Loyalty programs are not only sales drivers but also a strategic tool for retailers to retain their customer base.
Loyalty programs- not defined objectively.
“Ritesh, can you help us in developing our Loyalty program?”
This was the question asked me by one of the upcoming retailers.
I asked them – “why are you planning a loyalty program- is it for incentivizing repeat customers or just because you want to stay updated vis-a-vis your competition?”
The question made my client think…
I asked them another question, “what is going to be one major hook in your loyalty program?”.
The meeting ended as the client needed more time to brainstorm internally and come back.
Most loyalty programs are mere discounting exercises without even keeping track of the customers buying behavior i.e. on what items are they accruing the points and on which item they are redeeming the points.
Personally, speaking I am the biggest fan of Amazon Prime which according to me is a masterstroke when it comes to the Loyalty program which is coupled with a subscription model.
For your information, it has over 80 million subscribers worldwide.
Do what you do so well that they will want to see it again & bring their friends.
Loyalty program example – Ulta beauty’s ultamate
Another brand that is going big on loyalty programs is Ulta beauty whose loyalty program is called “Ultamate”.
At the outset, their loyalty plan seems more like incentivization but once you peel the layers of the program, one realizes that the loyalty program is based on “Honest incentivization”.
Your spend of USD1/- gets you 1 point.
But what is remarkable about the Ultamate plan is that they use multiple mediums to reach out to their customers, via email, via messaging services.
They track every customer purchase and try to personalize incentivization for each customer by giving them 2x or even 5X points on their spending.
Traditionally loyalty programs form “Buckets” of customers based on their spending at the store i.e. grouping of customers and then cross-selling them their products.
But Ultamate is different as they hyper-personalize the incentivization and entice their customers with 5X points or sometimes 10X points of special promos either online or offline.
A lot of Ulta beauty locations have awesome salons.
And they always have offers for 2x, 3x, 5x points. That means, for every dollar you spend, you’re actually getting $5 worth of rewards.
You also get 2x the points during your birthday month, and they send you tons of other offers throughout the year.
The rewards program allows Ulta Beauty to garner a loyalty most retailers can only dream of.
Sephora, on the other hand only redeems the points in terms of sachets or smaller packs of beauty products.
To learn more about Hyper-Personalization, click here
So how did Loyalty program Ultamate go viral on TikTok?
On TikTok, customers and fans have taken to educating one another on how to make the most of the retailer’s famous Ultamate Rewards program.
Check out the video.
the actual customers are posting videos of how they have got their favorite beauty gadget or product using Ultamate points.
Videos on TikTok emphasize “ the tailormade” experience of being an Ultamate Rewards member, teaching other users how to stack coupons and maximize points.
Remember, it is not paid influencers campaign but the actual customers who are using their loyalty points are sharing their experiences.
Ultamate performance indicators –
37.7 million members i.e. around 10% of [the population of] the United States, or the size of Canada.
Ninety-five percent of Ulta Beauty’s sales come from its members.
Moreover, the program has garnered millions of expressions on TikTok wherein the customers are sharing their opinions on the loyalty program and encouraging their friends to try the ultamate loyalty app.
Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, and Franchising & Business Management. He is the author of two books mainly ” Simplifying Retail” and “How to be a shark salesman?”
This is my first blog article this year and I could not find a better day (Vasant Panchami) and a topic that is trending currently in the Indian subcontinent.
Yes, it is, “The Union Budget 2022”.
This is my analysis and perspective, and my views may differ from the rest.
I have attempted a different viewpoint than most economists and thought leaders.
I was invited as a panel guest by the Indo-Gulf Management association to share my thoughts on the Indian Budget 2022
Frankly speaking, the very concept of direct taxations like income tax, capital gain tax, etc are outdated especially in a country like India wherein the only a small percentage of the population pays the taxes. (source financial express).
The tax reforms should not burden the small percentage of taxpayers, rather the focus should be on GST kind of taxation which is consumption-based i.e. you pay for the services or products consumed or utilized. (Majority population pays for GST)
The Budget 2022-23 focus has been on ‘growth’ and ‘CAPEX spending’ across sectors.
It is futuristic looking budget.
A good push to infrastructure by significantly increased capital expenditure, with a renewed focus on supply chain and logistics, and domestic manufacturing
Railways have been the core of India’s infrastructure development and its budget outlay justifies the same.
Linking Railways with the concept of “One station- One product” will boost the local product consumption and logistics.
The locally manufactured products can now easily be transported through nook & corners of the country with ease.
I consider this step revolutionary rather than dolling out subsidies and tax payer’s money in terms of Guaranteed MSP which was actually not solving the farmer’s issues.
By providing the market to the farmers and linking them to the logistical strength of Railways will drive better returns for the farmers.
Actually, the focus of the budget has been in developing infrastructure and supply chain ecosystem for the “Made in India” products.
