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.