Indonesia is by a fair margin the largest country in Southeast Asia and is home to nearly 270 million people. The country has attracted the attention of major brands, business conglomerates and investors owing to multiple  factors :

  • A rapidly growing segment of Middle-class Affluent Consumers (MACs)
  • Young population – the median age in Indonesia is 30.2 years and 66.5%  of the population is between the age of 15 and 64 years.
  • Increase in internet & mobile penetration  – 80% of Indonesians prefer to use smartphones to access the internet
  • High Ecommerce adoption rates – 90% of Indonesia’s 152 million internet users have purchased online before.
  • Rapid Ecommerce growth – Indonesia’s ecommerce market stood at a whopping USD $21.0 billion in gross market value (GMV) in 2019

Customer Engagement & Brand Experience as a Competitive Advantage

The retail sector in Indonesia remains one of the most promising markets among Asian countries and is expected to grow to $42.34 billion by 2023. However, like many Southeast Asian markets, it’s highly competitive and fragmented with few dominant players like Indomaret and Alfamart.

According to a study by SurveySenum, ‘67% of customers in Indonesia switch brands not because of the price or the features, but because of the lack of good customer experience’.

Brands typically engage in price wars and discounts to stay afloat in these commoditized markets but it ends up making a huge dent in the bottom line. Retailers aiming at long term survival and success in the Indonesian market will need to invest in elevating the Customer Experience through personalized, omnichannel engagement, loyalty program enhancements like gamification, social commerce enablement and world-class after-sales support to capture the interest of the digitally-savvy consumers.

Indonesia is a Gold Mine for Omnichannel Marketers

With over 170 million internet and social media users, Indonesia is home to one of the largest digital audiences in the world. As of January 2020, online penetration in the country stood at a whopping 60%.  

For most Indonesians, social media is a convenient way to contact families in remote locations of the archipelago, allowing them to stay in touch with friends and also keep up-to-date with the daily news. The most popular social networks in Indonesia in terms of adoption rates are YouTube (88%), WhatsApp (83%), Facebook (81%), Instagram (80%) and Line (59%). However, Indonesia’s social media audience isn’t merely large, they are also very active. The average Indonesian spends 3 hours and 26 minutes on social media every day. This is a significant spike compared to the global average of 2 hours and 22 minutes.

Indonesians are also heavy mobile internet users. A Google Consumer Barometer survey found that 81% of Indonesians prefer to use a smartphone to access the internet, with only 3% preferring the desktop. A recent report by iPrice supports this, indicating that 87% of shopping in Indonesia is done on a mobile device. 

On the other hand, there is a steady stream of low-income consumers continually moving into the middle-income segment and they are becoming increasingly sophisticated in how they engage with brands and decide what to buy. This will fuel a further increase in tech-savvy consumers who are ‘channel-agnostic’ and expect to receive personalized experiences in real time across email, SMS, social media, website and mobile apps.

Top 5 Customer Engagement Trends in Indonesia

While discussing trends, it’s important to remember that brands should adopt new technology or platforms not because it’s the latest buzzword but rather critically evaluate how it contributes to a better experience for their customers. On that note, here are the top 5 customer engagement trends prevalent in Indonesia. 

  • The blurring lines between social media and commerce

Social commerce is gaining rapid momentum in Indonesia thanks to the higher social media penetration. Brands are finding it easier than ever before to start selling through Instagram and WhatsApp Commerce by engaging customers with real-time videos and personalized product catalogues.   

According to Indonesia’s Ministry of Finance, 64% of all ecommerce transactions in 2019  occurred through social media. The Covid-19 crisis provided a further boost to the adoption of social commerce in the region. While establishing a social commerce strategy, it’s important for brands to deliver a personalized customer experience by integrating it with their existing tech stack like loyalty platform, marketing automation and CRM.

  • Indonesians have a higher distaste for Ads

While there is a growing trend of ad blocker adoption across the globe, it has seen explosive growth in Indonesia. A staggering 58% of mobile users in Indonesia have enabled one or more types of adblocker.  In comparison, mobile ad blocker adoption rate is  28% in India, 13% in China and 1% in the US and UK.  It is apparent that consumers are not interested in generic advertising and it is crucial for brands to use highly personalized engagement to drive high-value conversations.

  • The rise in demand for personalized, real-time, cross-channel engagement 

On any given day, Indonesians use a plethora of digital platforms like WhatsApp, YouTube LINE, WeChat, Instagram, Facebook Messenger, Email, Mobile App, SMS etc. They are also increasingly judging brands based on how it interacts with them across these channels. Unfortunately, one of the key challenges that Indonesian marketers face is managing the sudden surge in data brought about by this rapid digital adoption by customers.

This often leads to disjointed and ineffective customer engagement, which ultimately leads to a negative Customer Experience. Our experience with retailers in other emerging economies like India, Saudi Arabia and Malaysia clearly indicates that a combination of Customer Data Platforms (CDP) and cross-channel engagement solutions like X-Engage can significantly improve customer engagement through unified data pools, hyperpersonalization besides delivering higher campaign ROIs.

  • Gamified loyalty programs will be key to drive deeper engagement

Gamified loyalty programs are simply engagement-oriented reward programs that focus more on the non-purchase aspects of customer engagement. Unlike traditional loyalty programs which are heavily focused on earn/burn aspects of a transaction, these new-age loyalty programs are geared towards the digital consumer who wants to be rewarded for social actions like reviews, comments, shares, retweets etc. 

  •   Location-based mobile interactions

Considering the high smartphone penetration in Indonesia, it’s no surprise that several brands are experimenting with wi-fi beacons and very granular IP addresses to deliver location-based promotions and offers. While the technology has been so far used by shopping malls to invite shoppers to download a proprietary app to get access to exclusive details and sale information, we expect this trend to be adopted by Single Brand Outlets (SBSs) and large department stores. For brands, there is also an exciting possibility to use location data to improve their social media strategy by engaging customers across Facebook, WhatsApp, Instagram etc.

Wrapping Up 

While Indonesia’s geography and fragmented topography render it unique, the audience shares similar behaviour and aspirations as other emerging markets in Asia. The winning playbook for brands is to understand their customers, invest in AI-powered digital/technologies and analytics, and seize the opportunity to engage customers in a highly personalized way to improve brand loyalty and sales.

Amrutha Aprameya
Amrutha is a passionate marketer with over 8 years of experience in the areas of SaaS-B2B marketing, demand generation, enterprise marketing and product marketing across Retail-tech, Conversational AI and IT management domains. As a passionate technology marketer, she loves helping SaaS companies achieve their market expansion, product adoption, brand awareness and demand generation goals. Apart from loving her profession as a tech marketer, she is also passionate about travelling and blogging.