Budget 2022 from Retail Business Perspective:
FMCG sector growth depends upon rural growth & its consumption.
The 1.5 lakh post offices into the core banking system is a positive particularly for rural India and a higher minimum support price (MSP) allocation will drive consumption of fast-moving consumer goods (FMCG) products in the hinterland.
Bringing the rural population into the banking ecosystem will ensure that any governmental subsidies will reach the needy people through their banking accounts or post office accounts directly.
Supply chain / logistics– Budget 2022
As a part of the ‘PM Gati Shakti’ initiative, a Unified Logistics Interface Platform designed for ‘Application Programming Interface’ will be set up.
This is expected to provide for efficient movement of goods through different modes, reducing logistics cost and time, assisting just-in-time inventory management, and eliminating tedious documentation.
Learn about the business model of food delivery apps, click here
75 Digital Banking units in 75 districts of the country by Scheduled Commercial Banks are likely to provide a big push to the digital banking infrastructure of India.
The Most Resilient sector – Agriculture
The agriculture sector has grown 3.6% in 2021-22.
Sustainability initiatives – Budget 2022.
The Budget gave India’s renewable sector a big push.
The electronic Vehicle manufacturing /charging business in focus.
A policy for battery swapping will aid in reducing the upfront ownership cost of EVs, thereby driving customer preference towards such vehicles.
This policy is also expected to encourage the private sector to develop sustainable and innovative business models for ‘Battery or Energy as a Service.
The main rationale behind Green energy is to reduce the burden of our foreign exchange outgo in terms of oil procurement.
Hence encouraging greener transportation would mean that as a country we are less dependent on imported hydrocarbons.
GDP growth rate projected for 2022-23 is approx. 8 to 8.5%.
Industrial sector projected to grow at 11.8%.
Exports to grow by 16.5%.
Housing/ Real estate
Job Uncertainty continues to make people wary of EMIs, with home loans registering a decline vs pre-pandemic levels.
But there was no relief pertaining to Interest waiver or extended period offered to taxpayers in this budget.
However, Affordable housing was clearly in focus, with the finance minister announcing the allocation of ₹48,000 crores under the Pradhan Mantri Awas Yojana.
Current provisions to qualify as an eligible start-up (extended by a year to 2023);
India has the third largest startup ecosystem in the world after US & China.
New Delhi overtook Bangalore as start up capital.
In 2021, India saw 44 unicorns which is a record.
Beneficial tax rate of 15 percent – Boost to manufacturing sector.
This will provide stability & certainty to the sector.
Customs duty reduced
Customs duty reduced on inputs required for the manufacture of consumer goods like mobiles, cameras, gems etc
Removal of customs exemption on certain items, and providing concessional duties on the raw material that go into the manufacturing of intermediate products will support the Government’s objective of ‘Make in India’ and ‘Atmanirbhar Bharat’.
Some sectors ignored.
The airlines expected govt to suspend Minimum alternate tax for the aviation and airport sector for min two years. This is one sector that has taken the hit along with the tourism and Hospitality sector during the Pandemic.
The focus on the manufacturing sector will indirectly generate employment for the skilled population.
No relaxation to the existing tax slabs.
There is no change in current taxation slabs for the salaried employees however there is no additional tax burden either.
You can watch the full webinar here.
Despite all challenges, the Budget presented by our finance minister is quite forward-looking.
The rest will depend on its execution of governmental policies and plans.
ABOUT THE AUTHOR
Ritesh Mohan is a passionate retail professional with over 23 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
Top Retail trends shaping the retail landscape in 2022
As we embark on the new year, allow me to predict the 7 retail trends that will dominate the retail sector in 2022.
The year 2021 has been a year of recovery for most of the retailers and the retail sector in particular.
The increase in the vaccination rates & our vaccines’ providing immunity towards new variants of the virus will help the economic cycle to bounce back to pre-covid levels in 2022.
What is the future of retail?
Is retail dying?
This is one of the most common questions that get asked very frequently across panel discussions.
So let me answer it now.
The retail industry exists until the people do. It is one of the oldest forms of business known to mankind.
With the shops closing across the malls is rather signaling an advent of the new era – One Retail.
New trends and tendencies in buying behaviors & customer expectations are emerging.
Hence retail is one of the most agile industries, it needs to adapt to the changing environment and flourish.
Re-inventing the retail model by keeping your customer’s expectations and habits at the core of the business is the mantra to survive and thrive.
Learn how covid19 changed the consumer’s buying behavior, read here.
Retail trends in 2022.
1. One retail to continue to thrive.
We all are living in a Hybrid World, i.e. digital as well as physical.
As per Statista Digital Economy Compass, the global average time spent using social media platforms per day is 142 minutes in 2021 – far higher than the 90 minutes recorded in 2012.
Surely this behavior has brought a change in consumers’ behaviors and their consumption habits, especially media consumption.
It gives rise to social commerce which is another manifestation of eCommerce.
