When its competitor from Indonesia entered the market with its low prices and promotions, Grab doubled down on its stance of not giving out heavily discounted promotions. In a statement to Marketing, not long after GOJEK's entry, Grab had said that there will be no promotions being added to its platform. Grab Singapore’s head Lim Kell Jay also told Marketing that the team is working on building long-term value for its customers.
However, in recent weeks several users have been seeing ad-hoc promotions pop up on their screens. A quick check by Marketing showed that Grab handed out promotions such as SG$4 off for two rides to selected users. Clarifying the matter to Marketing, a Grab spokesperson explained that while the ride-hailing firm will not focus on mass promotions (as shared earlier), there is a role for targeted promotions to encourage usage of its services, such as transport, food, delivery and others. The spokesperson said that some customers have received these promotions while others may have received rewards from its new stamp card.
She added that some of the ride rewards users have been seeing, such as the SG$3 and SG$5 off three rides are part of GrabRewards stamp card initiative. This was introduced in November last year as part of its long term value initiatives to customers. These stamp rewards are available for Platinum and Gold users, who pay for rides with GrabPay credits. "Grab is focused on improving customer experience, and ad-hoc promotions and rewards have always been offered to a selected group of customers to encourage them to try Grab’s services. In the past months, the team has worked on different ways to engage its users and create greater value for them," the spokesperson said.
Promotions and prices slashes are not uncommon in tactical campaigns, when brands are looking back to acquire a new base of consumers, or lure back lost ones. Speaking to Marketing, Nick Foley, president Southeast Asia Pacific & Japan, Landor said that it comes as no surprise that Grab returned to using promotions as promotions can be a "highly effective mechanism" for stimulating short term demand.
However, he said that the challenge for Grab lies in the number of consumers who are reluctant to use the service without any form of discounts. As such, Foley added that this implies that Grab have struggled to build sufficient brand equity so as its customer base use its service in the absence of "fierce discounting".
"The latest approach by Grab seems to have a loyalty component to it. This is a positive step forward as it makes interaction with Grab feel slightly less transactional," he said. Many full service airlines have often bolstered their customer base in recent years by tailoring loyalty programs to their most frequent flyers. He added:
It would appear that Grab has looked at the aviation sector in an effort to lock in customers who use its services on a regular basis.
Meanwhile, Ambrish Chaudhry, managing strategy director, Singapore and Asia, Superunion was of a view that promotions prove how "good" competition is for customers.
"As a regular commuter in Singapore, it’s a welcome sight to see the return of promotions. However, I suspect it will be a bit different this time. Grab has been smart in tying its promotions to the loyalty program," he said, adding that its loyalty program will be a buffer against aggressive competition.
"The company has made huge strides in its loyalty program with partnerships that are relevant to everyday life in Singapore," he said, adding:
Linking promotions to loyalty status is a great way to reward its most lucrative customers and prevent them from jumping ship.
Of course, other elements such as transparent pricing, responsiveness in customer service and a desirable brand image will also be key to sustaining their customer base, Chaudhry said.