In the cut-throat competitive world, knowing and identifying its customers becomes imperative for any business today, irrespective of its size and nature. Though this is relatively easier for a small business to achieve it, identifying its customers is not a cake walk for a big enterprise. A loyalty programme can be the answer to this.
However, creating and managing a single loyalty programme might prove to be an expensive proposition at times as it requires a heavy and fully functional IT backbone, dedicated manpower, marketing spends, etc. A coalition partner programme on the other hand can do away with all these bottlenecks as it is a shared platform for a number of brands and helps in distributing the overall costs involved.
In simple terms, a coalition loyalty programme involves coming together of multiple non-competing brands to earn customer loyalty. Unlike a single loyalty programme, the idea in it is to have a loyalty programme that can be used across multiple brands. Following the success of this model in the West, Coalition Loyalty Programme is now being attempted in emerging markets such as India.
But it is not solely the aim to earn customer loyalty that drives brands to enter such an alliance. It is more than just a customer earning loyalty points on every buy and then redeeming them to get a free or discounted merchandise on having accumulated a considerable number of these points. Vijay Bobba, CEO & MD, Payback perceives it as a tool to identify one’s customers, knowing about their interests, their behaviour and then helping the marketer to build and align strategies in tune with the individual customer interests. “It builds loyalty among your customers by giving them the best possible costs and compelling consumer experience. This in turn will help in getting access to a wide customer database and facilitating cross partner transactions.” Furthermore, it nurtures the ongoing dialogue between you and your customer and helps to establish a relationship that will go a long way in deciding the fate of the brand in question.
In fact, at times it becomes even cheaper than giving away discounts on items. While discounts are given at the time of purchase, loyalty points are redeemed by a customer over a period of time and do not happen every time. So this is just another way of looking at profitability from a partner’s end.
Rajesh Gupta, President, Hariyali Kisaan Bazaar reiterates the fact how a programme like this helps in coming up with more tailor-made solutions specific to customers and largely preferred by them. “It does make sense in a way because it becomes very easy for us to reach out to consumers and gather relevant information. Most importantly, we get to know their buying decisions.”
Challenges on the way
However, a loyalty programme, as complex as this, is not without challenges. A fully automated loyalty programme is the biggest challenge on the way of implementing of any programme of this kind. And this is the reason why many of the retailers’ attempt failed as it couldn’t keep up to the expectations of its customers. “To handle something complex like this, we do need to have an enterprise class infrastructure in place. The infrastructure has to be a scalable one since transactions happen all the time. At the end of the day, it should be able to identify its customers, bring them in as members and keep their information stored. When these customers transact at different stores, transaction data should be captured. When a customer calls us, we should be able to pull out his/her information in a second and give it out to him,” opines Bobba.
The security issue and fear of getting their personal information hacked also bars a customer sometimes from sharing his/her information and this can be a big challenge to a retailer. “Moreover, in order to make it a success, there should always be a two-way communication. Retailers should engage in a continuous dialogue with its customers and keep them informed about the ongoing or the upcoming deals and about relevant products. In absence of communication, a programme will only fail,” cautions Gupta.
Given that coalition loyalty programme is still in the nascent stage in India, the time is not ripe to gauge the success of this particular programme. But this trend is in the process of picking up. It is not long before Indian retailers understand the benefits of entering a multipartner alliance and bask in the glory of having made such a decision.