Today retailers cannot depend on one or two or even three channels of communications or even touchpoints.
A study has revealed that on average customer checks the brand on 9 touchpoints prior to purchasing the brand.
Hence the brands need to embrace this change and talk the same communication message across the platforms (stores, website, tweeter, Facebook, Instagram, youtube, direct mailers, catalogs, market places, etc).
Retailers and mall owners need to learn the art of story-telling to this segmented targeted audience.
One of our regional mall players MAF- City Centre is doing it very effectively.
They have one message & story being communicated i.e. Providing great moments by making their malls – the center of their customers’ lives.
This vision is compelling the MAF team to come up with innovative ideas to remain relevant and active since they made the promise of making their mall – the center of their customers’ lives.
The malls like Emaar (The Dubai Mall) have taken the entire mall (all tenants) online, giving a buying option to their mall’s visitors more convenience. Some of the malls have concierge service as well.
“Keeping Customer at the center of all your activities” is going to help both retailers and mall owners to thrive in the coming years.
It is no longer an imperative question whether you need an eCommerce channel of distribution for your brand or not.
You need to be able to serve your customers across the touchpoints whether is e-commerce, social commerce, or physical store.
2) Immersive Retail experience
Did you recently visit the mall and pass by any of the fragrance stores?
If yes, then you would have noticed how fragrance retailers try to make use of sensory elements by diffusing their signature scents or aroma to the mall’s customers.
Use of Augmented Reality & Virtual reality will be more often used in the retail sector.
They provide value addition to the customers to engage with the brand virtually as well as in the physical world and provide product information and brand communications in a seamless manner.
They’ve created a Place App for you to place furniture items into your house using a simple smartphone. You can see if it fits your design, room size, and other settings.
Gucci (pathbreaking innovation- experience hubs)
In their flagship store in Italy, they charge an entrance fee.
It is now a mixture between a café, a museum, an art gallery, and a shop to provide an immersive experience of all senses.
Thus, both new people and Gucci fans are actively engaged.
They use AR & VR in their stores. For example, you open an app, scan shoes, and get additional information about them. You can also try on other items unavailable in the store to order them or not.
This brand makes and sells glasses.
They also have an app to try on different glasses before buying them online.
The same can be done with jewelry, watches, clothes, and everything possible to try on.
They use AR for you to try on makeup, see what product shades fit you best, and save your money ultimately.
They have virtual mirrors installed in most of their stores.
Livestreaming has grown in popularity over 2020 and 2021.
Home-bound consumers found live streaming to be a way they can engage when shopping online.
The challenge is to integrate live shopping with physical stores but it can be done by retailers who are technically advanced especially retailers like Warby Parker, Nike, etc.
6) Buy Now Pay later -fintech tools to become more prominent
In order to tap a large non-credit card users segment into the ONE Retail bandwagon, fintech products like Buy now and pay later will become more relevant as they bypass the credit norms laid down by traditional banking systems and do not hamper the credit ratings of the customers.
The biggest challenge in today’s time facing the industry is that there exists a humongous amount of data every day but most of the retailers lack the expertise in “making sense out of that data”.
There are software solution providers who would sell that tool but lack the expertise to provide “Key actionable insights” from the data on regular basis.
The primary reason for this gap is due to the fact that CEOs of most of the retail companies come from finance or accounting backgrounds and due to their limited vision, they fail to foresee the opportunity beyond the balance sheets.
Unfortunately, most of the retail companies are being driven like finance firms and not as retail firms and hence you see more retailers standing outside the financial institutional offices for filing for bankruptcies.
One of the sectors that saw huge spike in usage was undoubtedly ecommerce, logistics and fintech companies.
Buy now pay later is one such fintech solutions which is disrupting banking sector especially credit cards.
What is Buy Now Pay Later (BNPL)?
Buy Now Pay Later (BNPL), as the name suggests, is a micro-credit instrument.
It’s function is similar to credit card, that I allows consumer purchases just as a credit card.
BNPL users get to split their eligible online or offline purchases, i.e. purchases made with partnering merchants, into zero-to-low interest instalments or repay the total dues at a later date within the repayment cycle at no interest charges, according to the terms and conditions of the BNPL service provider.
For example, if you buy something in a store or online, you may be offered the buy now, pay later option at checkout.
If you get approved, you usually make a small down payment at the checkout.
You would then pay off the remaining balance in a series of interest-free instalments.
Why so much noise for “Buy Now Pay Later”?
Pandemic has changed the way we shop or our buying behaviour,
Convenience is the buzz word and if it comes with easy credit facility then it becomes a trend. (in urdu we say,sone pe suhaga, means cherry on top of the cake)
Global e-commerce transactions totalled $4.6 trillion last year, up 19 per cent from 2019, a report from Worldpay says.
BNPL accounted for 2.1 per cent or about $97 billion of that sum. (source: worldpay)
So, when you are talking about a trillion dollars sector, then it gets all the attention it needs in the marketplace.
