavirus developments :
Notify customers if the company believes consumers may have been exposed to the virus at a company location
Provide up-to-date information about shortages, delivery or service delays
Implement additional measures for disinfecting in-store or physical locations owned by the company
Update/communicate company rules that ensure customer safety and health
Waive service fees and penalties (e.g., late fees, cancellation penalties)
The faster you can adjust to this new normal of customer engagement, the faster you’ll be able to build the trust and credibility necessary for establishing relevance in their lives.
Top 5 COVID Digital Brand Campaigns
Play for the World by Nike
Shoe and athletic apparel powerhouse Nike has been pumping up engagement with consumers with some stellar content marketing. The brand made its subscription-based Nike Training Club app, which offers streaming workouts, training programs and expert tips, free. It also began publishing more content on its Nike and Nike Running Club apps, website, TRAINED podcast and social media to serve the millions of consumers who are under lockdown and trying to manage their fitness regime. And finally, Nike packaged its content offering in a great marketing campaign, Play for the World, that leveraged its roster of athlete endorsers and shows how they’re keeping in top form during the pandemic.
Creativity goes on by Apple
Apple put out an inspirational campaign titled ‘Creativity goes on’ that featured celebrities making some really interesting stuff while they’re in lockdown. The campaign had pro-surfer Yadin Nicol finding a way to bring the waves to his kids at home, John Krasinski producing an episode of his YouTube hit #SomeGoodNews on his Mac and filmmaker Tee Ken Ng creating a dazzling zoetrope creation. The best part was all of this was conceptualized and created within the past three weeks, while we all have been quarantined at home.
‘Love has no fear by’ Louis Vuitton
LVMH leveraged the massive social media presence of its diverse brands to tap into the interest of customers around the world. Louis Vuitton launched a cause marketing campaign, “Love has no fear,” on Chinese social media platform Weibo. Multiple Chinese celebrity brand ambassadors recorded videos to encourage residents in Wuhan and support frontline medical workers. The campaign topic generated 4.2 billion views within its first week.
The Cookie Recipe by DoubleTree Hotels
The American hotel chain owned by Hilton is famed for its delicious chocolate chip cookies it serves guests at check-in. The recipe had been a closely guarded secret with many bakers and chefs trying their best to replicate them using unofficial recipes. But during the COVID crisis, the hotel chain surprised everyone by revealing its chocolate chip cookie recipe to the world. The video containing the recipe has nearly 300,000 views and fans have been sharing their pics of their version of the baked cookies on social media. Hospitality is amongst the worst-hit sectors by the COVID pandemic and DoubleTree pulled off a great content marketing effort to maintain a connection with guests at a time when they’re not thinking about hotels.
‘This is Not Goodbye’ by Mall of Emirates
The Mall of the Emirates used to welcome over 40 million visitors each year till ‘Covid-19’ happened. The establishment informed its visitors that they are closing its doors temporarily with beautiful cinematic visuals layered with a message of hope. The campaign titled ‘This is Not Goodbye’ conveyed the spirit of solidarity while promising a future filled with great possibilities.
Digital Engagement Strategies during COVID
Consider the New Nuances
While this point has been beaten to death, it still needs reiteration simply because it forms the core of your engagement strategy. Brands will need to be thoughtful and sensitive about all promotions and communications during these times. Brands acting like its business as usual and running pre-COVID campaigns are going to be harshly judged and labelled as tone-deaf.
Harmonize Cross Channel Communications
Customers are relying on an assortment of digital channels like mobile apps, OTT services, social media and websites to keep themselves informed and entertained during these tough times. Brands will need to ensure the content, engagement and experience across these diverse channels are consistent, connected and seamless. The key to achieving this is an AI-powered, unified customer engagement platform like X – Engage that intelligently pushes the right content to the right customer based on multiple factors like Channel Reachability, Channel Responsiveness, ROI and Offer Redemption Propensity.
Explore Commerce & Engagement Integrations
Commerce and customer engagement have been on a convergent path due to native integration of ecommerce and payment capabilities by several social media platforms and messengers. There are three key reasons why they are a great strategy for brands in the current landscape: the increased usage of social media and messenger platforms, the opportunity to offset the revenue loss from store closures and the ability to go online with minimal investment. Conversational Commerce platforms like Store2Door+ which harness a phenomenal engagement rate of 90%+ of WhatsApp Commerce can immensely help in the cause.
