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Coloquy loyalty diversity in brazil white paper
1. FEBRUARY 2012
The Optimism Tipping Point: Loyalty Diversity in Brazil
The 2011 COLLOQUY Cross-Cultural Loyalty Study
Kelly Hlavinka Managing Partner, COLLOQUY
Jim Sullivan Partner, COLLOQUY
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The Optimism Tipping Point: Loyalty Diversity in Brazil
The 2011 COLLOQUY Cross-Cultural Loyalty Study
COLLOQUY strives to provide valuable perspectives on
how businesses can strengthen relationships with con-
sumers worldwide. In collaboration with LoyaltyOne
and Epsilon, we studied consumer attitudes and percep-
tions about loyalty in three developed economies:
Canada, Australia and the U.S.; and three emerging
economies: Brazil, China and India. The first of its kind,
this study uncovers profound differences in these con-
sumer environments, and has clear implications for
practitioners. Introduction
In addition to the Brazil-specific insights found here, we
Brazil’s economy has grown to impress the world just as its national football team has done for
offer a series of works from this study:
decades. Consumers and companies in Brazil are learning to play the loyalty game as beautifully
• “The Global Loyalty Compass” compares trends
as team Canarinho controls the field, and both are achieving championship status.
and expectations in both developed and emerging
markets. While some nations have created economic successes whose benefits have mostly gone to
stockholders and the wealthy elite, Brazil’s recent successes have lifted the entire country. In the
• “The Rules of Engagement: Loyalty in the U.S. and
process, it has created an ever-growing, more prosperous population with new needs and desires.
Canada” examines challenges and opportunities in
these two countries, incorporating trends from our
While consumer attitudes are in some ways similar to those of the middle class in other developed
previous research. nations, they are also uniquely rooted in Brazil’s culture and experience.
• “Marketing Mosaic: Loyalty Diversity in India”
49% Exhibit 1
explores the future of loyalty marketing in what is Low Participation Due to Lack of
predicted to be a $450-billion retail market by 2015. Programs
And Epsilon International delivers additional insights Reason for not participating: No program
in its reports: offered by frequented companies
2-3x
• “From Love to Loyalty: Engaging India’s Consumers
Source: 2011 COLLOQUY Cross-Cultural Loyalty Study
for Long-Term, Profitable Relationships” offers in- • Q: What is your reason(s) for not participating in a
rewards program? “The companies I like to / usually shop
depth analysis of behavior and motivators of today’s at do not offer any rewards programs.”
28% • Results indicate proportion of non-members making the
consumers in India, with engagement and communi- selection. Results for emerging countries are for SEC
cation implications for marketers. A/B. Significant differences are highlighted in bold.
• n = 865
22%
• “Regaining Trust and Faith Among Australian Con-
sumers” examines the austere marketing conditions 18%
in Australia and sheds light on how to successfully 15%
engage these savvy consumers. 13%
• “China – Pledging Allegiance to Brands” identifies
the drivers of brand preference, sensitivities around
brand loyalty and preferred channels of communica-
tion in China, and offers considerations for effective BR U.S. IN CA CH AU
marketing strategies.
Today’s typical Brazilian consumers are deeply pragmatic about their immediate realities while also
believing that the future is more promising than ever. That pragmatism was learned by persevering
and triumphing over times of unbelievable economic adversity. Brazilians are not people to be
gulled by promises and shiny exteriors. They look hard at something before making a purchase.
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Their motto might just be, “Past performance is not a guarantee of future returns.” Companies
must earn customers’ business each and every time.
Even so, earning customer loyalty is hardly impossible. As customers’ circumstances continue to
improve, they increasingly want to find brands they can trust and stick with long term. The desire
is already evident: A third of all upper- and middle-class Brazilians already belong to a loyalty
rewards program. Nearly half of those who don’t participate said it is only because so few companies
offer loyalty programs. Consumers looking to be rewarded for their loyalty are no longer relying
on price as the sole measure of value.
The opportunity for businesses here is clear. The potential payoff is significant because, as our
research finds, loyalty-program influence on purchasers is two- to three-times greater in Brazil
than in developed countries like the U.S. and Canada.
The challenges to implementing a successful program in Brazil are:
• Understanding the unique, Brazilian definition of customer loyalty;
• Respecting citizens’ demanding concerns about privacy; and
• Finding a way to connect with the next generation of consumers.
