Article provided by Zapper
The 2021 Truth & BrandMapp Loyalty Whitepaper once again confirmed how proficient South Africans are at gamifying our retail activities, with 74% of our economically active population using one or more loyalty programmes. In fact, so great is our love for a good deal that the average number of loyalty programmes we belong to has grown to 8.7 since 2015. Fortunately, these powerful retail tools are now also available to small businesses.
Brett White, CEO of independent QR-code and URL-based mobile payments and rewards platform, Zapper, looks at how businesses can use loyalty and reward programmes to better understand their customers and, more importantly, help influence their buying behaviour.
COVID-19 has changed how we engage with retailers
The pandemic has changed so much of how we behave. Strict lockdowns curtailed in-store shopping, with many wary South Africans choosing to transact online where possible.
In December last year, 69 million families in the US chose to shop online for their groceries, accounting for 13% of grocery sales. South Africans also showed a marked interest in online options, and we saw rapid growth of services such as Checkers Sixty60 and other home delivery services.
In the move towards a more digital retail lifestyle, we also saw some interesting shifts in retail behaviour with men using more loyalty programmes and at a higher rate than their female counterparts for the first time.
In fact, loyalty is driving real change in shopping habits with the Truth survey showing that 64% of South Africans confirm that loyalty programmes influence where they shop, 37% where they buy fuel, 33% where they bank, and even 19% saying that they are influenced by loyalty programmes in terms of which restaurants they frequent.
Given that loyalty is clearly having an impact, how can local merchants use a good digital loyalty initiative to shape how their consumers engage and transact, both on and offline?
Designing the programme to work for your specific needs
There are certainly benefits in running a digital-only business. E-commerce merchants have a complete view of the customer journey. From login to checkout, e-retailers have access to huge amounts of data that can help them develop targeted marketing campaigns to drive sales. But now brick-and-mortar merchants can also tap into the power of digital loyalty programmes to access anonymised customer data through their favourite mobile scan-to-pay option.
Once set up, merchants can also choose how to design programmes to influence buying patterns depending on their commercial objectives.
For example, if you are trying to encourage new customers, offering discounts on first-time purchases is an obvious choice. If, however, you are looking to boost spend, then structuring discounts or freebies after a certain threshold works well. For instance, for every R1000 spent, your customer qualifies for an extra 10% discount, or a free product etc.
Some merchants have been very successful in using their loyalty programme to drive repeat business, encouraging customers to collect tokens for every purchase which can then be redeemed after five or 10 visits. Some of the bigger retailers also use their loyalty offering to unlock discounts each time the customer checks out. Examples of this are the MySchool and Smart Shopper Card.
We always advise our merchants to offer meaningful discounts or incentives. Expecting someone to spend R1000 for a freebie worth R10 is never going to fly and can actually do more to damage the reputation of the business than it’s worth. However, a well-thought-out loyalty initiative can result in successfully clearing shelves of older stock, acquiring valuable new customers, and increasing the average basket size by several percent.
It doesn’t need to be complicated
Quite often the biggest inhibitor to launching a new loyalty programme is fear. Designing and running a loyalty programme can be a complex matter and building a proprietary one is out of reach for most small businesses.
Fortunately, activating the loyalty programme built into some digital payment offerings allows even the smallest of merchants to easily access the many benefits of loyalty and rewards programmes.
The digital offering also means customers don’t have to carry around yet another card, as the programme is built into the transaction process, effectively combining two interactions into one, becoming almost invisible to the consumer.
To sum up, by activating insights, vouchering and a loyalty engine built into their mobile payment offering, every merchant can have access to and enjoy the same valuable data-driven insights that big retailers do. What’s more, they can better engage their customers, build superior relationships, and grow their businesses; all at a fraction of the cost of a bespoke system.