There are a number of BNPL players vying for a share of the Middle East market, including Spotii, Postpay, Cashew, Tabby and Tamara. Australia’s Zip, a global BNPL platform, bought Spotii for $16.25 million in May this year.
Learn how to develop your Influencer Marketing Plan, Click here.
Why Millennials are in love with Buy Now Pay later (BNPL)?
Millennials hate conventional banking.
They are not interested in high interest rates on cards, and recurring fees.
Convenience of easy on-boarding. (Hassle free documentation of BNPL attracts them).
BNPL service providers often use new-age mechanisms to evaluate the creditworthiness of an applicant; thus, the customer onboarding process is usually fast and convenient with zero documentation requirements or joining charges.
The entire process is digitally enabled through internet-connected mobile devices or apps.
Upon approval, a BNPL service provider issues a line of credit based on its assessment of the user’s creditworthiness and income.
After signing up, users can visit a partnering merchant application, website or offline store (in some cases), add the desired items to the shopping cart, and select their BNPL provider’s payment option at ‘check out’ to buy the selected items in a secure one-tap manner.
Users can then convert their dues into zero-to-low interest EMIs, according to the terms and conditions of their BNPL service provider.
These BNPL companies are operating like mini banking institutions wherein they incentivize the purchase with cash backs, extended credit facility etc.
How does BNPL operate?
“Why wait for tomorrow when you can have your favorite gadget or dress today at equated monthly installments, which are interest free”
BNPL player’s services or model help countless customers, especially the ones who have just started working, to better manage their expenses by allowing them at least a few weeks to make the repayments.
BNPL services, thus, are rewarding spending tools for those who are yet to recover from the many financial shocks of the pandemic-induced lockdowns or are outside the credit card ecosystem.
Word of Caution- Buy now pay later
Customers must keep in mind that a BNPL facility is still a loan that needs to be repaid in full on time to avoid penalties and an adverse impact on their credit scores.
Since the sector is in its developing stage, following are some challenges.
Customer and Merchant acquisition
Getting both customers and merchants to come online with BNPL player is one such challenge, however BNPL players are identifying themselves as more of the omnichannel solution providers to the retailers in order to mitigate the risks involved.
Returns can be an issue, too.
If you return an item, it can take substantial time and effort to have the BNPL credit provider acknowledge the return.
You may still be obligated to pay your installments till the issue is resolved
How does the BNPL players make money?
At the outset, the financial looks similar to that of credit card company.
Net take rate represents the commission charged to merchants (Take rate) minus payment processing fees that the BNPL company pays.
Debt financing cost corresponds to the interest BNPL providers pay banks for liquidity (to provide loans to their customers). Debt management cost equals the credit check costs plus payment collection costs minus late fee payments collected from customers.
Provision for debt impairment is the weighted average percentage of loans that are not paid back (i.e., bad debt)
GMV refers to Gross Merchandising Value, the sum of all payments conducted on the BNPL platform.
Marketing and sales expenses are the expenses incurred as BNPL providers acquire and onboard both merchants and customers to their platform.
General and administrative expenses include team salaries, technology, and other infrastructure costs.
Let’s take an example: Suppose your net take rate is 5% (assuming merchants pay you 6% and you pay 1% in payment processing fees). If you pay 1% interest on your loan, and it costs you 1% to manage consumer loans, the percentage of your non-performing loans can’t exceed 3%; otherwise, you lose money.
Profitability for BNPL or for that matter with any tech firms is based on
Scalability – acquire more customers and merchants.
Incentivize the purchases especially up-selling using BNPL product.
Negotiate better terms with both Merchants and Banks (for debt financing cost).
Access more data on customer’s spending and build a separate data insight report for the merchants to buy and take benefit.
Buy now pay later – a boon for ecommerce sites.
Reduce cart abandonment rate.
This is the main challenge for any ecommerce site is to reduce the cart abandonment as over 40% traffic that comes on to the site, leaves the cart without click on the “Buy now” tab.
Improves the basket size by means of upselling. Hence your average transaction value increases along with the average transaction quantity.
Ecommerce retailer gets their full payment while their customer enjoys installment plans. This helps in customer retention and build trust.
Lower customer acquisition cost- Increase in sales for the same amount of efforts done in getting the online traffic through marketing efforts.
Attracts first time buyers with the installment option at the time of check-out.
De-mystifying myths of creating Influencer marketing plans
Most entrepreneurs and solopreneurs struggle with developing an influencer marketing plan for their businesses.
In the digital age, anyone with a smartphone can claim or can be an influencer.
Influencer marketing or Key opinion leaders (KOL’s) is a term which does not reflect in traditional business schools or in MBA books.
Hence it seems complex and proving to be a money-making machine for the influencers.
My purpose in writing this article is to peel the layer of complexities from the jargon – Influencer marketing or even writing an Outreach marketing plan using influencers.