Empower your reps for success
Consumers are going to be reluctant to walk into retail stores for a while even after lockdowns are lifted. A great way to ease purchase friction and overcome concerns around hygiene and safety is to have your store staff interact with customers on a weekly basis. Empower your staff with a staff clienteling app like StoreMax connected to your CRM and loyalty systems to create a direct line of communication with your top customers.
Revisit Your Personalization Strategy
The personalization fabric is typically woven with months or years of customer data. Unfortunately, the new normal has shifted customer behaviour and user preferences beyond anyone could have ever imagined. This can result in incorrect and irrelevant recommendations and content being pushed out to your customers. While this can dent a brand’s image even under normal circumstances, it’s doubly damaging when the audience is anxious and stressed out. The key is to use smart segmentation to focus on your “Top X%” customers and have a dynamic campaign based on real-time user behaviour.
Capillary is committed to supporting you in navigating these uncertain waters. If you have product, strategy or service questions related to COVID-19 response, please contact us.
Digital is pushing the frontiers of marketing and customer engagement, especially in retail. From being product-centric in early days, retail has quickly evolved into a full-fledged customer-centric experience. Today, digital technologies and the abundant possibilities of ceaselessly connecting with the customer has paved the way for retail to be a more nuanced, personalized experience.
True, retail faces its challenges when it comes to digitalization, given its strong association with being a ‘touch and feel’ experience; something antagonistic to digital. The industry is also undergoing transition, primarily in reaction to the relentless rise of e-commerce. While offline stores still account for 90% of retail business, their online counterparts are quickly gaining popularity through innovative marketing and focusing on the convenience factor. To keep up, brands are transforming their brick and mortar stores by adopting digital technologies that will retain the attention of today’s distracted customer through optimized, brand-centric in-store experiences.
Deploying digital technologies such as IoT, AR/VR, Big Data and Machine Learning in an in-store environment offers infinite, compelling opportunities to retailers.
Factors Driving the Digital Transformation
On the face of it, digitalization for a brick and mortar retailer translates to new ways to engage and excite the customer to create incredible experiences and ́ ‘stories’. But there’s more to this narrative than building smarter store environments. Below are some factors that spur the adoption of digital technology across conventional retail stores.
In-store technology — whether in the form of virtual product lanes and trials, interactive kiosks or smart displays — helps to blur the distinction between online and offline shopping experiences for the buyer.
It helps the brand to take the centre stage in the customer psyche and the buying channel becomes inconsequential.
A novel, immersive experience at a store helps build brand recall and customer loyalty. Smart use of virtual/augmented reality can enhance store ambience, entertain visitors and build a memorable shopping experience through personalized interactions.
Moreover, there are obvious cost savings that technology brings in; especially in terms of efficient staff and inventory management. A greater advantage to the retailer is the effortless mapping and analytics of data related to customer behaviour that AI-powered footfall counter and similar technologies help gather. Needless to say, such data can be valuable in planning future brand marketing.
Lately, the growth of omnichannel commerce solutions has further fused the online and offline retail businesses for brands. Omnichannel buying enables offline smart stores to act as extensions of the brand’s online presence. For example, many brands such as Starbucks, Van Heusen, Zivame, Pepperfry, Adidas offer buyers the option to buy online and pick up the orders at physical stores. This becomes a true win-win for the buyer and the seller, owing to the flexibility and convenience that incorporated.
The Digitization Impact on Offline Store Experience
Given the plethora of technologies available, physical stores selectively deploy technology based on the specific business goals in target. Once the goals are defined, enabling technologies can be chosen and implemented.
One obvious goal for a retail brand is to enhance the overall shopping experience, for every customer who walks in. Another is to boost store footfalls.
Let us look at some in-store technology use cases below:
Headsets and devices to help users superimpose digital environments in real-life environments. Many brands deploy devices built on augmented reality to enable customers to experience the product. Car makers such as BMW and Range Rover use AR devices to allow users to experience the vehicles without physical driving.
A number of retailers have taken to using VR to show virtual products to the customer. This is convenient when you don’t have the product available in-store. For example, in its store in Amsterdam, Marks & Spencer has a virtual, real-life size dress rail on a touchscreen, allowing shoppers to browse through the latest offerings. Another instance is IKEA building a VR store experience through pop up stores in the Middle East, where visitors can view, and shop IKEA’s furnishing products by wearing VR headsets.
