‘Emotional loyalty,’ the new way retailers retain customers
In Hong Kong, one in two consumers buy only from brands they trust so keeping that relationship exciting pays off.
Loyalty programmes like Cathay Pacific’s “AsiaMiles” and DFI Retail’s “YUU Rewards” tend to focus on “transactional loyalty” or rewarding customers as they make purchases. But in Hong Kong, where almost half of consumers want to actively engage with brands, experts suggest that companies also prioritise building of “emotional loyalty.”
“Hong Kong consumers are looking to build more authentic, one-to-one connection with brands, as there is an increased tendency for Hong Kong consumers to select unique, curated and personalised experiences,” Prudence Lai, senior analyst at Euromonitor International, told Hong Kong Business.
Citing Euromonitor’s “Voice of Consumers: Loyalty” survey, Lai said the consumers participate in loyalty programmes of a brand that “offers or gifts just for being a customer,” “helps solve a problem,” and “say ‘thank you’ for being a customer.”
“This shows that customers with strong interest in engaging with brands through joining loyalty programmes are searching for more personalised and emotional connections,” Lai said.
HSBC’s “Travel Guru” membership programme demonstrates effective loyalty building in businesses and was launched “to stay relevant to their target consumer groups after observing the strong sentiment for outbound travel,” she said.
“Through staying up-to-date in terms of the needs and wants of target segments and innovating loyalty programme offerings around it, it helps in building emotional loyalty towards the business,” she added.
One of the programme’s features is the personalised alerts for members, keeping them informed of the latest travel offers.
Customised for customers
Personalisation, according to Kai Tang, head of Adyen Hong Kong, is fundamental to developing an effective loyalty programme.
Citing Adyen’s Hong Kong Retail Report, Tang said 70% of Hong Kong consumers would like to see more personalised discounting at retailers they regularly visit to shop.
Retailers, however, fail to create tailored discounts and seamless, personalised cross-channel experiences due to a “disconnect” between online and in-store transaction data, with only 23% being able to do so.
A way to connect data from online and in-store transactions is through “unified commerce,” said Tang.
“Unified commerce” ensures that “data from all sales channels can be consolidated and accessed with a single view.”
“By doing so, retailers can gain insights of customers’ purchasing patterns and shopping behaviours across channels, helping them boost interactions with customers and personalise services, eventually promoting loyalty,” Tang said.
Data that brands can use to come up with tailored benefits is payment data.
“This is what we term as ‘payment-linked loyalty,’ where businesses can use customer recognition to make their existing loyalty programme more frictionless for their customers by removing the need for a traditional loyalty card or app,” Tang explained.
“A customer’s payment method can effectively become his/her loyalty card, which can automatically trigger discounts, tailored recommendations, and other rewards,” Tang added.
Another way for brands to actively engage with their customers is through “gamifying” their loyalty programmes.
“Gamifying interaction between customers and brands increases the number of touchpoints and creates habits to engage with brands with higher frequency, and in the end groom customer retention,” said Lai.
Amongst the brands that have adopted gamification include F&B chain Maxim and Sephora.
Maxim’s omnichannel Eatie app has mini in-app games where customers need to complete challenges for rewards. With an omnichannel approach, the restaurant is able to redirect its online traffic to offline outlets.
Sephora, on the other hand, has a feature called “Beauty Insider Challenges” where loyalty programme members can do tasks to earn more reward points. Some involve purchases, whilst others do not.
“Other than building an individual app to gamify experience, embedding gamification in loyalty programmes can build reason and excitement amongst customers to engage and groom retention,” Lai said.
Given that one in two Hong Kong consumers only purchase from brands that they trust, Lai said it is important for brands to increase the frequency and duration of engagement with customers as this helps build relationships and trust.
“With the aim to increase the engagement, hyper-personalisation through monitoring user activity, adopting gamification strategies and creating brand communities especially on social media platforms help create various types of relationships with your loyal customers,” Lai said.