South African retailer Makro has worked with Decision Inc. on an innovative mobile app solution to improve its understanding of its customers and provide vendors with a new platform to market their products and services while incentivising bigger and repeat purchases.
Makro has evolved in the retail space from a stalwart warehouse chain to now being able to offer customers a convenient online shopping hub. Makro offers food, the latest electronics, housewares, camping, outdoor equipment, and even liquor.
A total of 21 Makro stores trade in South Africa, bringing convenience and affordability to local households and businesses. With the ecommerce addition to its offering, customers can enjoy its deals and value-added services across a broader reach of locations.
Its extensive online shopping range includes most items customers would expect to find in a Makro store as well as an extended and marketplace assortment and carries with it the same ethos it has always maintained. It operates under a low cost / low margin trading philosophy, enabling the company to deliver quality merchandise at competitive prices.
Makro wanted to reward customers for buying more and shopping more frequently.
“Makro is generally considered to be a destination store and only convenient to visit often for people who stay close to it. We wanted to change this perception and reward customers who shop with us frequently. Even though we have powerful promotions like the R100 deals, we needed to identify an innovative way to embrace this customer-centric approach even more,” says Paul van de Waal, eCommerce Executive at Makro SA.
Given the pervasiveness of mobile solutions in South Africa, it identified an app as the ideal way to offer customers rewards that can be earned over an extended period as well as short-term deals in a secure environment.
Furthermore, a mobile app would enable Makro to stay relevant from a technological perspective and keep up with industry trends when it comes to customer rewards and provide a new communication channel to customers. It also serves as a platform to introduce additional features.
“This app would be a major driver to reward our customers for shopping frequently. With people having so many loyalty cards in their wallets, the digital nature of the app would also provide something different,” says van de Waal.
The app would need to integrate effectively between several internal platforms and would require a multi-faceted implementation process. It would also require specific considerations from financial, software, database, security, and regulatory perspectives and need multiple teams across divisions within the company and its various solution partners to communicate and work together.
Following an extensive tender process, Makro awarded the project to Decision Inc., who would be responsible for the back-end calculations and analytics, and Britehouse, who would develop the front-end application.
“This would require significant coordination between the two organisations and Makro. However, we were up to the task and wanted to ensure as smooth a process as possible to ensure the best possible outcome for the customer,” says Kate McFarlane, financial manager at Decision Inc.
The mobile app would see customers earn rewards by purchasing a qualifying number of products, for example, on the eighth purchase of dishwashing liquid, a customer will receive cash back in a digital wallet linked to the app.
“We had to work with Makro, UCS, and Britehouse to enable the app to perform all the required calculations on the back-end to keep track of the number of purchases and allocate the funds to the wallet once a customer qualifies. It also tracks the movement of the wallet balance. This reward can be used as tender to pay for purchases, can be donated to a charity, or transferred to another customer,” says McFarlane.
The following Decision Inc. solutions and divisions were used:
Business Productivity Solutions team;
Database and data management;
Extract, transform, and load (ETL) processes and data work; and
Qlik Sense to perform analytics on the rewards.
“This was quite different from our usual implementation as it was a transactional system. We therefore had to cater for not only the reporting of information but also the creation of data and ensure that it was done correctly. Furthermore, given how the wallet accounts on the app are essentially bank accounts, Decision Inc. had to ensure that security takes priority. In terms of support, we had to have a team on standby during weekends should there be any issues to resolve. Additionally, we had to cater for several scenarios that could not be pre-defined in terms of support services,” says McFarlane.
Decision Inc. worked closely with Makro with the relationship expected to continue expanding as new retail campaigns are launched throughout the year.
The entire project took approximately seven months to complete from the initial scope of work to becoming fully operational.
“With the app, Makro has embraced a new environment where the customer can engage with the business. Makro is also providing its vendors with the ability to promote their products through the app and access customers with a new type of rewards system,” says van de Waal.
In the first few months of implementing the app, Makro reported a significant increase in sales across the product ranges that were part of the rewards programme.
“For example, the still water products in the programme had sales growth of more than 65 percent at most of the stores. Even more significant is an online sales growth of more than 325 percent reflecting the incredible success of going mobile and introducing the rewards element. This figure excludes the Western Cape that is experiencing a water crisis and would by default have higher sales in the product range,” adds van de Waal.
Additionally, in the first few months since launching the app, Makro said six percent of its frequent shoppers registered for the programme. The amount of rewards earned and number of active customers, have been growing exponentially in recent months as people are taking advantage of the benefits associated with the programme.
“With the app, Makro can understand its customers better and provide them with even more relevant and tailored products and services. Furthermore, the analytics Decision Inc. provides us enables us to customise the offerings even further by empowering us with the necessary insights to create a more integrated customer experience,” concludes van de Waal.