The opportunity for businesses
These challenges aren’t road blocks. They are more like lane guides for how to best appeal to and
here is clear. The potential payoff is connect with consumers.
significant because, as our research
finds, loyalty-program influence on
purchasers is two- to three-times
greater in Brazil than in developed
countries like the U.S. and Canada.
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I. The Proven Desire for Loyalty Rewards
Let’s begin by looking at which Brazilians already belong to loyalty programs and why they do so.
This examination offers key insights into how to change other consumers’ behavior.
As noted before, 33% of the upper- and middle-class Brazilians – those with the greatest buying
power – already belong to a loyalty program. However, 43% of upper-income households
participate, as opposed to only 26% of middle-income households. The discrepancy illustrates the
direct connection between buying power and the ability to earn rewards within a reasonable time
frame. As spending power increases in the emerging middle class, these consumers are buying
products and services in new categories. And they are more likely to be purchasing enough to earn
meaningful rewards over a short period of time.
43% Exhibit 2
Class-Based Differences in Loyalty
Program Participation
Right now, Brazil is perfectly 33%
Source: 2011 COLLOQUY Cross-Cultural Loyalty Study,
Brazilian Results
• Q: Do you currently belong to any rewards programs?
positioned for a huge growth in • Results are for those who selected “Yes” to participating
in a rewards program. Significant differences are
highlighted in bold.
loyalty programs, thanks to several 26% • n = 519
factors. These include increasing
economic stability in the country,
growing consumer optimism, and
plenty of room for new programs.
SEC A/B/C SEC A/B SEC C
Business sectors that cater to the top tier of earners – like travel and financial services – enjoy the
highest penetration of loyalty programs. Overseas programs in these industries were among the
easiest to copy and import, after all. And, in some cases, alliances between Brazilian companies and
foreign strategic partners sped the process along.
Of Brazilians surveyed, 17% said they participate in travel industry rewards programs, and 16% in
financial services programs. Just 10% listed telecommunications programs, and 7% listed restaurant
programs. In addition to underscoring the connection between buying power and where program
memberships are taking hold, these findings reveal how big the opportunity is for businesses to take
advantage of the desire for loyalty rewards programs. Consumer demand for programs is high, but
the percentage of Brazilian businesses offering loyalty program options is low – so far.
Right now, Brazil is perfectly positioned for a huge growth in loyalty programs, thanks to several
factors. These include increasing economic stability in the country, growing consumer optimism, and
plenty of room for new programs. Companies that jump in early and understand what Brazilian
consumers want will have a winning competitive advantage.
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II. Brazil’s Balance Between Pragmatism and Optimism
Brazil’s consumers differ from other nations’ consumers as distinctly as the Canarinho differs from
other nations’ teams. What sets the football team apart is its grace and success; what sets the
consumers apart is a unique combination of pragmatism and optimism forged by their experience
creating Brazil’s economic resurgence.
In addition to its other accomplishments, the nation’s growing economy is producing consumers
ready to see the value of these programs. After years of living with wild inflation, Brazilians are
now enjoying the peace of mind that comes with a stable currency, and they want the rewards
from their hard work and perseverance. One result is the widespread adoption of credit cards –
which make accumulating rewards points or miles a seamless part of the purchase process.
32% Exhibit 3
Influence of Reward Programs
28% Loyalty programs’ influence on the purchaser
27% is greater in emerging countries than in
developed countries
2x Source: 2011 COLLOQUY Cross-Cultural Loyalty Study
• Q: Overall, how much do the rewards programs you
belong to influence your decision about where you make
a purchase? Please use the scale from 1 to 10, where 1
means “not at all influential” and 10 means “extremely
17% influential.” Please select one response only.
• Results indicate Top 2 Box proportions. Results are for
15% rewards program members only and SEC A/B in
emerging countries.
• n = 2,636
12%
U.S. CA AU IN CH BR
MEAN 6.4 6.0 6.1 7.0 7.8 6.5
Consumer interest in loyalty programs is only one reason that businesses should take interest in
them. For example, loyalty programs are especially influential with consumers in emerging markets.
This is because the programs themselves allow people to receive the special treatment they want.
The delivery of that treatment can be relatively low-key, or it can be more extravagant – like access
to a VIP lounge. COLLOQUY’s research shows 43% of Brazilians expect special treatment from sales
people – this is nearly 20% higher than any other country we surveyed.
