Loyalty programs earn dividends

Customer satisfaction and customer loyalty are goals which brands aim at. Retailers, in the hope of securing the commitment of the customers develop strategies like loyalty programs and credit card reward programs. Take a look at the magnetism of it
Earning brownie points

In a bid to foster loyalty and maintain customer trust we see most names in retail taking the path of loyalty/reward programs for their customers. It is well-intentioned and both sides benefit from it. Customers get value for money, a promise of quality and assurance and the retailer gets, as hoped for, customer allegiance. Not reaping success immediately, however, a loyalty program is something that needs time to mature and earn dividends. So, patience is something a retailer needs to have. 

Concept
Loyalty programs reward and encourage the customer’s buying behaviour, by issuing to them a loyalty card or ID which enables them to secure certain points on each buy which in turn allows them to receive free or discounted merchandise on those points. These are meant for two goals, firstly, the acquisition of information relating to the customers' spending habits, and secondarily to actively promote loyalty amongst customers to make sure they continue patronising the business. Every retail establishment has its unique loyalty programs. Some may award points while a few may partner with multi-partner loyalty programs like I-mint which provides a single platform to thousands of retailers to interact with millions of customers. Banks like ICICI and Citibank also offer certain points on every purchase made by credit cards; these points can be used by customers to purchase other goods on substantially lower prices and at times even free of cost. 

Names in the game
Companies like Shoppers Stop, Reliance, Future Group, Tata have reaped in the benefits of single loyalty programs. Shoppers Stop’s First Citizen loyalty program has given 80 per cent boost to their sales, Pantaloon’s Green Card program accounts for 55 per cent sales, the Future Group expects their loyalty program to generate around 70 per cent sales from their lifestyle formats. As opposed to a single loyalty program, which requires a heavy and fully functional IT backbone, dedicated manpower and heavy investments, multi-partner loyalty programs like I-mint are quite a beneficial venture for companies.  

What they do
Shoppers Stop launched its First Citizen Club; one of India’s best known loyalty programs has reached a headcount of 644,500 and still has a strong hold over its loyal shoppers. Fujifilm Graphic Systems has launched the ‘Platinum 100 Club’, a loyalty program which aims to acknowledge key account customers and provide a wide range of support with their future business strategies. The new Tata Credit Card offers cardholders the opportunity to earn and redeem loyalty points across 18 brand categories through one unit. This card which is in association with the SBI card and MasterCard is a partnership of leading brands across categories like airlines, books, departmental stores, durable goods, fuel, hospitality, telecom etc. 

A word of caution
Loyalty programs do add to new revenue growth depending on the kind of data they are based on, but the retailer needs to be cautious to not use standard loyalty programs for all the customers. Tailoring these programs to suit the needs of the customers is something a retailer should keep in mind. An interesting factor is that, does a loyalty program truly generate loyalty or is it only a mutually beneficial transaction? The retailer should have clarity that he cannot ruthlessly pursue the course of loyalty programs solely for the purpose of profit. Allegiance to a brand by the customer should be the priority, with profit coming a close second. 

Loyalty programs tap in on the market psychology of making a customer feel special and be treated well with respect to the fact that they too deserve a ‘royalty’ of sorts for patronising a certain brand. Businesses have capitalised on this when designing their loyalty programs, often offering benefits that cost little, but carry with them an assumed prestige and the surety of customer commitment.
 

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