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.

Keerthana Tiwari
Keerthana is a business journalist and is adept at catching market and retail trends. She enjoys analyzing facts and figures and often shares those insights through her writing. Before becoming a writer, Keerthana also had a stint in Biotechnology research.