Brands are resonating with affluent Chinese consumers far more than their counterparts in Hong Kong and Singapore, according to a new study from Collinson Group. Looking at the motivations and behaviours of the affluent middle classes from these three regions and the impact of loyalty programmes, the research shows that:
- 72 percent of Chinese consumers regard themselves as engaged members of loyalty programmes, a figure that drops to 45 percent in Hong Kong and 53 percent in Singapore
- 34 percent of Chinese consumers feel loyalty programmes have increased in value over the past year, opposed to 25 percent in Hong Kong and 16 percent in Singapore
- 89 percent of Chinese consumers agree that loyalty programmes encourage higher spending, compared to 87 percent in Hong Kong and 81 percent in Singapore
Collinson Group polled 6,125 of the top 10-15 percent of earners across the globe including 1,524 from Asia (24 percent of the total, split equally across Hong Kong, Singapore and China). The research focused on the following industries: supermarket and grocery stores, airlines, credit card providers, retailers, hotels, telecom and media companies, coffee shops, and banking.
While positive sentiment is high in China, the more mature markets of Hong Kong and Singapore tack closer to the global trend showing loyalty programmes are in need of innovation. Across all countries surveyed, there was a 20 percent drop in membership of loyalty programmes among the affluent middle class since 2014.
“China, Hong Kong and Singapore are vital markets for brands, and we’re seeing a much higher demand for personalised, relevant, and digital customer engagement initiatives than before. Given the importance of affluent middle class consumers on the fortunes of companies, brands must lift their game and focus on how they recognise, engage and reward customers,” said Chris Rogers, Director, Collinson Group. “While brands in China are currently doing well, those in Hong Kong and Singapore indicate what happens if companies become complacent and fail to differentiate their loyalty proposition.”
Unlocking Customer Sentiment
Brands need to be aware of what consumers value if they are to win and retain customers in Asia. 75 percent of Chinese consumers value a seamless customer experience, and 76 percent want to be able to identify with a brand. Being easy to do business with is also important to 73 percent of affluent Chinese consumers, but conversely on a priority to 49 percent of Hong Kong respondents.
Instead, 65 percent of the affluent middle class in Hong Kong wants access to a range of rewards and benefits to choose from, and 66 percent want to be treated as an individual. Those in Singapore value great customer service (69 percent), access to a variety of rewards and benefits (69 percent) and for it to be easy to do business with brands (65 percent).
The Importance of Loyalty
Loyalty is a powerful driver in Asia, and especially so in China. When questioned about brands they felt loyal to:
- 75 percent of Chinese respondents would make a future purchase from them. This drops to 63 percent in Singapore, and only 49 percent in Hong Kong
- 75 percent of Chinese respondents would recommend them to friends and family members. Again this was much lower in Singapore (63 percent) and Hong Kong (54 percent)
- 60 percent of Chinese respondents would shop from them even if they were more expensive. This sentiment fell to 40 percent in Hong Kong and 39 percent in Singapore
“There is a clear appetite for loyalty and customer engagement initiatives across Asia. Chinese consumers are embracing loyalty programmes new to the market, but in Hong Kong and Singapore, brands must do more to reinvigorate their approach. The affluent middle class here values spending time with, and providing for, their families, as well as saving for the future. These rank far higher than driving a good car or going on a luxury holiday. Brands should seek to tap into what motivates their customers, instead of reaching for only discounts or material goods as rewards,” continued Chris Rogers. “Brands that are not innovating to address evolving customer expectation will simply be left behind.”
The Financial Services Opportunity
Customer expectation is highest in financial services, with almost two-thirds (65 percent) of global affluent middle class customers expecting their bank to reward them for their loyalty (China, 73 percent; Singapore 66 percent; Hong Kong 59 percent). Retail banks and credit card providers can meet this demand by developing innovative loyalty programmes that draw on the wealth of multi channel customer data available to them.
Of all the industries surveyed, the financial services sector is best placed to succeed, as globally 49 percent of all respondents agree that their bank knows and understands their needs. However, in Asia, financial services brands need to do much more to deliver a personalised experience. While 67 percent of the Chinese affluent agree banks know and understand their needs, this is only 36 percent in Hong Kong and 34 percent in Singapore.
Globally banking loyalty programmes specifically were found to encourage 82 percent of members to spend more. China (95 percent), Hong Kong (87 percent), and Singapore (89 percent) were all above the global average. This trend was repeated when looking at the effect of credit card loyalty initiatives. Globally they positively influenced 79 percent of respondents, and in China this was 91 percent, Hong Kong 88 percent, and Singapore 83 percent.
Globally, the research also uncovered increases in the levels of trust in financial services’ ability to manage personal data, and faith in institutions to act in their customers’ best interests. The sector must however be aware of challenges to their business in the form of new FinTech start-ups offering services that impact revenues, as well as the reduction in interchange fees which have traditionally been used to fund loyalty programmes.
To succeed, financial services and other industries must:
- Recognise the value of relevance – The abundance of generic programmes has diluted the impact of loyalty programmes causing consumer fatigue. Brands need to balance programme objectives for motivating short-term behaviour and driving deeper engagement for long-term loyalty. Personalisation and breadth of rewards and benefits is key for brands to remain relevant.
- Address how loyalty programmes are funded– For financial services, the loss in interchange fees can be mitigated by increasing fees in other areas of the business, developing their own loyalty programmes, increasing collaboration with merchant funded programmes, and building bank-wide loyalty through account add-ons like insurance.
- Embrace digital– The smartphone is becoming the consumer device of choice for many brand interactions. Incorporating loyalty programmes and initiatives into payment card and mobile ecosystems will drive engagement and increase consumer brand affinity. Indeed, over half of Chinese, Singaporean and Hong Kong respondents use digital loyalty apps, and 27 percent of Chinese respondents ‘can’t do without’ them.
- Move beyond transactional rewards– Although discounts and cash-back provide instant gratification, they do little to drive long- term loyalty. Brands should instead get to the heart of what matters to their customers. For the affluent middle class, this is often their friends and families, so rewards should be more experiential, lifestyle and life-goal oriented.