5 CRITICAL WAYS TO INCREASE SHOPPER ENGAGEMENT AND SALES

25 CRITICAL WAYS TO INCREASE SHOPPER ENGAGEMENT AND SALES

As the worlds of retail and technology continue to evolve at a rapid rate, so do shoppers’ expectations. With some retailers adopting the use of tablets in-store to help improve the customer service experience and others launching new online initiatives to make the shopping experience more convenient and efficient, most customers do not understand why all retailers do not do this and give them the best of all worlds.

With this in mind, it is no surprise that many retailers struggle to keep up with and satisfy shopper expectations. Satisfying expectations is no longer enough. Retailers need to exceed expectations and give customers compelling reasons that make them want to engage, spend more and become loyal advocates. Without this relentless focus in understanding who their customers are and how to make them feel more valued and rewarded, retailers will seldom connect with them in a more emotional way that deepens their personal association and secures their commitment to buying more, spending more and sharing their experiences with more of their friends and family.

Whilst winning the hearts and minds of customer needs to be firmly at the centre of any retailer’s business and brand strategy, customers need to be influenced to actively open their wallets and purchase, or encourage others to do so, in order to positively impact commercial performance. Retail loyalty programmes have proved to be successful in motivating consumer behaviour and have grown significantly in Southeast Asia over the last few years. This is reinforced with research that found that 91% of Singaporeans stating they were more likely to shop at retailers that offered a loyalty programme.1

Furthermore the path to purchase is no longer linear. Customers are probably better informed and more savvy than they have ever been. From consideration to purchase, the number of factors influencing the decision making process has multiplied. The key to shopper engagement and ultimately capturing their loyalty is for the retailer to understand the stage of each customer in their individual journey and provide the tools, channels and experiences that take shoppers from one stage to the next, from where they are today to where they want to be tomorrow. The majority of shoppers want to be engaged and reminded that they are making good decisions and that the relationship they have with a retailer is at least equal, if not weighted more in their favour in terms of what they take away.

Overview

1 Source: Southeast Asian consumers enticed by retail loyalty programs, Nielsen, November 2013

35 CRITICAL WAYS TO INCREASE SHOPPER ENGAGEMENT AND SALES

Addressing shopper frustrations and solving business issues

Whilst large global brands might be perceived as superior to local brands in most Asian markets, Singapore is the regional headquarters for many international brands and provides a particularly competitive business environment for all retailers. For some international retailers, the environment is too tough and consequently they have ceased operations, the most recent of which is Hong Kong’s homeware and lifestyle retailer Goods of Desire which joins Japanese fashion brand Lowrys Farm who did the same as earlier this year. The purchase behaviour of Asian consumers also adds other challenging dimensions for retailers to manage in order to succeed with the critical role played by international visitors, particularly those from China, domestic consumers purchasing from international brands overseas and the increasing proportion of those who shop online.

In working and engaging with retailers around the world who operate nationally and internationally in sectors from fashion to home and DIY and department stores to beauty and fitness, a number of common frustrations are repeatedly heard from customers. What also becomes regularly apparent is the additional sales and marketing opportunities that present themselves as a result of addressing these needs, which in turn translates into incremental revenue generation and meeting the business objectives of the retailer.

So what do shoppers want and how can retailers drive greater engagement and sales?

Scenario 1

For any offline and online business today not being able to identify a new or returning customer in-store is like shooting with your eyes closed. Online customers share their personal details and mailing addresses which can be demographically profiled to gain further insight but when the same person walks into a store, often the retailer has no idea who they are dealing with. What this also means is that targeted communication to known customers and individuals is not possible, leaving broad promotional activity to all as the only option. Whilst this may increase sales, it also has the potential to dilute walk-in sales who intended to purchase anyway without the promotion, reducing the overall profitability of certain customers.

Some retailers offer a digital newsletter and promotional offers as a way of encouraging customers to identify themselves and provide an email address at point of sale. Others use a loyalty programme as a very effective mechanism of not only encouraging the customer to share their personal details, but enabling the retailer to immediately associate them with their current purchase and track any future transactions.

Whatever the initiative, being able to harness the potential of the data that is available and complementing this with external data sources, will derive more meaningful customer insights that can be translated into actionable marketing strategies and improved business performance.

