Re-defining Loyalty
in Emerging Markets
Johannesburg, South Africa - August 2006 |
 |
| Building brand loyalty in emerging
markets offers challenges and opportunities that
first-world loyalty models often don't address.
For emerging market loyalty practitioners, benchmarking
against best practices in the U.K. and the U.S.
is an interesting exercise, but far removed from
local market realities. |
|
| What defines best–practice
loyalty marketing in emerging markets? Achievement
Awards Group Loyalty Marketing Director and COLLOQUY
Network Partner Deon Olivier invited a distinguished
group of experts from India, Malaysia, China, Brazil
and South Africa to frame the answer at the company's
recent 2nd Annual Loyalty Marketing Summit. Here’s
his report: |
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| Henry Winter, SmartClub, China |
|
| Perhaps the most remarkable loyalty
story of the day was told by Henry Winter, CEO of
internet-based SmartClub, China's first coalition
loyalty program. At least 100 million Chinese consumers
enjoy SmartClub benefits – but the
program has zero consumer members. And by the way,
Winter asked that we don't call SmartClub
a coalition loyalty program. So, how does it work?
|
|
| In the exploding Chinese consumer
culture, retention and up-selling are low on the
list of retailer priorities. For the Chinese, it's
all about customer acquisition and increased sales.
They're not interested in the nuances of loyalty,
nor are they particularly interested in paying for
it. |
|
| After a few years trying to get
a traditional retail-focused coalition program off
the ground with marginal success, Winter realized
the “long, painful and expensive way”
that retailers just want sales. He re-focused SmartClub
to deliver sales to retailers based on a commission
split that looks like this: |
|
- SmartClub earns commission every time
a member buys from partner retailers
- SmartClub turns part of the commission
into SmartPoints and rewards the consumer
- SmartClub shares remainder of the commission
with website partners who referred the consumer
to them
|
| SmartClub is basically a
virtual community targeted to white-collar, highly
educated 17 to 35-year-olds. SmartClub members,
(or citizens, perhaps?) earn SmartClub for
chatting, emailing, shopping at online and offline
partner retailers, commenting on their shopping
experiences and just basically being active members
of the SmartClub community. Their 50-plus
partner retailers include McDonald’s, eLong,
Lianhua and Unicom. Beyond retailers, SmartClub
also partners with banks and credit card companies,
mobile communication providers, and various media
outlets. |
|
| So is SmartClub a coalition
loyalty program, or a loyal consumer community?
Call it what you will, SmartClub has won
the hearts and minds of nearly 100 million Chinese
consumers. And growing. |
|
| Nyang Koon Seng, Customer Loyalty
Solutions, Malaysia |
|
| One of the biggest challenges facing
loyalty marketers in Malaysia, according to Nyang
Koon Seng, CEO of Customer Loyalty Solutions (CLS)
and COLLOQUY Network Partner is using analytics
to best advantage. As in other emerging markets,
retailers understand how to gather data, but often
lack the technological skills and knowledge to turn
that raw data into useful information. |
|
| With an emphasis on the critical
value of data mining, analytics and information
as a key market differentiator, Seng offered simple,
solid insights on loyalty marketing basics. In a
presentation neatly structured as a sort of Loyalty
Marketing 101 lecture, he discussed program objectives,
strategic integration, communication, segmentation
and program execution strategies with concepts illustrated
by examples of CLS work for L'Oreal Malaysia, Ambank
and Shell among others. His no-nonsense presentation
engaged novice loyalty marketing delegates and veterans
alike. |
|
| Praphul Misra, NetCarrots, India |
|
| NetCarrotts CEO Praphul Misra, another
loyalty marketing veteran, exposed the five most
persistent loyalty myths that linger in the minds
of clients in India (and surely other emerging market).
Myth: Loyalty is a subset of marketing
and therefore resides in the marketing domain.
Myth: A loyalty program is the best method
for attracting new customers. Myth: A
co-branded credit card is a loyalty program.
Misra deftly busted these and other myths with patient
humor and sage understanding. |
|
| Roberto Chade, DOTZ, Brazil |
|
| The DOTZ Program began in 2000,
following a decade of deregulation and privatization
that created a customer acquisition frenzy in the
Brazilian loyalty space. Six years later, the focus
has shifted from acquisition to retention. The new
challenge for Brazilian loyalty marketers is figuring
out how to deliver to clients effective, cost-efficient
loyalty programs. Many proprietary programs have
been launched, but with little success. From DOTZ
CEO Roberto Chade's perspective, coalition is the
way forward for Brazilian loyalty marketing and
that's what he's created with DOTZ. With more than
1.5 million participants, more than 70 sponsors
and 1 billion worth of DOTZ Currency in circulation,
Chade is proving his theory correct. |
|
| Jeremy Sampson, InterBrand Sampson,
South Africa |
|
| Branding guru Jeremy Sampson, CEO
of InterBrand Sampson, vigorously reinforced the
chicken-egg relationship of branding and loyalty.
Explaining the complexities and life cycle of a
brand, Sampson stressed that brands are built over
time and must be nurtured and sustained across every
customer interaction. Earning and keeping customer
loyalty is an on-going process. |
|
| Refiloe Mataboge, Research Surveys,
South Africa |
|
| Is the South African Black middle
class emerging or has it already emerged? How is
it defined? Is it a mirror image of the middle classes
in other emerging markets? These were just a few
of the questions answered in Refiloe Mataboge's
presentation of a recent research survey titled
"Black Diamond – Unearthing South Africa's
new Black Middle Class". Mataboge captivated
delegates with compelling statistics on the local
market and gave local loyalty marketers much food
for thought. |
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| In Summary |
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| In summary, urge South African retailers
to maintain the international perspective of the
day and bear in mind that South Africa is not alone
as an emerging market economy. Local retailers must
avoid an inward focus and look to other emerging
markets for comparative information and inspiration.
South Africans have the intellectual creativity
and rigor to design unique solutions. If anything,
this conference has underlined for us that adherence
to key global loyalty principles notwithstanding,
unique solutions are required for unique markets. |
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South Africa Loyalty Marketing Summit Report
