Brazilian SMEs could engage with a community of millions of potentially loyal customers by using data-powered offers and rewards to influence shopping habits and encourage loyalty.

Local businesses are an integral part of everyday life in Brazil; they are just as popular as mass merchants, while one quarter of customers say they use SME retail outlets most often.

However, there is an ongoing generational movement in shopping habits, as market dynamics shift in favour of the growing number of young consumers entering the economy, who are much more likely to shop with a national chain or online specialist.

In response, SMEs need to ensure they attract and keep younger customers while retaining the business of older members of the community. A key strategic lever is the enormous potential provided by offers and rewards programmes.

Brazilian consumers love loyalty programmes; many local stores do not offer them.

Two-thirds of consumers say they want to earn rewards for shopping with local businesses; among those who already use at least one loyalty scheme, typically through a national retailer, interest in local initiatives rises to 75%.

Yet although this large community is actively interested in spending money with SME retailers, just 15% are signed up to a local business loyalty scheme. This leaves more than 100 million consumers who could be engaged by offers and rewards programmes, if they were introduced by local merchants.

The successful introduction of relevant offers and rewards could be transformative for businesses in two ways:

  • Firstly, it would attract a wealth of new customers, particularly from younger generations, who increasingly expect personalised offers as part of their retail experience.
  • Secondly, by raising awareness and extending the reach of SMEs into new consumer groups, merchants can increase their exposure to middle-income and high-income brackets where there is increased spending power. Currently, local stores are most popular with lower-income groups.

So why is there a loyalty gap?

With such a vast market open to offers, why are SMEs not engaging with shoppers more effectively?

The answer lies in data, both in terms of its collection and effective use.

Technology is essential to creating the type of personalised, responsive loyalty programmes customers expect, but there is consumer resistance.

Concerns about data-sharing in Brazil are twice the level seen in countries such as the UK and Australia, which is a significant barrier to launching any customised, digitally enabled loyalty programmes that rely on customer data.

However, this resistance almost evaporates when banks become involved in data handling. Around two-thirds of Brazilian consumers say they would choose banks to enable local business’s offers and rewards programmes. They are also most comfortable with financial institutions analysing transactional data.

This indicates that banks have a valuable opportunity to work more closely with SMEs, playing a key role in unlocking potential growth by supporting and powering loyalty schemes that enjoy huge domestic demand.

Bank-powered, data-driven loyalty and rewards programmes are best-suited to help small businesses meet the unmet needs of Brazil’s shoppers.

A global perspective on loyalty

Our market report, available to download for free, provides a detailed perspective on the opportunities for banks to support SME engagement with consumers through offers and rewards.

In addition to Brazil, the Making Loyalty Work for Small Businesses report also contains extensive analysis of SMEs in Australia, the UK, and US, covering more than 4,500 consumers worldwide.

PYMNTS report download

Making Loyalty Work for Small Businesses

Free report

The report explains how banks are ideally placed to support SMEs; consumers trust banks much more than technology companies when it comes to transactional data; they also trust banks to operate digital loyalty programmes that allow for tailored and personalised experiences across multiple small businesses.

Pollinate works with global banking partners including National Australia Bank (NAB), NatWest and CIBC to make better use of the wealth of data they own to transform merchant acquiring solutions for business banking customers.