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COVID-19 on Consumer Loyalty and Engagement

There is no doubt that COVID-19 has disrupted the retail industry in a big way.  Not only have online shops grown tremendously but we have also seen major growth of businesses that offer auxiliary services.

Just a few years ago, a company like DoorDash was only in a handful of cities. But today, not only is DoorDash operating in all major US cities, but they can also afford to advertise at the notoriously high-priced Super Bowl. As the saying goes, with new challenges come new opportunities—primarily when it comes to the way businesses engage with their customers.


The rise of the gig economy

In 2021, consumers are demanding better service straight to their doorsteps.

Jay Klauminzer, chief executive officer of Raise and former DoorDash vice president, told RETHINK Retail that increased consumer demand for same-day delivery has increased the need for companies that assist with last-mile deliveries such as DoorDash, Uber EATS, and Postmates. For example, instead of going out in the winter cold to shop for groceries at Walmart, customers are turning to companies like DoorDash to pick up and deliver their groceries

” You’ve got a consumer attitude that really wants things now,” Klauminzer said. “I think the gig economy will play into that as more and more retailers turn to last-mile delivery companies like DoorDash.”

This is beneficial to the customer who gets their shopping from the comfort of their sitting room. The COVID-19 pandemic has also helped to exponentially grow the gig economy. With both parties benefiting from this relationship, we are likely to see more retailers counting on last-mile delivery providers.


The rise of SMS marketing for customer engagement

A decade ago, SMS marketing was the “in” thing. But then came social media marketing that pushed this marketing channel to the peripherals.  But retailers are now realizing one limitation of social media for customer engagement—there are different consumer demographics on different social media channels.

Eric Nykamp, chief executive officer at Raange, told RETHINK Retail that one of the advantages of SMS marketing is that it cuts across different customer demographics. And unlike the past when sending an SMS was very expensive, the cost has come down, making it a cost-effective advertisement method. Nowadays, retailers are using SMS messages to get leads and contacts in their database.

“I don’t think SMS was used properly in the early days,” Nykamp revealed. “One, it was extremely cost prohibited. Now it’s really going down in price. There are so many different channels and platforms out there, but SMS cuts through every single one of them and is always on your lock screen.”


The use of loyalty programs for customer data capturing

Retailers are now luring their customers with loyalty programs and newsletters. We are seeing a trend where they are using their in-store data to target online customers and vice versa, enabling them to capture more data. Retailers can then use the data to serve their customers better.


Data privacy and consumers owning their data

With GDPR being implemented in Europe, consumers are now demanding data transparency and more control over their data. At the same time, retailers also understand that consumer data helps them with better targeting. This is where we are seeing a change in how data capturing happens.

“There are lots of companies out there that let you append your data so that they could know that, I’m a male between 39 and 49, and I’ve got children, etc,” Klauminzer said. “With that, you can actually build really sophisticated targeting models to predict what you want before you even know it.”

The majority of consumers don’t have a problem if the data is captured for targeting. But if their data is for sale, they will demand privacy and better control of their data.


The convergence of mobile payments and loyalty

Due to the practice of social distancing, we are seeing more customers use mobile phones to make payments. And the deal becomes sweeter when they are rewarded for doing so. With mobile payment being one of the contactless payment methods, we are even seeing older generations adapting—therefore, one of the big trends we are going to see in 2021 is the convergence of mobile payments and loyalty programs as part of contactless payments.