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Retail Loyalty Program: An Effective Way to Bring Market Competitiveness in China
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Retail Loyalty Program: An Effective Way to Bring Market Competitiveness in China

86% of Chinese respondents agree that all other factors equal, they will buy from a retailer with a loyalty program over one without; 84% respondents in China prefer use loyalty program mobile apps

A retail loyalty program can be an effective way to create competitive advantage by reducing customers’ likelihood to switch stores. Indeed, most respondents(72%), in Nielsen’s Global Loyalty-Sentiment Survey Chinese respondents in particular (86%), somewhat or strongly agree that, all other factors equal, they will buy from a retailer with a loyalty program over one without.

“Today’s retail market is highly competitive and retailers face a major challenge in holding on to existing customers as well as attracting new ones. Loyalty programs are key tools to increase consumer purchase transactions, margins and top line revenues,” said Vishal Bali, managing director of Nielsen China.

“The ultimate goal for using loyalty data is to provide consumers better shopping experience so as to attract more consumers. To improve the shopping experience, retailers need to consider exclusive rewards and in-store experiences that are unique to their location or brand positioning and make it engaging and fun to participate for all generations of consumers.”

The Nielsen Global Retail Loyalty-Sentiment Survey polled more than 30,000 online respondents in 63 countries to understand what drives consumers to participate in retail loyalty programs.

PARTICIPATION IN RETAIL LOYALTY PROGRAM IN CHINA STILL HAS SPACE TO GROW

According to Nielsen report, Chinese Consumer are not actively participating in retail loyalty program right now comparing to the consumers in other countries. On average, the number of retail loyalty programs that each person participate in is only 2.14 in China, while the number worldwide is 2.39. And the participation rate in Greater China (61%) is a bit lower than the figure worldwide (66%), and much lower than the percentage in India and Southeast Asia, where more than seven in 10 consumers with online access say they participate in one or more retail loyalty programs (74% and 72%, respectively).

However, the situation might be changed, as Chinese retailers are now focusing more on loyalty programs. First, e-commerce is growing fast, and off-line retailers are under intense pressure to protect their share and their consumers. Finally, more Chinese consumers are paying greater attention to the quality of products and the overall shopping experience. Based on these reasons, we saw the potential of the retail loyalty program grow in China.

“Loyalty programs are intended to increase a retailer’s share,” said Vishal. “But loyalty programs cannot be designed in a one-size- fits-all manner. There are big differences in loyalty program preferences and habits across countries, and across consumer groups within countries. These differences include how consumers want to use technology to engage with their loyalty program, what tangible benefits they are seeking from loyalty programs, and even how much they care about loyalty programs. Retailers need to determine who they want to bring into the store or onto the website more, and design a loyalty program for them.”

CHINESE PEOPLE HAVE HIGH EXPECTATIONS FOR RETAIL LOYALTY PROGRAMS

Despite the participation rate of retail loyalty programs is not very high in China, Chinese still show a high passion for the features of such program and are willing to join. This means that retail loyalty programs have a bright future in China.

Loyalty programs can help drive more frequent visits and heavier purchasing. The report found that 82% of Chinese respondents say that they would pay a little more for a product from a retailer with a loyalty program than from a retailer without one. The percentage that loyalty programs make consumers more likely to continue doing business with a company among Chinese participants is also 82%, while globally the percentage is 74%.

“For the Chinese consumers, we really have to follow their likes and make adjustments to their needs in order to bring more benefits to business through improving the retail loyalty programs,” said Vishal Bali.

CHINESE CONSUMERS LOVE LOYALTY PROGRAM MOBILE APPS

An interesting finding in this report is that Chinese consumers especially love loyalty program mobile apps. According to the report, Asia-Pacific has the highest percentage of loyalty-program participants in the worldwide study who say store-specific loyalty mobile apps are somewhat or very appealing (69% versus 60% globally).

Mobile apps are particularly popular in China (74%), only slightly lower than that in India (80%) and Thailand (78%). The report found 84% respondents in China like to use loyalty program mobile apps that can automatically earn and use points or rewards.

As Weibo and WeChat develops, sharing products and pages on social networks to win points and awards is also popular in China. About 78% of Chinese respondents say that they like it very much, much higher than that worldwide, which is 61%.

“To carry out valuable, differentiated loyalty programs, retailers must leverage digital tools that create value for consumers, and digital interactions must be aligned with how much or how little consumers want to be contacted,” said Vishal Bali.

“The future lies in integration—combining granular, internal loyalty data with rich contextual media and market data to make more insightful decisions.”

ABOUT THE GLOBAL SURVEY METHODOLOGY

The findings in this survey are based on respondents with online access in 63 countries. While an online survey methodology allows for tremendous scale and global reach, it provides a perspective on the habits of only existing internet users, not total populations. In developing markets where online penetration is still growing, respondents may be younger and more affluent than the general population of that country. In addition, survey responses are based on claimed behavior, rather than actual metered data. Cultural differences in reporting sentiment are likely factors in the outlook across countries. The reported results do not attempt to control or correct for these differences; therefore, caution should be exercised when comparing across countries and regions, particularly across regional boundaries.