What is Influencer Marketing?
Influencer marketing is a communication strategy that identifies people/ Key opinion leaders, who have a strong influence on a brand’s industry or target audience.
In an influencer marketing strategy, a brand does collaboration with an influencer for reaching out to the segmented audience/followers of the influencers.
The collaboration can be both either for money or for the kind purposes (barter in terms of giveaways which the influencer may use to give away to his/her followers by means of contests etc.
The premise – Influencer marketing.
The premise remains the same i.e. People love to buy from the people whom they love or trust.
Here the influencer becomes an authority on the subject matter and uses his/her influence in persuasive selling by promoting the benefits of the product or the service that is being promoted.
Basically, influencer marketing is all using the benefits of word of mouth and trust of the influencer in putting the product or service in front of the dedicated audience (followers) who may be interested in the product or service or may end up buying the product in the future.
Influencer marketing brings the brand’s product or service into the consideration mindset of the targeted audience/followers.
learn as to how your brand purpose can make or break your business, click here.
How big is influencer marketing in terms of value?
According to Adweek, the industry is set to reach $10 billion in worth by 2020.
Other networks like Snapchat, YouTube, and TikTok have their own set of influencers with different demographics.
Myth- Influencer marketing means using celebrities.
One of the most common myths in the market is that brands think that influencer marketing means using celebrities.
This myth is partially correct since today most of the influencers have become a celebrity in their own domain/ or niche.
So the next question comes to mind..
“Can influencer marketing be done without using popular celebs?”
The answer is straight-forward.
“Yes”, it can be done.
You just need to know how to develop creative influencer campaigns that focus on targeting the right audience, not the largest audience.
Putting your brand in front of its segmented audience, will be more beneficial rather than talking to a large audience, who may or may not be your core target group.
It also depends on the product category you are selling.
If you sell Coca-cola, then using K-pop band BTS makes sense but if you are selling specialized medical diagnostic machines, then talking to the specialist medical doctors and clinic owners would result in getting you more traction on your communication strategies.
Focus on the right audience, not the largest audience while choosing the right influencer.
How to find the right influencer for your brand?
Study your niche segment or industry in detail using social platforms like Linkedin and facebook and Instagram.
Look out for the people who are producing content in a contextual manner for that industry.
Check and study their engagement on their posts – Trick here is to focus more on comments rather than likes.
Use Hashtag strategy to see who is following a particular hashtag in your niche and adding them to your list and make a connection with them.
Follow your competition social media posts and see which influencers they have been using in the past. Follow them and their associated influencers.
Find influencers that share your audience
Understand the authority of the selected influencer – are they positioned as thought leaders in their niche or not.
Develop a campaign with them and monitor its results.
Mistakes marketeers make with the influencer marketing plan
The most common mistake is that marketers or business owners forget the core premise – what brings them into the business.
How are they making a change in their customer’s lives with their products or services?
Most people forget to set clear campaign objectives and measurable metrics prior to initiating the influencer marketing plan.
Decide on your campaign objectives.
Is it Brand awareness campaign
Is it Building brand identity
You need to decide on the above prior to embarking on this journey.
Type of campaigns – Influencer marketing plan
Different types of influencer campaigns include:
Gifting: giving influencers gifts in exchange for mentions, posts, etc.
Guest posting: getting an influencer to allow you to write for their blog
Sponsored content: paying an influencer to share your content or create content that is tied to your brand.Most of the social media platforms shows this as sponsored ads to inform their followers that it is a commercial campaign which is a paid form of advertising.
Contests & competitions: To build audience engagement, contests are very effective.
Affiliates or Discount coupons or codes: sharing affiliate codes with influencers so that they earn money each time someone that came through their funnel purchases from your brand. It can help brand to sell more on their sites and also helps the influencer to make commercial sense out of the collaboration.
Endorsements – wherein the influencer is recruited as brand ambassador
Tools for doing your research for the Influencers or Key opinion leaders
Today, digital marketing has become quite easy and complex at the same time.
There are several tools to do research and base your selection based on analytics and results provided by these tools.
And the following tools are also helpful for identifying social media and blogging influencers.
Customers can relate to your story, find themselves in sync with your mission, and will become your brand ambassadors.
Always remember my selling tip:
“People don’t buy product or services, they buy your beliefs, values”, “They believe in what you believe in”.
Satisfaction feeling – when buying from Purpose-driven brands.
People buy goods to satisfy their urge or aspirations in possessing a product or service.
But if this purchase provides them with the inner satisfaction or intangible feeling of “feel-good” factor that they have positively contributed to the society or environment in some way or the other by purchasing a purpose-driven brand.
In a survey done in the US, it was found 66% of Americans would even switch from a product they typically buy, to a new product from a purpose-driven company.
Acceleration in the introduction of the Purpose-driven brands:
Pandemic has changed the customer’s preferences and behavior when it comes to purchasing products.