Shopper pain point: You don’t know who I am

Retailer need: I want to find out and understand more about who my customers are

Opportunity: Identify, capture information about customers and give them reasons to identify themselves to generate a more detailed understanding of customers and their profiles

45 CRITICAL WAYS TO INCREASE SHOPPER ENGAGEMENT AND SALES

Today consumers are engaging with brands and retailers across an increasing number of channels and this is predominantly being driven by the adoption of digital channels. Smartphone penetration has reached 87% in Singapore and Hong Kong representing the highest rate across Asia2 and Singaporean consumers now own approximately four digital devices each.3 Whilst traditional channels such as TV remain important, multi-screening or “screen stacking” is a growing trend, particularly in Singapore with 61% of respondents using multiple devices to check emails, shop online or using social exceeding the worldwide average of 48%.

What should not be forgotten is the importance of human interaction as a key channel, particularly when over half of Singaporeans state that their most frequently used channel to actually purchase is in-store and two-thirds indicated that their preference for purchasing in-store was unlikely to change in the next 2 years.4 Consequently retailers in Singapore and across Asia need to determine the mix of channels to use, along with their associated proportion, to optimise the engagement with their specific customers to drive loyalty and increase sales.

The flip side of the coin is the amount of interaction and engagement data that this creates for retailers with retailers across the world, struggling to know how to use this information. For the majority, the vision of a single customer view remains just that, a vision. Retailers continue to work towards this and see how they can access and bring together as many sources of customer data as possible to create a central database from which they can better understand individual customers, their behaviour, transactions, interactions and engagement across various channels and touch points.

This consolidated view of any individual customer will enable tighter targeting and tailoring and relevance of its content and messaging. In turn this will create data-driven insights that retailers can then take into the boardroom to demonstrate the quantifiable impact of personalised communication.

Whilst retailers may not quite be there, customers understand the value of their own data, and understandably want and expect more than they currently get in return for providing it to retailers. They want retailers to communicate more effectively with them and a recent study of Singaporean consumers, found that a third who had previously purchased felt they were not receiving communications that was either relevant or engaging from that brand.5 Consumers want to be engaged in a dialogue, a two-way conversation that recognises them and intelligently acknowledges their engagement and history with the retailer, rather than just being talked at and treated like they are a number stored in a database.

Scenario 2

Shopper pain point: I want to be treated as an individual. You know who I am and yet you communicate to me like I’m the same as everyone else.

Retailer need: I want to use the data that I have more effectively to understand how I can communicate with customers on a more personal level

Opportunity: Develop strong customer relationships based on data-driven actionable insights and tailored communication

2 Source: The Asian mobile consumer decoded, Nielsen, January 20143 Source: Rise of digital devices drives new viewing habits in APAC, Digital Market Asia, July 20144 Source: Traditional shopping is still king in tech-savvy Singapore, Singapore Business Review, March 20155 Source: Brands fail to adjust to growing consumer demand for engagement, 3radical, May 2014

55 CRITICAL WAYS TO INCREASE SHOPPER ENGAGEMENT AND SALES

British Airways recognises the value of the data it holds on the members of their frequent flyer programme Executive Club and last year started to present members with their personal travel dashboard based on the data the airline had collated about them. My Flightpath shows how many miles they’ve flown, how many times they have been around the world, how much time they have spent in the air and what cities and countries they have visited the most. They are also allowing members to share their travel milestones on social networking sites and recognise achievements by unlocking stamps when they have reached certain travel goals. Who will be next to apply this concept into the retail sector?

Such personalised communication provides a significant opportunity to drive more emotional engagement between the customer and the brand, which is far stronger and deeper than purely a transactional customer relationship. As a result, the development of a more emotional connection is definitely something that will drive engagement and sales and so is likely to become an increasing focus for retailers in Singapore and the Asia Pacific region.

65 CRITICAL WAYS TO INCREASE SHOPPER ENGAGEMENT AND SALES

Research commissioned by ICLP identified what consumers from the US, UK, Europe, UAE, KSA, India, Brazil and China said was most important to them when thinking of brands they are loyal to. The findings unanimously highlighted that all consumers want to be rewarded and expect brands to recognise their commitment. The top three priorities were (not in any particular order):

• to receive rewards based on their purchases

• to be rewarded instantly with discounts and savings

• to have coupons or rewards that can be used when they want.

This is supported by other research that indicated that 80% of Singaporeans are interested in discounts as a reward for not only making a purchase but also interacting such as visiting a store or sharing information about the brand on social media. In addition 70% would interact for the promise of being entered into a prize draw and 50% would engage in exchange for level ups in mobile games.6

The McDonald’s Surprise Alarm app7 is a successful example of customer interaction using rewards. By downloading the app, users would receive a surprise from McDonald’s to start their day which ranged from free music downloads

to food and beverage coupons to redeem in the restaurant. The app achieved over 420,000 downloads and gave out more than 5.9 million surprises. Not only did this leverage a consumer’s motivation for getting something for doing very little but also their needs for anywhere, anytime connectivity and their “always on” behaviour in interacting with their phones first thing in the morning and last thing at night.

An overwhelming consideration today is the immediacy with which shoppers expect those rewards and how they can bring forward the value they associate with being part of a loyalty programme. They are no longer happy to accept a long process of shop, collect, save and then redeem. Integrating loyalty into the POS provides the ability to reward the customer’s current spend and with real-time connectivity, returning a benefit straight to the customer via their mobile device or even on the POS / receipt itself. This means a retailer can automatically update a customer’s points balance every time they shop to deliver the instant gratification and recognition they crave for being a member and using the programme.

With the potential upsurge in e-wallets and mobile payments with the launch of the likes of Apple Pay and PayPal beacons over the last 18 months, the necessity for a loyalty card in a digital form (potentially in addition to a physical one) is critical. Luxury retailers such as Harrods still benefit from the aspirational value of having their physical card in a customer wallet, but increasingly the battle is for space on the phone. Deploying a loyalty rewards earning and redemption capability that simultaneously caters for both channels will cover the entirety of the customer base albeit with increased functionality and immediacy of redemption for those holding the digital card and the loyalty app.

Scenario 3

Shopper pain point: I want to be rewarded for my purchases and feel valued

Retailer need: I want to retain customers and encourage them to make repeat purchases

Opportunity: Retain and reward customers to motivate profitable and loyal behaviour

6 Source: Brands fail to adjust to growing consumer demand for engagement, 3radical, May 20147 Source: McDonald’s Singapore

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9 Source: Brands fail to adjust to growing consumer demand for engagement, 3radical, May 2014

Omnichannel was arguably the most overused buzz word of 2014, but a seamless and consistently delivered customer experience across all channels has always been, and remains, an essential requirement for creating and retaining customer loyalty. Whilst the commitment to offer customers more choice and flexibility as to how they want to engage with a retailer is not a new strategy, the priority is to bring together and transform all individual aspects of retailing; where the customer doesn’t see ‘channels’ but a single integrated experience with history and benefits following them when switching from one touch point to another. Too often retailers can operate as effectively separate businesses with different teams running the in-store experience, e-commerce shopping functionality and customer services department whilst completely missing the opportunity to connect these with customer data and insight.

ICLP predicts, and in some cases is already seeing, that integrated multi-channel customer engagement will be one of the key differentiators in the loyalty space in 2015, especially as retail channels continue to evolve and fragment with innovations like ‘click and collect’ and drop-off delivery kiosks. Initiatives like this are used by both bricks and clicks and ecommerce retailers who are looking to provide more convenient delivery options. It is online fashion retailer Zalora who has also been evaluating ways for making it easier for customers to do business with them. It was the first ecommerce brand to open a physical store in Southeast Asia last year at ION Orchard and has now opened its second pop up shop available for 4 months at Bugis+. It offers customers a physical experience of going into a shop and trying on clothes whilst also offering an online shopping experience where any purchases are shipped directly to the customer’s home. Not only does this provide existing online customers with an additional engagement channel but helps create awareness of the brand with a more traditional shopper audience.8

Increasingly customers engage whenever, wherever, and however they want. Omnichannel campaigns are becoming increasing important for marketers and the opportunities that this level of marketing integration creates will be significant.

In comparing consumer engagement with brands they are loyal to, consumers in emerging countries favour social and mobile above some traditional channels. Whilst traditional channels like store, web and email continue to dominate consumer interactions, social and mobile represent an increasing share of consumer engagement. In Singapore, smartphones are already becoming part of the bricks and mortar shopping experience. Research has shown that 82% of consumers use their smartphone while shopping and in addition to finding store locations and opening time, 70% use their smartphone to research products they are looking at in-store and 51% to compare prices.9

As a result, fully optimised and responsive websites that work across all interaction points including mobile are becoming the minimum expectation to encourage customers to interact and transact more. Enabling customers to engage as they like, whether on a website or loyalty programme member portal, to manage their membership and benefits whilst browsing offers and targeted communications and socially sharing interesting content is today’s minimum standard for retail loyalty digital customer engagement.