Pragmatic today . . .
Brazilians are more pragmatic about their immediate needs. They focus on getting the most for
the least – which means pursuing discounts when shopping, making careful decisions about the
value propositions that loyalty programs present.
To succeed, a program must be seamless to use and give people the types of rewards they want.
Here are the top four reasons why Brazilians join a program.
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Makes it easy to redeem for a reward when you have earned it Exhibit 4
59% Influenced to Join by Coalition
Program Features
Allows you to earn reward points or miles from a number of Top 4 factors influencing Brazilians’ decisions
different retailers, partners or brands using the same card
to join a program
58%
Source: 2011 COLLOQUY Cross-Cultural Loyalty Study,
Allows you to earn rewards within a reasonable amount of time Brazilian Results
• Q: Please indicate how important each of the following
54% factors are, or would be, in your decision to join a
rewards program (assuming one was available to you)?
Please use the scale from 1 to 10, where 1 means “not at
all important” and 10 means “very important.”
Gives you lots of ways to earn rewards faster • Results are for program members and those willing to
participate in a program SEC A/B. Results indicate Top 2
Box proportions “very important.”
52% • n = 193
In one respect, these factors can be boiled down to one motivation: Ease of use. But, as the chart
shows, what ease of use means isn’t always self-evident.
Consider: The second most important influence on Brazilians joining a program is the ability to
earn points or miles from a number of different businesses. While that may sound
counterproductive to creating customer loyalty to individual brands, it isn’t.
A coalition program like DOTZ or MultiPlus allows businesses to leverage the knowledge and
customer base of all member companies while still maintaining their own identity. Coalitions
don’t partner with two of the same type of store. So your grocery chain, for example, will be
uniquely positioned to get access to the customers from all the other participating businesses.
The coalition will also be able to gather more data and employ more insights than a store or
even chain operating independently could. Finally, the coalition creates an economy of scale,
allowing businesses to provide many more reward options than they could have on their own.
. . . Optimistic tomorrow . . .
Because of the nation’s economic turnaround, Brazilians may be the most optimistic people on
Earth right now. They are certainly the most optimistic people of any nation we surveyed. Even
the Chinese, emerging as one of the most powerful economies on Earth, aren’t nearly as hopeful
for the future.
71% Exhibit 5
Optimism for the Coming Decade
Consumers in emerging countries express
economic optimism at a level 2-4 times higher
than those in developed countries
47%
2-4x
Source: 2011 COLLOQUY Cross-Cultural Loyalty Study
• Q: Please indicate how much you agree or disagree with
the following statement. “I am confident that my/ my
34% family’s economic prospects will improve over the next
ten years.” Please use the scale from 1 to 10, where 1
means “strongly disagree” and 10 means “strongly
agree.”
• Results indicate Top 2 Box proportions for those who
“Strongly Agree,” and mean score.
• n = 4,414
17% 18%
12%
U.S. CA AU IN CH BR
MEAN 6.2 6.4 5.9 7.5 7.9 8.8
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This optimism means that, despite their incredible pragmatism, Brazilians dream big. It’s impossible
to overstate the importance of that aspirational aspect to Brazil’s consumers. The best way to
understand the importance is to look at their view of what money is for. We asked people in six
nations if they thought of money as:
• A necessity
• Security
• A key to enjoying your life
• Power
• A way to achieve dreams and goals
While “a way to achieve dreams and goals” was a popular choice everywhere, it was the choice
of 86% of Brazilians – far, far more than people in any other country.
39% Exhibit 6
38%
Preferences for Aspirational Benefits
Consumers in emerging countries prefer
aspirational rewards
28% Source: 2011 COLLOQUY Cross-Cultural Loyalty Study
• Q: Please indicate how important each of the following
factors are, or would be, in your decision to join a
2.5x rewards program (assuming one was available to you).
“Offers rewards that allow you to dream.” Please use the
scale from 1 to 10, where 1 means “not at all important”
and 10 means “very important.”
• Results indicate Top 2 Box proportions for members and
those willing to participate in the future. Results are for
SEC A/B in emerging countries.
• n = 3,397
14% 14%
13%
U.S. CA AU IN CH BR
The thing to remember is that Brazilians want rewards that give them something they dream about.
