Mer­chants’ ma­chin­ery taps into feel­ings

China Daily (Canada) - - HONG KONG -

com­mu­nity, as well as the tra­di­tional prod­uct and ser­vice re­li­a­bil­ity and qual­ity.

Ac­cord­ing to the pro­gram, cus­tomers could opt for a por­tion of the money they spend at Marks & Spencer’s out­lets to go to the char­i­ties of their choice. The re­tailer would en­gage cus­tomers in a con­ver­sa­tion on the char­i­ties they want to sup­port. The re­la­tion­ship be­tween the shop­pers and re­tailer would then be not just trans­ac­tional but much more per­sonal.

In­stead of just earn­ing re­demp­tion points, the points Marks & Spencer’s cus­tomers earn could take them to the next level, where they are given dif­fer­ent re­wards and of­fers, de­pend­ing on their po­si­tions on the loy­alty pro­gram lad­der.

These novel ways of en­gag­ing cus­tomers come as the trans­ac­tion-based model of mar­ket­ing loses its glamor and con­sumers be­come more tight-fisted amid grow­ing un­cer­tain­ties in Hong Kong’s econ­omy. Re­tail­ers have to find new ways to bol­ster sales.

The value of re­tail sales in Hong Kong dived 8.1 per­cent to HK$436.6 bil­lion last year fol­low­ing a 3.7-per­cent de­cline in 2015 and a 0.2-per­cent drop in 2014, Census and Sta­tis­tics Depart­ment data showed.

“Con­sumers will have to tighten their belts again af­ter a few years of plenty. The com­bi­na­tion of higher in­fla­tion, ris­ing debt­ser­vic­ing costs and a slow­down in job creation across the globe is curb­ing global spend­ing power which will grow at the weak­est rate in eight years in 2017,” pre­dicted Tom Rogers, as­so­ciate di­rec­tor at eco­nom­ics think­tank Ox­ford Eco­nom­ics.

The per­cent­age change in per capita con­sumer spend­ing power in Hong Kong would be 2 per­cent and 1.6 per­cent this year and next year, re­spec­tively, lower than the an­nual growth rate of 2.5 per­cent from 2007 to 2013, and 2 per­cent in the pe­riod be­tween 2014 and last year, ac­cord­ing to Ox­ford Eco­nom­ics.

Global cus­tomer loy­alty mar­ket­ing agency Collinson Group’s sub­sidiary ICLP has found that most Hong Kong con­sumers are less com­mit­ted to their fa­vorite re­tail­ers than ever. In a sur­vey in­ter­view­ing 750 con­sumers in Hong Kong, just 1 per­cent were de­voted to pre­ferred re­tail brands.

The mar­ket­ing agency em­pha­sized that brand loy­alty was based on an in­clu­sive ap­proach that val­ued hu­man re­la­tion­ships, pas­sion, in­ti­macy and com­mit­ment. Un­der­stand­ing these was es­sen­tial to brand build­ing.

“Loy­alty pro­grams have to be in­clu­sive, more ex­pe­ri­ence­ori­ented, re­ward-re­cur­ring and com­mu­nity-re­lated to elicit cus­tomers’ long-term par­tic­i­pa­tion,” ICLP Gen­eral Man­ager Mary English told China Daily.

Tra­di­tional cus­tomer loy­alty pro­grams were es­sen­tially ex­clu­sive in na­ture, where con­sumers had to pay first to have a place in the pro­grams. In re­al­ity, cus­tomers did not want to pay first be­cause they did not know how they would be treated be­fore join­ing the pro­gram.

“When brands’ rev­enues are go­ing down and there is huge com­pe­ti­tion from other play­ers, re­tail­ers need to em­brace psy­cho­log­i­cally based mar­ket­ing to re­tain cus­tomers,” English said.

Brands also needed to re­tain cus­tomers over a long time in or­der to de­rive value, she said.

Deloitte’s Global Pow­ers of Re­tail­ing 2017 Re­port said: “Cus­tomers are defin­ing them­selves less by how many things they own and more by how cu­rated their lives are in terms of pos­ses­sions and ex­pe­ri­ences.”

“Cus­tomers are seek­ing ex­pe­ri­ences and prod­ucts that re­flect the per­sonal brand they pro­mote on so­cial me­dia.”

How­ever, re­tail brands in Hong Kong sel­dom de­vote re­sources to cre­at­ing emo­tional el­e­ments in their brand build­ing ex­er­cises be­cause of cul­tural dif­fer­ences and bud­get con­straints.

ICLP be­lieved that be­sides the emo­tional el­e­ment of mar­ket­ing, real-time in­tel­li­gence would be a sig­nif­i­cant fac­tor to con­sider when de­vis­ing a loy­alty strat­egy.

“Re­tail­ers need to use cus­tomer data, not just trans­ac­tional

When brands’ rev­enues are go­ing down and there is huge com­pe­ti­tion from other play­ers, re­tail­ers need to em­brace psy­cho­log­i­cally based mar­ket­ing to re­tain cus­tomers.”

data, but also so­cial data to un­der­stand cus­tomers’ so­cial be­hav­ior. The data will then be seg­re­gated into dif­fer­ent seg­ments whereas re­tail­ers can lever­age cus­tomer data in dif­fer­ent ways to ad­vo­cate brand aware­ness,” said English.

A sur­vey by global tech­nol­ogy ser­vice provider NTT Com­mu­ni­ca­tions, which last year in­ter­viewed 300 large re­tail, man­u­fac­tur­ing and whole­sale en­ter­prises on the Chi­nese main­land and in Hong Kong and Sin­ga­pore, re­vealed that 58 per­cent of them had adopted ex­ten­sive big data an­a­lyt­ics to ac­cel­er­ate dig­i­tal trans­for­ma­tion and boost com­pet­i­tive­ness.

“Ex­po­nen­tial tech­nolo­gies like ar­ti­fi­cial in­tel­li­gence, robotics and vir­tual re­al­ity are chang­ing how we live and how we will shop,” Deloitte said.

DAVID PAUL MOR­RIS / BLOOMBERG

Shop­pers car­ry­ing up­mar­ket brand prod­ucts at Har­bour City shop­ping mall in Tsim Sha Tsui — one of Hong Kong’s prime shop­ping dis­tricts. The SAR, once seen as a shop­ping par­adise for main­land vis­i­tors, has seen re­tail sales slump as vis­i­tor num­bers de­clined.

Mary English, ICLP Gen­eral Man­ager

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