Scenario 4

Shopper pain point: Make it easy for me to do business with you

Retailer need: I want to provide a consistent experience to customers regardless of their channel of interaction

Opportunity: Deliver an intelligent omnichannel experience across all touch points that makes it easier and convenient to engage and purchase

8 Source: Zalora Singapore

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Shoppers today have all the information they need at their fingertips to make a logical and informed purchase decision. The advent of online retailers, discounters, price comparison sites and peer-to-peer resellers means the product features, performance and most importantly price is widely available across different retail channels. Aside from using stores to be a brand shop window, supported by strong owned and third party ecommerce digital, the in-store experience has to offer something different in order to turn browsers into customers and relationships into profit.

With the dramatic increase of consumer adoption of new interaction technologies, there are so many new ways that retailers are actively engaging their customers – fashion brands such as Topshop, H&M, and Burberry are leading the way. H&M’s flagship store in New York contains a virtual runway where a video of the customer appears on monitors outside the store. They also enable customers to pay for their items in the changing rooms, making the purchase process faster and more convenient. Last year in Singapore Samsung opened its largest flagship store dedicated to giving customers an experiential experience. Customers’ movements in front of a video wall were digitised and projected, access was given to all the latest range of products and information with in-store ambassadors on as well as in-store dining options.

As a leader in digital customer engagement, Burberry is renowned for leveraging social channels to offer its fans the opportunity to watch the catwalk shows in real-time at numerous fashion weeks around the world and were among the first to shop the new collections before they were available to the general public. Social apps and with the importance of instant messaging and chat permeating throughout Singapore and Asia, established brands will need to consider the best ways of engaging their customers through multiple interaction channels such as voice, video and e-commerce, to drive greater loyalty and advocacy.

With mobile as the main device through which customers engage in-store with brands, there is no doubt in the future there will be significant growth of location–beacon tools and location-based mobile triggers. Adopting beacons and a staff app can enable in-store staff to use facial recognition and transactional details of customers to recognise them and offer a very personalised experience. Using a location-based app to incentivise members to visit stores or specific area of a store when local to them, adds to the value of recommendations and suggestions that are contextually relevant, and all help to evolve the customer experience from being behaviourally-informed to being more emotionally-driven.

Scenario 5

Shopper pain point: Involve me in new experiences

Retailer need: I want customers to collaborate with us and advocate about their positive experiences

Opportunity: Engage customers in new and different ways to deliver a differentiated experience that they will want to share with others.

95 CRITICAL WAYS TO INCREASE SHOPPER ENGAGEMENT AND SALES

Back to basics of retailing – in the modern world

Long before large supermarkets and e-commerce sites, a shopkeeper knew all their local customers, made them feel welcome and valued and could probably predict what items were going to be purchased. Strangely enough, today retailers are looking to create the personalised experience except on a much larger scale and supported by data and technology.

Fundamentally those retailers that are driving engagement and sales are those who:

• understand who their customers are by giving them reasons to identify themselves to generate detailed profiles

• focus on developing customer relationships driven from actionable insights and tailored communication

• motivate more profitable and loyal behaviours to retain and reward customers

• make it easy and convenient for customers to engage and purchase through an intelligent omnichannel experience

• drive customer engagement in new and different ways to deliver differentiated experiences they share with others.

About ICLP

We drive customer devotion. We give your customers compelling reasons to engage, spend more and become loyal advocates - whilst delivering commercial results for your business.

As a worldwide leader in loyalty marketing and CRM, ICLP builds loyalty and creates devotion. From acquiring customers and understanding them as individuals, to creating relationships that engage, reward and inspire loyalty, we t urn customers into advocates and relationships into profit

– and have done for over 25 years.

We have global experience in B2B and B2C loyalty marketing in multiple industry sectors including retail, travel, financial services and technology. Our expertise is underpinned by the skills and talents of over 600 talented colleagues who work across our 16 offices for clients in over 170 countries. With customer data at its heart, together we uncover insights, determine and deliver tailored experiences that create loyal customers and improve commercial performance.

ICLP is a Collinson Group company. Collinson Group is a global leader in influencing customer behaviour to drive revenue and add value for our clients.

With a unique blend of industry and sector specialists, the group develops and delivers market-leading products and services to help build, manage and optimise customer relationships across four core capabilities: Loyalty, Lifestyle Benefits, Insurance and Assistance.

© ICLP Worldwide 2015

A COLLINSON GROUP COMPANY

To find out how we can help you drive greater shopper engagement, loyalty and sales, please contact Angela Tan on angela.tan@iclp.com.sg or +65 6416 6319.

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