March 12, 2020

What’s driving consumer loyalty in Asia?

By
Natalie Ang
Head of Business Development, APAC

In Asia, loyalty is in vogue again. When I say loyalty, I don’t mean the type you expect from friends, family and life partners, which of course should be more unconditional than cyclical.  Instead I’m referring to customer loyalty, which has seen a renewed focus from businesses across the region, as brands launch new and creative programs for their customers.

A deeper look at the loyalty landscape in Asia shows a highly diverse market, with countries at very different points on the maturity curve. Markets like Hong Kong, Japan and South Korea are highly mature - with well established programs facing the challenge of diversifying their offerings in a noisy and highly competitive loyalty landscape. In contrast, emerging markets like China, Indonesia, and India present an opportunity for businesses to capitalise on the unquestionable appetite for loyalty among the burgeoning middle classes.

As technology and easy access to information creates a more discerning and savvy society across Asia, and with challenges such as COVID-19 continuing to evolve, brands are having to get increasingly creative in their loyalty programs – both in the long and short-term.

We've taken a look at the key trends driving companies’ loyalty initiatives in Asia right now.

Brand partnerships have become a key tactic for spurring loyalty and growth. Through the right partnerships, brands can generate increased awareness and brand association, and extend additional value beyond what they can provide alone. The larger a partner’s customer base and brand awareness, the greater the potential reach to promote new rewards and / or loyalty initiatives.  

Brand partnerships can also present a far more cost-effective method of engaging with consumers as it enables brands to collaborate and roll out new ‘combined value’ loyalty programs, rather than taking on the full undertaking themselves.

Big brands such as Airasia, Cathay Pacific, Hilton, Lyft, Accor and Amex have all launched new partnerships in the last year aimed at boosting loyalty. A standout is Singapore-based telecom brand Starhub, who after a successful partnership with OCBC Bank in 2018, continued their partner strategy in 2019 through a new alliance with cloud platform Perx. StarHub have integrated Perx’s data-driven Software-as-a-Service (SaaS) technology into their My StarHub app to offer users with instant, personalised rewards in exchange for added spend, a fantastic example of leveraging gamification to spur customer loyalty.

Personalisation has also quickly become a widely adopted strategy in loyalty. Personalisation is helping brands deliver more targeted recommendations based on buying behaviour, and offer more relevant promotions to drive customer satisfaction.

Brands like Singapore Airlines, Shangri-La, and Sephora have all generated record customer loyalty in recent years through tailored customer engagement, the latter of whom’s tailored customer communications and in-store technology, Color I, propelled them to top position in the Retail Personalisation Index 2019.

Korean lifestyle products rental service MYOMEE increased conversion and retention rates fivefold in 2019 by unveiling a more personalised curation service to facilitate customer-managed relationships. The service provides fully tailored product recommendations based on a customer’s gender, age, preferred product categories, and purchase histories.

Digitalisation and leveraging digital tools has been a staple of loyalty programs across Asia for some time, and it shows no sign of slowing down with digital technology providing new and more creative ways to entice customers to stay loyal.

And we can expect brand focus to expand – from engaging consumers through email newsletters, apps, and mobile notifications, we’ll increasingly see them turn to technologies like artificial intelligence, big data, cloud computing and blockchain.

Asian-based banks in particular are looking to new digital tools and platform-based offerings to innovate and create more seamless customer experiences, and loyalty. For the financial services sector, digital transformation is a necessity to survive and thrive, especially competing against rising tide of digital challenger banks.

Last year both Bank of Gansu and China Construction Bank (CCB) partnered with cloud computing conglomerate Tencent to roll out an online loan management platform and innovation lab respectively, both of which utilise AI and big data. Tencent rival Ant Financial, an affiliate company of Alibaba Group, has also confirmed multiple deals with Chinese state banks in the last year including with CCB, to build and launch scalable open financial architecture and consumer mobile banking.

Over the next decade, expect to see more innovative technology, unique product features, highly personalised experiences driven by emotional marketing in the Asian loyalty space. That’s how Upgrade Pack is disrupting the loyalty travel-tech industry with our robust, market-first platform, which is driven by the combination of personalised emotional experiences, brand partnerships and a highly valued lifestyle proposition. Our goal is to provide financial institutions, corporates and employers with a unique benefit that will drive customer / talent acquisition, retention, and loyalty by making travel upgrades more affordable and accessible.

To find out how you can leverage Upgrade Pack to improve your customer loyalty, contact Natalie at natalie.ang@upgradepack.com

Commercial
Loyalty
Partners
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