AI has multiple applications in a physical store. The most familiar instance is that of Amazon Go, which deploys AI to track purchases and enable a seamless buying experience, in a cashierless store. The landscape of AI applications in physical retail is still unravelling itself. Some instances include the deployment of voice AI to get customer service and enable customized store settings, interactive dressing rooms and self-checkouts based on AI systems. The future possibilities are endless.
China is considered a leader in the adoption of facial recognition to enhance in-store retail experience. Customers pay by scanning their faces, which in the database are linked to payment details; shopping is seamless and the entire process beats identity frauds. Another benefit is that shoplifters can be identified by the system as soon as they enter the store.
In-store sensor technology
Allows for use of in-store analytics capabilities to drive better customer experience. While sensor technology pertains largely to on-the-go-billing and merchandise tracking — for eg., RFID, and sensor-fitted shelves to spot misplaced stock– the benefits reflect in boosted sales, merchandise management and enhanced store layout, among others.
When a customer visits a store, it gives the brand an opportunity to create a delightful and memorable experience. Digitization can play a major part in creating these lasting relationships with your customers by :
Offering multiple options such as interactive kiosks and AI-powered bots to reduce the stress on the sales personnel. This self-service environment makes for happy shopping experience for the visitor. Use of AI-powered bots at the store can assist sales by gathering customer data without staff intervention. Similarly, AI-powered kiosks support self-service to a great extent by auto-matching customer preferences to product recommendations.
Bridging the online-offline divide in retail business through omnichannel commerce – for instance, allow shoppers to pay online and nudges them to visit the store for order fulfilment. Or allow in-store customers to place orders online and deliver it to their doorstep.
Once businesses have mapped business goals to technology and implemented it, it is vital to measure impact and gauge the ROI prior to scaling. In fact, planning your investments on digital technologies must accompany pre-defined measuring mechanisms to check if the technology meets pre-set branding or business goals. In simple terms, the digitization efforts must favour the customer as well as the business. To stay on track, your business must build a consistent performance assessment system.
Over the years, retailers have used Same Store Sales (SSS) as a yardstick to measure store performances. It is a closely scrutinized metric since it gives an accurate picture around revenue growth and more importantly, the overall customer satisfaction levels and in-store experience. The current retail landscape marked by higher competition, fickle customers and digitization has made it all the more important for brands to focus on basics like improving same-store sales.
So, what exactly is same-store sales?
Same-store sales or comparable-store sales is simply a comparison of sales for a set of stores over a specific period. For instance, it allows brands to compare third-quarter revenue for 2019 with third-quarter revenue of 2017. If the figures of same-stores have increased from the previous year, then it means that the company is moving in the right direction. So it is important for companies to keep an eye on same-store sales figures to gauge how well they are doing.
Importance of measuring same-store sales
Comparisons between existing locations and new ones help companies understand and learn business trends and shape important and critical strategies; for instance, to take decisions around focusing on existing stores or going into expansion mode and opening new ones.
An increase in same-store figures is a good indication for investors because it helps them to evaluate how well the company is doing in retaining their customers. It also helps to boost the stock prices of a company. Whereas, a decline might indicate that customers are losing interest in their products or services or that new stores are cannibalizing business in existing locations. SSS typically affects stock prices; industry forecasts around the health and future success of a company.
Same-store sales also reveals missed opportunities; problem areas that can be worked upon and the type of process that can be set in place. These figures also help market analysts to find out the effectiveness of retail management and if they are able to convert existing assets into the revenue growth.
How to increase same-store sales
Know your customers
In today’s competitive world, it is extremely important to proactively know who your customers are, rather than being reactive and responding to customer feedback. There are variousin store retail analytics solutions that will help you track frequent customers and the ones who spend the most. Loyal customers and repeat visits are critical factors in determining your same-store sales.
Analyzing in-store customer behaviour using AI-poweredfootfall counters and empowering your store staff with clienteling solutions can further help you improve the in store customer experience through personalized engagement strategies. For example, if a frequent customer has fallen off the radar , your store staff can send them a personalized promotion to bring them back by making them feel important and valued.
Send promotions and personalized offers
You can send personalized offers to a targeted audience to increase footfalls during a slump. For example, if your business is slow in the second quarter, it might be a good idea to offer a 20% discount during this period to a select set of customers who have previously shown high purchase intent. This could go a long way in increasing customer loyalty and same-store sales.
