Retail’s battle for customer engagement

AURRA KAWANZARUWA

With vendors offering cash deals on groceries and basic commodities that appear cheaper than traditional supermarkets, retail has had to step up its efforts to retain and engage customers.

TM Pick n Pay Supermarkets, which is part of the retail arm of Zimbabwe Stock Exchange listed company Meikles Limited, set the template on how to utilise promotions to drive sales.

Pick n Pay introduced the popular Rich Rewards promotion in 2015, the same year they announced their long running Bargain Bonanza promotion draw.

The Rich Rewards promotion encourages customers to accumulate “stamps” which are valued at $5 spent for one stamp. The rewards which are often in the form of high quality cutlery or pots, are categorised by the number of stamps you collect. For example, 35 stamps will earn you a small pan.

The ‘$5 for one stamp’ was subsequently copied by listed companies OK Zimbabwe (Token of Appreciation promotion) and SPAR Zimbabwe (Sharp Sharp promotion).

All three stores also have major draws that they hold during the course of the year.

The success behind Pick n Pay’s value proposition is instant reward. A published research paper breaks it down as follows:

“An instant reward program (IRP) is a rapidly growing form of short-term program that rewards consumers instantly with small premiums per fixed spending, where these premiums are part of a larger set of collectibles. A supplementary element in many IRPs promotes specific brands with an extra premium, labeled bonus premiums.”

IRPs breed consumer loyalty, and in the world of retail and the shift in consumer trends brought about by Industry 4.0, loyalty is gold.

Researchers also argue that retailers can leverage reward programs to create “surprise and delight” with a new generation of flexible, fungible reward currencies redeemed instantly at the point of sale.

“In the new loyalty economy,’ PYMNTS CEO Karen Webster said, ‘Points become money. It’s always been that, but now customers can apply them when making a purchase in real time. It’s elevated the significance of points in a way that wasn’t quite as tangible before for consumers. Before, you were watching your balance accrue, but there was never a motivator to apply them at that moment.”

In an economy like Zimbabwe’s, where the price of goods and the cost of living are generally quite high (and currently on the rise), the market is prime for IRP programmes.

The sense of “getting a good deal” is a significant factor that drives local consumer behaviour.

Retailers amplify this by offering ‘specials’ on selected products to encourage customers to spend.

SPAR Zimbabwe has taken a unique approach by taking the popular concept of ‘happy hour’ – which is normally associated with half price specials on alcohol at pubs and other similar watering holes during a specified time frame – and has made it relevant to grocery shopping.

Usually done on a Saturday, customers are given happy hour deals on a wider range of products from morning until midday. The amount of savings made on these products seem minimal at first glance, but with the golden ticket of receiving a ‘stamp’ which, when accumulated, will equate to the reward of a colourful quality knife, the dollars and cents saved are perceived to be worth it. Thus coaxing consumer behaviour.

OK Zimbabwe’s IRP approach has taken on a more “we reward you because you are our customer” approach over the more direct “if you spend with us we will reward you”. The difference is subtle but has an effect on the consumer’s perspective.

One might argue that the consumer’s perspective is initially influenced by the naming of the promotion.

Pick n Pay deliberately uses the word ‘reward’ in their marketing, which is a direct form of marketing. It communicates clearly that ‘if you give you will receive’.

SPAR uses colloquial language to engage with the consumers as well as a play on words; ‘sharp sharp’ is a response term which means ‘all good’ in slang, but also is descriptive of the product up for reward which is a set of knives.

OK’s ‘token of appreciation’ places the focus on the ‘tokens’ that customers are given to redeem their reward from OK.

All three supermarkets have pros and cons to their strategy but they all share the same goal: “buy from us”!

The decision is now left up to the consumer which of the rewards is the most appealing and which one offers real “bang for buck”.

But promotions are not the be all and end off of customer retention. Just because I got a pot from A doesn’t mean that I won’t want to also get a knife from B. So, what keeps a customer loyal? Engagement.

Social media has become one of the most powerful tools for building customer engagement – if used right.

Much like building human to human relationships, character and personality go a long way in determining the longevity of the relationship formed.

In this era, companies can no longer rely on building a strong brand presence alone, they must take on an attractive personality.

In a study by Sprout Social (Q2 2017), they found that consumers preferred a more authentic and honest brand personality (86 percent) over snarky/mean comments or political content (33 percent). In addition, 72 percent of those surveyed said that they are more likely to purchase from a brand if their social media image is humorous. Therefore, consumers prefer a brand that is friendly and engages with them; this boosts customer morale, increases brand reputation and influences purchase decisions.

You can tell a lot about a company from their social media behaviour, not just about the brand’s personality but their understanding of their customer profiles.

Pick n Pay customers are typically bargain hunters. On the company’s socials you see daily competitions and surprise specials. SPAR customers are family-oriented and OK customers typically are traditionalists, much like the company itself by observation.

In conclusion, the competition for market share is stiff enough for bigger retail stores like these three to throw their best foot forward to gain the respect, loyalty and hard-earned dollars from customers.

Strategies that work are particularly hard to create in an economy like ours. Already Zimbabwe has seen a significant shift in the typical consumer profile, with 70 percent of the market being below the age of 35. If companies hope to survive the mindset shift in consumers, they need to be willing to pay attention to their customers as well as the global changes brought on by Industry 4.0.

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