While this is generally true in all emerging nations, Brazil wants it more than others and far more
than the citizens of any of the other six nations we surveyed.
. . . With a large measure of healthy skepticism
Perhaps related to Brazilian pragmatism, our research found that Brazilians are less trusting overall
than consumers in the other nations we looked at. In particular, Brazilians are far less willing to trust
companies to protect their privacy and their data.
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68% Exhibit 7
Privacy Concerns Are Widespread
Brazilians are the most concerned; Indians and
Chinese are also concerned – but to a lesser
52% degree
51%
49%
Source: 2011 COLLOQUY Cross-Cultural Loyalty Study
41% • Q: Please indicate how much you agree or disagree with
each of the following statement. “I am concerned about
the privacy and protection of my personal information.”
Please use the scale from 1 to 10, where 1 means “strongly
33% disagree” and 10 means “strongly agree.”
• Results indicate Top 2 Box proportions for those who
“strongly agree.”
• n = 4,414
U.S. CA AU IN CH BR
MEAN 7.9 7.9 7.7 7.3 7.7 8.4
Nearly 70% of Brazilians said they are strongly concerned about privacy and the protection of their
personal information. This figure dwarfs the level of concern about privacy reported in every other
nation we surveyed. The issue of privacy is most acute among consumers age 18-25. Only 18% of
that Young Adult segment said they would be willing to provide more personal information to enable
companies to provide them with more relevant product and service offerings. That’s a third less
than the General Population as a whole.
Brazilians are skeptical and asking questions. This conclusion is made clear by their attitudes
toward the use of personal information. Brazilians are concerned about what private electronic data
companies gather and how it is handled. Younger consumers in particular doubt that business will
put the interests of the consumer first.
Although this mistrust could be seen as a barrier between business and customers, it’s actually an
opportunity to increase connections between the two.
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31% 31% Exhibit 8
Youth Least Willing to Provide
Information for Relevance
27%
26% Willingness to provide additional information
for relevance
Source: 2011 COLLOQUY Cross-Cultural Loyalty Study,
Brazilian Results
18% • Q: Please indicate how much you agree or disagree with
each of the following statements. Please use the scale
from 1 to 10, where 1 means “strongly disagree” and 10
means “strongly agree.” Please select one response for
each statement. “I would be willing to provide more
personal information if companies sent me relevant
product and service offers based on what I have provided
them.”
• Results indicate Top 2 Box proportions.
• n = 519
SEC A/B/C 18-25 26-34 35-44 45+
The opportunity lies in demonstrating that you understand these reservations, particularly when it
comes to privacy. Many companies express their policies regarding privacy and personal information
documents like “end-user licensing agreements” written in language only a lawyer could interpret.
Instead, make the process as transparent as possible. Consider featuring an easy-to-understand
statement that also offers easy “opt-out” options and lets customers determine how much informa-
tion they want to share and what will be done with it.
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III. The Takeaway: Five Essentials
As the findings of the 2011 COLLOQUY Cross-Cultural Loyalty Study demonstrate, Brazilians are
optimistic, but pragmatic. And they have an eye on the goal. To reach them, marketers must exhibit
those same characteristics.
With an eye on the goal, coach your loyalty team in these strategies:
1: Get the first-mover advantage.
We’re at crucial moment in the development of Brazilian consumers. They’re moving on from the
tough times of the past, which means they’re just beginning to acquire a new set of habits and
attitudes – especially when it comes to how they spend the new levels of income they now enjoy.
They want the payoff from all the hard work they’ve done. They want to be acknowledged as
special and important.
As we’ve seen, few companies are currently responding to these desires. Brazilians say the primary
reason they aren’t participating in a loyalty rewards program is because the opportunity isn’t offered
to them – meaning that having a program in the first place is in itself an important differentiator.
A good program will make your business stand out.
Building a program now will give you a significant advantage over competitors, who will be forced
to play catch-up. Your business will establish itself as one that proactively works to meet customers’
Brazilians are optimistic, but prag- needs.
matic. And they have an eye on the 2: Recognize consumers’ dreams.
Brazilians’ desires reflect their optimism. They want special treatment that reflects their bettered
goal. To reach them, marketers must economic circumstances.
exhibit those same characteristics. This treatment may include “everyday indulgence” rewards like a massage or dinner for two at a
favorite local restaurant. Or it could encompass larger treats like time at a super-exclusive spa,
premier tickets for a football match or concert, an ultra-luxurious trip or a meal at that restaurant
even Ivete Sangalo has trouble getting a reservation for.
