Loyalty Potential in Asia Pacific: Embracing Diversity’s Opportunities


Asia Pacific is a diverse region, encompassing a mix of markets with different economic and social backgrounds. Businesses looking to introduce loyalty programmes in the region must keep this diversity in mind; understanding the unique aspects of local markets and catering for the needs of consumers in these markets will be critical in strengthening and retaining customer loyalty.

Rapid pace of digitalisation in the region leads to greater competition for consumers’ attention

Asia Pacific has been at the forefront of the global digitalisation wave, and the momentum in this space continues to accelerate. Such a connected environment offers both opportunities and challenges for loyalty programmes.

Utilising Euromonitor International’s Digital Consumer Index 2022, which measures the rate of digital advancement, as well as Euromonitor International’s Voice of the Consumer: Loyalty Survey, which tracks customer segmentation, Asia Pacific countries were mapped to identify the share of consumers in these countries that could be classified as “Engaged Loyalists” – that is, those consumers who are most likely to seek proactive engagement with a brand. In doing so, a negative corelation was observed, where a highly digitally-connected environment is associated with consumers being less engaged with brands.Loyalty Asia Pacific chart1.svg

They have access to more brands, products, and offers than ever before. With such a wide variety of options to choose from, there is a significant risk that consumers’ brand loyalty could weaken, especially in the most digitalised markets. ​

With the smartphone possession rate reaching 88% in Asia Pacific and 94% in Australasia in 2022, information is available at consumers’ fingertips, anytime, anywhere

Source: Euromonitor International

The ability of loyalty programmes to aid in customer retention will be challenged as digitalisation further accelerates in the region and the consumer bases in more countries become increasingly connected, but potentially less engaged​.

There is a negative correlation between the penetration of digital commerce and brand loyalty

The relationship between digitalisation and the overall level of brand loyalty in a specific country can be best explained by comparing two countries: South Korea and India. In South Korea, which is the most digitalised market in Asia Pacific, e-commerce transactions constituted 43% of retail value sales in 2022 – but consumers defined as being Engaged Loyalists comprise a relatively low share of the population. The retail landscape looks vastly different in India. The country is considered one of the least digitalised markets in Asia Pacific but has the highest share of Engaged Loyalists.

India has a unique retail landscape where small local grocers – including market stalls or street vendors referred to as “kiranas” – accounted for 49% of total retail sales in 2022

Source: Euromonitor International

Shopping at small local grocers drives closer engagement, as customers are able to communicate directly with store owners and build personal relationships. Small local grocers also often have relatively narrow product assortments, which can reinforce stronger loyalty to specific brands due to less exposure to their competitors.Loyalty Asia Pacific chart2.svg

Loyalty programmes are changing to better cater for the idiosyncrasies of different local markets

With such differences in the retail environment, loyalty programmes are evolving to better cater for local tastes. For example, in India, Zithara – a local provider of a growing rewards platform that utilises India’s Unified Payments Interface (UPI) instant payments system – launched a zero-cost decentralised mobile app-based loyalty programme called Bharat Loyalty Program in 2022. This scheme aims to help small enterprises in the country by offering UPI QR codes to customers which they can scan to receive Zicoins. Small merchants like kirana stores have limited financial capability or digital infrastructure to support loyalty programmes, but new schemes such as Bharat are expected to be highly effective in capturing a previously untapped consumer segment in the country – and one that is potentially more predisposed to brand loyalty and more actively engaged in their shopping habits.

Localisation component in loyalty programmes is essential for Asia Pacific consumers

Localisation and personalisation are closely intertwined, and the increasing importance of both concepts in the Asia Pacific commercial landscape implies that consumers are actively seeking products and services tailored to their preferences. According to Euromonitor International’s Voice of the Consumer: Loyalty Survey, “Recommend product to me based on my needs” ranked fifth out of total 11 attributes, indicating that personalisation is being valued in loyalty programmes.Loyalty Asia Pacific chart3.svg

Asia Pacific is a region of regions, and a one-size-fits-all approach to loyalty programmes cannot be applied in this part of the world. The differences may stem from idiosyncrasies of the local retail landscape or cultural, economic or demographic variances. Personalisation should therefore be seen as an important part of the localisation strategies of brands in Asia Pacific. Brands, retailers, and hospitality operators that keep this in mind will foster stronger emotional bonds with their customers, as their loyalty offerings will be more customised to suit consumers’ specific needs.

Compare Asia Pacific to other regions by downloading our report on Latin America Building Brand Loyalty in Latin America OR download our briefing Next-Generation Customer Loyalty for more innovation ideas.

 



Read More: Loyalty Potential in Asia Pacific: Embracing Diversity’s Opportunities

2023-08-31 08:03:43

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments