Inflation has steadily risen globally, with consumers seeing price hikes at every turn. If this trend continues, consumers will likely deprioritise their brand loyalty and choose more economical alternatives.
This does not bode well for businesses. Research has shown that retaining customers is cheaper than acquiring new ones and that improving retention by just 5% can drive profits up by over 25%.
DigitalEdge speaks to Priyanka Gargav, head of Commercial for Southeast Asia and Hong Kong at financial technology platform provider Adyen, to find out how businesses can effectively build a loyal customer base in times of inflation without resorting to long-term deep discounts.
How important are loyalty programmes to businesses in Singapore? How can such programmes help in times of economic uncertainty?
Adyen’s Retail Report 2022 reveals that more than half of businesses in Singapore aren’t prioritising loyalty programmes as they do not think keeping customers engaged through such initiatives will contribute positively to revenue. 43% of them do not have formal loyalty programmes in place.
Against the backdrop of high inflationary pressures and growing competition in the market, consumers are more cautious with their dollar. However, offering discounts and promotions is not sustainable in the long run, as consumers can easily switch brands if they spot a better deal elsewhere.
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To successfully attract returning customers, brands must address their customers’ growing expectations and gain their trust. Our report also found that consumers are willing to shop with businesses with loyalty programmes, especially if they work automatically through their payment cards.
In what ways do Singapore businesses fall short when meeting consumers’ expectations and retaining customer loyalty?
Many believe great products and offerings will attract and retain customer loyalty. That might have been the case a few years ago, but this trend no longer rings true in today’s competitive market. Today, it’s the consumers calling the shots.
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Businesses must stand out from the competition, but it can be tricky to nail down what makes the customers tick. This is where our research comes into the picture: Consumers value seamless, hassle-free experiences; rewards that matter; and security and flexibility in the purchase journey.
There’s a clear gap to be bridged here if businesses want to nurture customer loyalty for the long term. Leveraging technology, particularly in the payments area, can be a way to address these consumer expectations.
What are the key ingredients of a well-designed loyalty programme? How can payments help?
Our findings reveal that Singaporeans are more likely to frequent businesses that reward them for their loyalty, but the loyalty programmes must be convenient.
One way to do so is to link the customer’s payment card to the business’ loyalty programme, which can automatically trigger discounts, personalised recommendations, and other rewards as they pay.
A well-designed loyalty programme is one tool in an organisation’s arsenal to retain customers. Businesses must look hard at what customers value to nurture customer loyalty.
Besides seamless purchase journeys, customers want to receive rewards that matter. They also want businesses to do better when rewarding them for their loyalty. This can be something as simple as providing a more enjoyable experience.
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For example, 48% of Singaporean consumers would like quick-service restaurants to recommend dishes they may enjoy based on their previous takeaway orders. For this to happen, food and beverage providers must first be able to recognise and know the diners as they pay for their orders. Therefore, an integrated overview of the payments data across all channels becomes key.
Brand trust is also important to customers. This calls for businesses to assure customers that their service is secure, their data is safe, and they can leverage tokenisation.
In payments, tokenisation is used to safeguard a card’s primary account number (PAN) by replacing it with a unique string of numbers, meaning that the PAN is not transmitted during the transaction. Even if fraudsters manage to steal tokenised payment data, they cannot use them to pay online as they cannot link the token to payment information stored securely by the payment partner.
Singaporean consumers value this added security, with 59% wanting the providers to offer tokens so they can make purchases easily while keeping their cards away. In this process, the payments provider takes on the burden of managing cardholder data stored securely, thus reducing the costs involved with meeting and monitoring Payment Card Industry (PCI) compliance by the businesses. This frees up precious resources for the business to focus on what truly matters: its customers.
One company that has benefitted from payment tokenisation is Crown Digital, the creator behind Singapore’s first robotic coffee barista. By working with Adyen to implement tokenisation, repeat customers can experience a smoother checkout on the Crown Coffee app while the company can track the preferences of their loyal customers to design rewards that matter to them.
How else can payments help businesses become more resilient?
When businesses think about payments, the standard train of thought is offering cashless methods, but there’s a lot more potential for payments than that. It’s not simply about cashless or digitisation but enabling businesses to be fast, flexible, and scale where required.
A unified commerce setup helps businesses to do just that. Unified commerce gives businesses end-to-end control of transactions across different sales channels on a single platform based on recognising your customers when they make a purchase. Here is how it helps businesses thrive:
- Richer customer insights: A single, integrated overview of all transactions allows businesses to connect transactions to individuals and build a deeper understanding of their purchasing behaviour across all channels and, ultimately, make informed business decisions.
- Revenue optimisation: By linking transactions across a global network of payment data, businesses can detect fraud earlier than if their sales channels were siloed. Consequently, this increases revenue for merchants as fraudsters can be distinguished from genuine customers more accurately to increase authorisation rates, leading to more successful sales transactions.
- Easing of operational burden: With all of the payment data in one place, businesses can reduce the operational burden on their staff. For one, monitoring and management become easier with reconciliations and dispute management done all from within a single payments platform.
For retail brands, unified commerce also helps with inventory management and staff rostering, as they can observe the velocity of transactions during certain periods to ensure they have enough stock and staff to serve their customers.
This interview has been edited for length and clarity