More than 60% of Brazilians reported that they prefer saving for big rewards instead of cashing in as
soon as they can afford something smaller. One company that understands this desire is Accorhotels,
which offers its A Club members the opportunity to redeem for such experiential rewards as tickets
to shows, or to Formula One auto racing.
3: Emphasize soft benefits.
Rewards certainly catch consumers’ attention, but so will recognizing those consumers as special and
important. Brazilians want to know that a business is as loyal to them as they are to it. Businesses
must acknowledge this with soft benefits that are evident each time the customer transacts with it.
This recognition can take a number of different forms:
• A unique cashier or checkout process
• A lounge – either in the store or access to an airline lounge when they travel.
• Discounts given on a birthday, or for having been a customer for a certain amount of time
• Shopping times when only they have access to the business
• Events – like a celebrity appearance – that only they are invited to
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Financial services companies seem to recognize the importance of these recognition benefits.
Mastercard, for example, offers Black Card members access to a special “lounge” in the winter
resort town of Campo de Jordao, where they can log into the internet, use meeting rooms, and
take advantage of access to limousine service.
4: Reward for word-of-mouth behavior.
In Brazil, more so than in other nations COLLOQUY examined, people defined a loyal customer as
someone who has a long tenure with a business and who recommends it to friends. Brazilians are
significantly more vocal about their positive and negative brand experiences than citizens in other
countries – two-thirds tell family and friends about a positive experience with a particular company.
To succeed, therefore, a Brazilian rewards program must also recognize and reward this word-of-
mouth behavior, perhaps by awarding points or miles when a new customer identifies an existing
customer as how he or she found out about the business.
5: Emphasize ease of use.
Brazilian consumers have a high concern about privacy and the use of their personal data. Businesses
must design programs with appropriately high levels of transparency and communication.
Brazilians are significantly more
Ensure that personal data is protected, and that policies for its use are clearly communicated not
vocal about their positive and only to consumers, but also internally and with any external partners. A privacy policy must be easy
negative brand experiences than for customers to access, and to understand.
citizens in other countries – two- Equally important, the process of earning and redeeming rewards must be straightforward and
intuitive. Employ systems and people to suggest how to get the most from those rewards. Make it
thirds tell family and friends easier for customers to earn points or miles by partnering with other companies, or by joining a
about a positive experience with a coalition.
particular company.
Goal!
Brazil’s economy is poised to mirror the success of its football team, embarking on a string of
victories and World Cup finals. If offered the right value proposition, Brazilian consumers can
become as loyal to their brands as they are to their world-ranked sports team. Don’t wait until
2014, when Brazil hosts the World Cup championship. The time to establish Brazilian consumer
loyalty is now.
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Appendix:
Methodology
The 2011 COLLOQUY Cross-Cultural Loyalty Study was fielded via an online survey during July 2011.
Though this paper concentrates on Brazilian results, the overall study was conducted in 6 countries.
Approximately 1,000 responses were collected in both the U.S. and Canada, while a minimum of 500
responses were collected in Australia, China, India and Brazil. The online survey was run in English in
all countries, but also translated to French in Canada, Simplified Chinese in China, and Portuguese in
Brazil.
Respondents in the emerging economies of China, India and Brazil were further classified by
socioeconomic class A, B and C (D and E classes were not included). COLLOQUY collected a
minimum of 300 responses for SEC A/B and 200 responses for SEC C in each of the emerging
countries studied.
Specific to Brazil:
• The standard SEC system was used. This system takes into account the education of the head of
household, the number of consumable goods owned by family, and whether or not the household
has a monthly maid to determine SEC.
• SEC Classes A/B: n = 309. SEC Class C: n = 209.
• Regions represented by respondents include Center-West, Northeast, North, Southeast, South.
Surveyed Total Sample Demographic Segment
United States n = 1100 General Population + Affluent, Young Adults, Seniors
Canada n = 1151 General Population + Affluent, Young Adults, Seniors
Australia n = 510 General Population Only
India n = 508 SEC Classes A, B, and C Only
China n = 627 SEC Classes A, B, and C Only
Brazil n = 518 SEC Classes A, B, and C Only
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