By Hetarth Patel, VP – MENA and managing director – UAE, WebEngage
The money-burning, valuation-chasing startups have woken up to the harsh realities of a funding winter in the last few months. The “stagflation” dilemma — a recession-inflation situation — has prompted VCs to apply a firm brake on their beneficiaries’ spending spree. Even the MENA startup ecosystem is no exception to this global phenomenon, with the total funding raised in September 2022 pegged at about $173m(1) — an almost 50 per cent drop compared to the same period the year before. Distancing themselves from capital-consumptive, fast-growing startups, VCs are rallying behind profitable ones that give their investment portfolios the much-needed balance.
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If profit is the “holy grail” to survive and thrive in the ever-dynamic startup ecosystem, then a reliable study(2) that correlates customer retention to an increase in profits merits attention. A mere 5 per cent increase in customer retention rates was found to raise profits by at least 25 per cent. So, startups have a real incentive to double down on customer retention, as opposed to new customer acquisition, which is known to cost 5–25X more. At the same time, however, the strong correlation between profitability and customer retention also means that the latter is not easy to achieve.
The current juncture in the business ecosystem can be characterised as “flux de clients” — customers in flux. They are spoilt for choices, making retention a tall order. In the MENA region, due to high internet penetration and other demographical factors, the said “flux” is especially pronounced. So, such discerning customers cannot be wooed through cookie-cutter marketing strategies; they only respond to bespoke marketing, where the messaging, loyalty benefits and offerings are attuned to individual preferences. For brands whose customer base exudes a broad spectrum of expectations, interests, dislikes, and price sensitivities, such hyper-personalisation can be taxing without cutting-edge marketing automation tools in place.
MarTech — a portmanteau of marketing and technology — allows brands to integrate customer touch points, analyze their behavioural data, derive actionable insights, segment based on a range of criteria, and deploy personalised campaigns, including journeys, offers, notifications, etc. — all at scale, in real-time. In 2023, marketing automation is primed for considerable uptake in the MENA region as brands subscribe to the premise of retention-led growth and profitability. At a time when the global perception toward MENA’s business potential is growing in positivity, brands’ emphasis on retention marketing could generate more investor interest, followed by funding. At WebEngage, we ascribe retention marketing’s impact in the region in 2023 to three fundamental aspects:
1. Hyper-personalised brand communications
Forward-thinking brands understand the need to strike a two-way communication with customers. That essentially involves analyzing the expectations, interests, and behaviour of each customer, and fine-tuning the product/service and brand communications accordingly. Companies such as Spotify epitomise such strategies by suggesting listeners playlists and new songs that are closely aligned with the music they’ve been indulging in. Listeners are thus incentivised to constantly seek song recommendations on the platform, leading to good retention rates. For consumer brands, such opportunities extend across channels such as messaging apps, social media platforms, push notifications, and chat boxes. The messaging context and relevance ensure that brand engagement does not come off as a “hard sell”.
2. Omnichannel brand engagement
The effective post-pandemic reopening in the region has induced a good balance in the ways goods and services are consumed. That is to say, there is a sizeable demand for both online and brick-and-mortar channels, with the same customers navigating both under different circumstances. In such scenarios, the onus is on brands to ensure homogeneity across channels in terms of prices, offers, loyalty benefits, etc. If an omnichannel customer finds price disparities between online and offline stores for the same product, the shopping experience could be skewed towards one channel. Omnichannel retention marketing aims for effective and consistent engagement, be it online or in-store. In MENA, entrenched demand for brick-and-mortar, combined with e-commerce’s growing traction, presents an ideal environment to deploy omnichannel retention marketing strategies.
3. AI/ML-led targeting
While we touched upon Spotify’s bespoke brand communications earlier, the modus operandi was not established. Personalised recommendations have a vital prerequisite: Data analytics. Listeners’ behavioural data, including but not limited to artist or song searches, genres, and duration, is subjected to AI analytics. The deep algorithm, in turn, churns out personalised offerings. However, listeners, too, are prone to whims and changes in genre preferences. So, machine learning (ML) models are deployed to constantly stay in sync with customer movements. Such life-cycle engagement naturally translates to customer retention. Using cutting-edge MarTech, such actions can be implemented at scale.
Irrespective of how sophisticated products/services get, consumerism boils down to one critical aspect: Perceived value — a customer’s unique perception of a product or service’s merit or desirability to them. That perception is shaped by how brands interact with the customer. In today’s hyper-competitive business environment, the window of opportunity for engagement closes too soon. To that end, the utility of AI-led omnichannel and personalised brand engagement cannot be underscored enough. In 2023, MENA brands will attest to the same.