Today people are much more aware of what they are buying, they do read the ingredients labels on their products to see as to what is being sold to them, is it ethical ingredient or sourced by harming the environment.
Today, this self-consciousness and self-awareness have pushed millennials towards Purpose-driven brands.
People are keen to know, how much amount of chemicals are being served in their spices, foods, cosmetics, etc.
Read about changes in consumers’ preferences post-pandemic, click here.
One of the main aftermaths of the Pandemic is the shift in the trend of consumers towards the WELLNESS & HEALTH categories.
Most of you who know me must be aware that the company I work for is also a purpose-driven brand i.e. LIHT ORGANICS.
It’s not only our mission to provide sustainable, organic, vegan makeup solutions to women who are well aware of the ill-effects of chemical-based beauty products,
But it is our Philosophy that everything we will do in the brand must be organic, ecofriendly & provides clean beauty options to our women customers.
In fact, when I was first interviewed by the brand, I was sold out on the brand’s purpose and vision as the brand proudly states – “Make up safe enough to eat”.
Hence Purpose-driven brands also attract the right talent towards them.
Examples of Purpose Driven brands
Dove: The personal care brand is on a mission to improve the self-esteem of women and girls everywhere.
They do this through their products, but also through their marketing imagery (featuring unretouched women of all shapes, sizes, and ages) as well as social media campaigns and content that support their message.
Nike – Nike is driven by a goal of promoting equality is not just in the sports world, but in all arenas.
Their work on reducing plastics going into our oceans by recycling them into the shoes has been remarkable.
Neeman’s – this is a homegrown brand from India, which has caught my attention.
They recycle the plastic water bottles into great comfy shoes and help to reduce the plastic bottles ending up in our landfills.
Their shoes are made of natural, renewable, and sustainable materials which makes the customer feel extra good about purchasing them.
Tesla – Even in the automotive sector which is considered as one of the major contributors to global warming, we have Purpose-driven brands that are excelling in their mission.
“Accelerate the world’s transition to sustainable energy,”is the brand purpose of Tesla.
Elon Musk communicates that Tesla’s goals go beyond the auto industry, and aspire to change the world.
Starbucks seeks to “inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”
(Please take note that nowhere Starbucks or tesla talks about coffee or cars).
How to build a purpose-driven brand?
Before you can build a purpose-driven brand, you need to figure out what that purpose is and what values you stand for.
What problem do you solve or need do you meet?
Get clarity on what you stand for
Once you have clarity on your purpose, you need to fuel it with your passion (drive).
Align your purpose with Passion.
The purpose is nothing without passion. It drives your whole business and shapes your products or services.
Start communicating the reason of your business and purpose in the form of a story.
Produce content around each theme and master the art of storytelling.
Brand’s purpose is not the CSR activities that you do once a year. You need to live, breathe, feel it every moment of your lifetime.
It is not a fashion trend or a fashion seasonal assortment that you introduce once and forget about it. You need to build your brand around that purpose & your belief systems.
Results showed that 64% of those surveyed across the globe would “choose, switch, avoid or boycott a brand based on its stand on societal issues.”
Watch this video which narrates Unilever’s ambitious plan for making purpose-driven brands.
Today, we all live in well connected informed world.
In case we want to build a brand’s differentiator and scale it up by ignoring the competition then building a purpose-driven brand is a very good strategic move.
I would end my article with a quote.
“By standing for something bigger than what they sell, tuning into customers’ beliefs and taking decisive action, companies have the chance to recast their customer relationships and connect with consumers on a deeper level.” –Accenture
References: Neeman’s website, Liht organics website, Accenture report on purpose brands, author Simon sinek’s book – start with why.
About the author:
Ritesh Mohan is a passionate retail professional with over 22 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
Why Lenskart pivoted to Omni channel retail model?
One of the insights from the research showed that Indian consumers were a little apprehensive of purchasing eyewear online.
The customers wanted to try the frames i.e. touch & feel of the spectacles were desired.
Also, opening up physical stores helped the brand grow its business faster and gain the trust of its customers.
They used the Omni-channel to convert their offline customers to online by offering them application and portal facilities.
Digitalization helped Lenskart to monitor their customer’s preferences, their locations, and developed a sales funnel wherein they could drive online traffic to their physical stores in order to boost trials of their trendy frames and lenses.
That’s the main aim of any retailer i.e. to drive online traffic into their stores.
Now operating over 500 stores in 30 cities, Lenskart is now contemplating of scaling their retail store operations through franchising in order to gain more market share.
With physical store presence, they are now providing customer service to their customers in terms of free eye check ups etc.
Currently, they command 70% of the eyewear market in India.
Let me mention here that one-third of the India’s population wear glasses or lenses.
Founder Peyush Bansal of Lenskart was able to identify this trend and the unorganized sector quite early in their business cycle.
Learn 10 hacks to kick start your ecommerce business, read here.
