The traditional Christmas holiday period is Singapore’s main shopping event, but US-style discount days such as Black Friday are beginning to gain traction.
Given Black Friday’s success, James Berry, e-commerce director at Collinson Latitude, explains why a more strategic — and profitable — opportunity is in danger of being missed.
For decades, Black Friday has signalled the start of the US Christmas shopping season.
However, Black Friday has now expanded beyond the US into neighbouring Canada and Mexico, even crossing the Atlantic into Asia and Europe, most notably the UK.
The opportunity for Singaporean companies
There is also a clear appetite for similar Black Friday discount events in Singapore. We have already seen retailers such as Courts and Robinsons experimenting with substantial flash discounts of up to 90%, resulting in a fivefold uplift in their visitor numbers.
Meanwhile, the Orchard Road Business Association (ORBA) had its own Black Friday-style event for this year. About 15% of ORBA’s 125 businesses took part in Black Friday last year, a significant increase over 2014.
It looks like last year’s Christmas holiday season could be Singapore’s biggest yet.
But there is a twist to the story. The short-term revenue boost produced by the holiday shopping season is a missed opportunity: the chance to use online loyalty reward programmes (such as earn malls) as long-term competitive differentiators.
Black Friday and the wider Christmas shopping season is the perfect moment for companies to secure longer-term customer engagement from their loyalty members. But why is it so important to take advantage now?
Collinson Latitude’s recent study of more than 2,000 online shoppers tells us that rewards points and brand loyalty play a significant role in their buying decisions.
Your earn mall can earn you more
Across all sectors, from retail to banking and travel, loyalty is big business. Companies have long understood that acquiring a new customer is up to 10 times more expensive than retaining an existing customer. Existing customers also spend 67% more than new customers. The business case for running a loyalty programme is watertight.
And if that was not enough, Collinson Latitude’s recent study of more than 2,000 online shoppers tells us that rewards points and brand loyalty play a significant role in their buying decisions.
According to the survey, Black Friday purchases were unsurprisingly driven by the desire to grab a great deal. But other loyalty-led incentives were not far behind — “brand loyalty” (58%) and “reward points on offer” (39%) also scored highly.
Yet consumers told us that they planned to use just one in five of their online loyalty programmes for both Black Friday and Christmas shopping, suggesting there is clearly more to be done to convince programme members of the merits of shopping through online loyalty programmes such as earn malls.
Respondents also cited the reasons they would not be using earn malls for their seasonal shopping: “a lack of special deals” (34%); “I did not know I could use my programme” (22%); and “the offers are not relevant to me” (13%). It seems reward programmes themselves are failing to communicate how and where members can earn reward points.
Bring non-core rewards to earn malls
When asked which type of loyalty programmes they will use to earn points, the overwhelming majority of consumers (87%) chose retail programmes, with finance (47%) and travel (6%) programmes falling a long way behind. This is a cause for concern, but also a clear opportunity for brands in these sectors.
Airlines, for instance, have long been leaders in the development of brand loyalty programmes. More than anything else, customers shopping online with airline reward programmes are looking for earn malls stocked with diverse, but relevant, non-core inventory rewards.
Travel brands must do more to make programme members aware of the ability to buy above and beyond their core inventory offerings such as flights and hotel stays — and to earn points by doing so. When asked “what aspect of reward programmes could be improved for the holiday season”, 60% of consumers said the earn mall needed “more choice of rewards and retailers”.
Our research strongly suggests that loyalty programme providers, particularly those outside the retail sector, need to be thinking beyond price in order to make their shopping environments more attractive to their members.
Loyalty programme managers must deliver the right user experience and do more to inform customers of relevant deals and incentives — such as double points, special offers, and featured retailers — that will help shoppers earn more points from their ordinary online shopping activity.
Loyalty programme managers, especially in the lucrative travel and banking sectors, need to take heed.
They must deliver the right user experience and do more to inform customers of relevant deals and incentives — such as double points, special offers, and featured retailers — that will help shoppers earn more points from their ordinary online shopping activity.
This year’s bigger and better Black Friday sales events may seem a long way off. But for loyalty programme members, Black Friday is yet another opportunity to earn from ordinary online spending. For programme managers, it is a chance to increase customer engagement and maintain it — long after the day itself has passed.
Don’t let another loyalty opportunity slip away this year.