Customers like to feel appreciated and valued by their favourite brands. Promotional offers and exclusive promotions targeted at them can go a long way in increasing the Average Basket Value, besides increasing the frequency of visits to your stores. The key to successfully execute such personalized experiences is an AI-poweredCustomer Data Platform that combines and refines online and in-store data to build a Single View of Customer.
Responding to customer feedback
Responding to customer feedback with immediacy is critical to the health of a company; and in terms of customer loyalty and increasing the revenues over a period of time. If there is positive feedback, then it means that the business is moving in the right direction. But, if the feedback is negative, it becomes important to address the concerns of customers positively. For instance, if there is continuous negative feedback about your staff, it becomes imperative to have a staff meeting and coach them about handling customers and also have a training program to address the gaps in performances.
Focus on the quality
It makes perfect business sense to review your products and services periodically, to find out how you can improve, provide additional value to customers and offer solutions that are innovative and creative. It is important to evaluate your offerings and find out what is working and what is not and why. With advanced people counters, you can understand the demographics of your visitors like gender, age so that you can tailor your products to appeal to a specific segment. High quality products and exceptional after-sales services will ensure a loyal and repeat customer, thus increasing same-store sales.
Hire the right staff
Investing in hiring the right staff who will do the actual selling of your products and services will have a major impact on your in stor experience. They should love their job, be glad to be where they are and know their products, like the back of their hand. Mike Eden, owner of the Ultra Gear Shop says “The staff should be knowledgeable and passionate about their products and should offer exceptional experiences to customers, the same as they have. They should share their passion with confidence.”
Offer your employees training programs from time-to-time, to upgrade their skills and bring them up-to-speed with the latest in retail trends. The staff should be able to identify customer needs, give them what they want and show them value in their choices. Brands should also invest in clienteling solutions and instant access to customer data via mobile apps for staff to help them track and engage with customers on an ongoing basis.
Understand & adopt the latest trends
It is important to keep an eye on the latest trends, understand what your customer wants, what sells and what does not. For instance, cashless checkouts, VR and BOPIS are some of the recent trends in retail. If your store does not offer customer experiences that are in sync with current trends, there is a chance of your comparable store sales taking a hit.
And more importantly, it’s important to understand what your customers are expecting from your brick and mortar stores. Is it the touch and feel aspect? Or personalized interaction? Or immediate delivery? Brands will need to understand the role of their brick and mortar stores in the overall omnichannel context and focus on enhancing the strengths of this channel. The more up-to-date you are with the latest trends, the better you will be in meeting customer needs, staying ahead of the competition, adding value and staying relevant.
Brands – often mistakenly – focus only on promotions and discounting to increase same-store sales. However, customer satisfaction and customer engagement are increasingly becoming important factors in boosting revenues and creating loyal customers. In order to improve same-store sales and increase Customer Lifetime Value, it is important to offer engaging and personalized customer experiences, invest in infrastructure and improve efficiency.
The F&B business is one of the toughest markets to be in. On one hand, you have rapidly rising rental, labour and raw material costs, and on the other, fickle and highly demanding customers who expect the best dining experience every time. And to top it all off, you have aggregators eating into your already declining margins.
To stay afloat and thrive in this dynamic and competitive market, restaurants will need to keep up with the latest F&B trends by adopting new-age technology to elevate the dining experience through faster, more efficient service, streamlined kitchen operations, real-time customer relationship management, omnichannel engagement and innovative digital experiences across multiple formats.
Brands like Luckin Coffee and Dominos Pizza are leading the way in this new technology-driven, digital-first F&B business model. And the results speak for themselves: Luckin Coffee is set to increase its number of locations from 2,000 to more than 4,500 by the end of 2019. And more than 60% of Domino’s US sales in 2018 came via digital orders, and the pizza maker achieved its 30th straight quarter of same-store sales growth and saw its stock rise 22% in a turbulent market.
Here are the top F&B trends that you should watch out for in 2020 :
The Rise of Eat-ertainment
Much like the transformation of retail from being a transaction-driven to experience-driven model, dining out is quickly becoming more than mere eating. Today’s connected customers expect a series of delightful micro-moments right from the table reservation (through an app or website) to leaving the restaurant. Whether they will return and become loyal customers is entirely dependent on how well a restaurant is able to craft these moments while incorporating elements of fun, surprise and entertainment. In short, serving good food is merely not enough anymore and restaurants should look at leveraging new-age technology like AR, VR and other interactive digital interfaces to create these unique moments.