Core belief of Lenskart.
They have positioned themselves as a fashion accessory brand rather than the medical driven eye care brand.
Their customers today checks out the latest trends and style on Lenskart.com prior to making a purchase decision.
They have 3D technology which is AR driven for their customers to check the frames and looks on their faces.
Youtube link (kathrina)
Bringing economies of scale to its operations
Since they don’t own any manufacturing (example of Lean management), hence they are able to use some of the finest manufacturing facilities in the world as their shortlisted manufacturers.
“The fact that there is no middleman involved means the company can pass on the benefit of reduced costs to the customers in the form of almost 70% lower prices. The frames at Lenskart.com are crafted in some of the finest production lines in the world and are inspected thrice before being delivered.”
– Peyush Bansal in an old interview with Vision Mag
With the entry of such a dynamic brand into Gulf territory, I foresee eyewear sector in the territory will see some innovative action in the coming days.
Brands like Magrabi, optix, visioncare, al jabber optics, Rivoli eyezone etc will have to steer up with their digital & retail initiatives in order to compete with Lenskart who has emerged as a winner despite digital onslaught by giants like amazon, flipkart etc.
Coming days will definitely see some action in the category here which will be beneficial for the customers.
Let me also cover one of the digital native brands which also has adopted Omni channel approach to its advantage.
Case study – Bonobos.
Boosting engagement for men’s apparel purchases Founded in 2007, New York-headquartered Bonobos positions itself as “the largest clothing brand ever built on the web”, designing and selling a new type of smarter men’s apparel.
In 2012, it opened physical stores in response to online customers’ desire to try on clothing before ordering, and now has almost 20 stores in major cities across the United States.
These “guide shops” act as product showrooms: they have items in every colour, size, fit and fabric available to try on, but keep no product in stock for immediate purchase.
These guide shops provide high-touch, highly personalized experiential components that cannot be replicated online.
Upon entering, a guide (style assistant) provides a one-on-one service to help customers find the items with the best fit and style, which are then ordered and delivered directly to their home.
Appointments can last up to 45 minutes, and there is a lounge area with free beer, soda and water.
Moreover, the trial of clothing before online purchase reduces the chance of returns, as it is estimated that e-commerce purchases typically have a 30% return rate; a greater portion of new customers come to Bonobos through the guide shops than online.
Omni channel approach helps both online and offline channels to engage customers.
Today customers are using multiple platforms for their purchases.
Hence both online and physical stores are complementing each other in driving customers towards the brand.
Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
In layman’s definition, Ecommerce is the modern way of reaching out to your customers and doing business with them.
The pandemic has accelerated the process of digitization in various sectors and today in the era of lockdowns and social distancing, this medium i.e. e-commerce has emerged as a winner.
This article is my attempt to narrate my personal challenges that I have encountered myself to scale eCommerce websites and my learnings from undergoing the whole grind process.
My failures & my lessons….
First and foremost, let me clear some myths to set the narrative of the content.
Myth one – Ecommerce is very easy to set up and you can start earning immediately.
On a daily basis, I come across my retail fraternity friends who consider setting up an e-commerce business- the easiest thing to do on the planet.
Yes, it might be easy to develop an eCommerce enabled website but believe me, the toughest part is to get the traction and organic traffic onto the site.
The average conversion rate for e-commerce sites is less than 3%, so driving relevant traffic to your site is crucial.
E-commerce has exploded, meaning there’s more fierce competition now than ever before which makes getting the customer buy onto your platform more and more challenging.
Myth two – Ecommerce website is the easiest and fastest to break-even when it comes to profitability.
This myth may or may not be true and it depends solely on the category that you are selling.
Yes, in case of innovative product categories, the statement may turn out to be true. For example, Tesla, being a revolutionary & Innovative car ‘ clean energy’ concept, disrupted the entire traditional value chain consisting of dealers and authorized showrooms, etc by going directly to the end-user through digital channels, wherein an end-user can book his/her test drive and order a Tesla car online at a click of a mouse.
They created an online buying experience for their customers.
Myth three- I need technical personnel to help me set up an eCommerce business
This is one of the most myopic statements or reasons, I come across during various panel discussions.
You do need a team of technical people specializing in the platform on which you want to build your eCommerce business.
The most important person that you need is A STRATEGIST, who can visualize and identify the trends in the business and the one who understands the technology but most importantly understands the end-user or the CUSTOMER.
The techies often lack this core skill.
10 Must do’s in order to get immediate traction for your eCommerce business.
Start small with your eCommerce business
This applies to new startups or first timers only.
Not applicable to huge brick & mortar businesses wherein the speed of scaling is of utmost importance.
You have to walk before you can run.
There’s no short cut way to go from a small store to behemoth overnight.
The right strategy is planning to scale up over time, addressing key areas for growth before making any major leaps.
This way you can create your own audience or customer base who will trust you and your site.
Launch with limited products.
Most of the entrepreneurs believe in “Variety is the spice of Life” which does not hold its essence in the digital business.
Pareto principle (80/20 rule) is more relevant in digital businesses than before. Only selected merchandise and categories will get you revenue or sales traction.
The challenge is to find out those variants or lines contributing the most to your overall sales.
Today we have tools like enterprise software (in case of huge corporations going for eCommerce) wherein you can in real-time track the traffic on to your site and check the cart-abandonment rate or bounce off rate including the inventory status.
Various plugins are now available to check the keywords which are driving traffic to your website.
Once you know the keywords driving traffic on the site & resulting in the sales of certain products or categories;
Use various creative formats for one piece of communication by using A/B testing plugins or tools.
This will help you overcome creative fatigue which is very high in the eCommerce business.
You can then scale your eCommerce business by leveraging on the already built strengths.
Learn how you can compete with Amazon, in case you are a brick & mortar retailer, click here
Grow your customer base using customer service.
Using PPC and organic AdWords, and SEO tools you can scale your eCommerce site in few months itself, however, the make or break of your eCommerce site is your customer service.
As a small web company, you may be getting 1 or 2 complaints out of 1000 customers that are visiting your site but as you scale up the chances of complaints are also higher maybe 100 out of 10,000 customers that you are now catering to.
You need to create a specialized call center for complaint redressal system with well-defined policies.
The first step in providing excellent customer service is to ask questions and provide feedback. The best way is to get in touch with a live human on the other end of a phone line and get a first-hand review or feedback of your rendered services.
Make your goods return policy, customer-friendly, even it may initially burn a hole in your pocket, but in the long term will build trust for your eCommerce business.
Focus on your last-mile deliveries:
The majority of the complaints in an eCommerce business arises from the lapses in the last mile delivery process.
Issues like picking up the wrong item or breakage during the delivery process are the most common.
The biggest problem with eCommerce entrepreneurs is that they get involved in fulfilling the orders themselves.
Once you have reached a quantum of orders, it is advisable to outsource the fulfillment of orders to the third party partner, so that you can focus on generating more and more orders.
That’s what I call a “focused approach”.
Find your eCommerce site Niche.
Distinguishing yourself from your competitors is crucial to standing out and attracting new customers for your business.
This can be accomplished by making sure your website looks professional and is optimized correctly to suit today’s Google algorithm.
By providing a unique product or service, you can focus on a smaller demographic, making it easier for you to increase your domain authority.
Use Influencers to promote your eCommerce business
For fashion & lifestyle businesses, influencer marketing works very well.
Nowadays, microbloggers with a limited number of followers are proving very effective.
Choosing the right metrics is of the key importance here,
Don’t go for the number of followers, engagements, and comments, etc. (they can be extrapolated).
Leverage sales generated per influencer as the correct metric for judging any influencer.
Basically, understanding your audience is key to figuring out which marketing channel will generate traffic that actually converts into sales.
Social commerce is the next big thing.
Ecommerce retailers have long used social media to advertise and promote their products.
But in recent years, social shopping has evolved to allow customers to make purchases from right within their favorite social media sites and apps.
This has shortened the buying process and improved the overall customer experience, so retailers will want to lean into social shopping in 2020.
Both Facebook and Instagram have launched shops to target small & medium enterprises.
Learn how to leverage social commerce, click here.
Offer Multiple Payment Options on your e-commerce site
The world is moving away from cash and cards, and especially when it comes to online shopping.
Digital wallets like Apple Pay, Google Pay, PayPal, (UPI, and Paytm for Indian Territory).
But if a shopper doesn’t see their preferred digital payment method at checkout, they’re likely to abandon the process.
The challenge for retailers is the sheer variety of digital payment platforms that already exist, and adding the new platforms onto their eCommerce site.
Product descriptions are outdated- Videos are trending.
Recent studies suggest that 60 percent of shoppers would rather watch a video about a product than read a description of its features and uses.
If you want your website to translate into cash then adding comprehensive videos to their product pages, including how to use the product, why a customer needs it, will help your customer to overcome their hesitations and it acts as a call to action.
Be more visible
I always profess the statement “Create your own audience”.
Make your products available on marketplace websites, amazon, etc will add more weightage to your eCommerce business since it will give your business some kind of credibility and trust.
To sum up, the article, running an eCommerce business is very exciting as you discover new trends, new customer’s behaviors, new tech highlights but it is at the same time quite challenging.
It is definitely not the quickest way to make your millions.
Enter only if you have a long term business plan and you are eager to learn the overall process.
Digital or eCommerce business is full of testing and experimentations, enter if you have patience and persistence to last longer in the game.
In case if any of my retail fraternity members, want to learn from my experience of setting up retail commerce solutions for their businesses, then feel free to reach out to me on firstname.lastname@example.org.
I strongly believe in helping my retail fraternity members and enabling them to succeed in the fierce marketplace.
Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion, and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.