As customers get used to personalized interactions in other industries like health care, beauty and retail, they will come to expect the same from their favourite restaurants. Brands can leverage the customized F&B trend in multiple ways like recommending dishes based on previous online/offline customer interactions, building a rich customer profile that incorporates personal preferences, allergy information etc, ‘build-your-own-dishes’, or simply personalized messages on the food using stamping or embossing techniques.
Self-ordering kiosks are being hailed as the secret to the success of QSR chains and it has already proven highly effective in improving customer experience, reducing labour costs and increasing sales during peak hours. A self-service solution is essentially a digital interface that allows in-store customers to submit orders, pay for it and skip the long waiting lines. It’s also fairly easy and cost-effective to implement as the components comprise of a tablet, bill acceptor and card swipe module. These ordering interfaces can also be synced to be your CRM to offer personalized menus/offers and also create cross-sell/upsell opportunities. However, before following this F&B trend blindly, bear in mind that a self-ordering kiosk is likely to be effective only for QSR chains where the focus on getting the orders out as quickly and efficiently as possible.
From Lab to Table : Cell-based Meat
The Maharashtra government and the Institute of Chemical Technology have already signed an agreement with U.S.-based non-profit Good Food Institute establish a Centre for Excellence in Cellular Agriculture. The institute plans to setup a greenfield lab by the end of 2019 and expects to offer tasting tests of lab-grown meat by early 2020. Proponents of the technology list several health and environmental benefits – the meat is slaughter-free, free infections of salmonella and e coli, not injected with multiple doses of antibiotics and leaves a lot less carbon footprint. This is one F&B trend that’s set to take off in the near future.
Focus on Sustainability & Transparency
With deforestation, human rights violations and climate change grabbing headlines almost every day, consumers are increasingly demanding more sustainable and humane products and ingredients. From grass straws to drinking cups made from palm leaves, bamboo tableware and chemical-free kitchen cleaning products, several F&B brands are actively moving towards a plastic-free, sustainable living for a better future. Consumers today not only want to know where a brand’s product, ingredients, etc. are sourced from but also how the product was made, how it got there and the assurance of quality. Technology plays a vital role in mapping the entire lifecycle of a product, and communicating it in a transparent way is critical for building brand loyalty as well as word of mouth.
The Reign of Convenience
We’re seeing a large number of restaurants — both fast-casual and fine dining — jump on the F&B trend of implementing new interfaces and touchpoints to engage customers and offer easy access to the brand in new ways. In addition, ordering via apps has grown exponentially. These applications have definitely changed the consumer dining experience and provide better customer convenience. Mobile apps now allow consumers to view a restaurant’s menu anywhere and place an order so that it’s ready when they arrive. And the technology has benefited restaurant owners too – giving them more time to prepare food, optimize their operations and increase table turnover. Also, since most pre-order apps have online payment features, restaurant owners can sell their meals in advance.
Personalized, Value-driven Loyalty Programs
An F&B brand’s success is heavily hinged on Average Order Values (AOV) and repeat purchases. However, a generic, one-size-fits-all reward program doesn’t cut it anymore. To boost sales and repeat visits, a restaurant loyalty program needs to be highly personalized, omnichannel and value-driven. According to Evergage, 88 percent of marketers reported noticed signified improvements through personalization and more than half report a lift greater than 10%. In fact, Panera, the US-based bakery cafe’s loyalty program generated $1 billion in sales in 2018. Moreover, personalized loyalty programs tend to increase the average bill values and enhance guest satisfaction levels. For this reason, it’s important that F&B brands partner with vendors that can implement a unique, value-driven loyalty program that rewards guests not merely for transactions but for reviews, social sharing and referrals.
Stay on top of the latest F&B trends, test-drive our award-winning F&B Loyalty Program Software, Get a Demo
AI-Powered Inventory Optimizations
Restaurants deal with a highly dynamic inventory comprising primarily of fast-moving and perishable goods. To reduce wastage, predict demand and ensure great service, it’s critical for them to get their inventory management right. An Artificial Intelligence system can connect the dots between diverse factors like guest preferences, social media engagement, brand mindshare, product shelf life, global F&B trends and even the weather to help you streamline your supply chain and prevent stockouts.
Technology adoption amongst F&B brands is expected to skyrocket in the coming years. However, the key focus point in product and solution implementation should be its relevance, impact on overall customer experience and improving convenience. If not brands, run the risk of riding an expensive hype train that’s headed to no man’s land.