Loyalty Programs are changing face

A few years back, I was quite excited about collecting retail membership cards. I used to think that retail store value me as a customer but now the weight of all these cards is much more than the weight of my wallet. Last week, with heavy heart I decided to part away with my valuable collection of some 15 membership cards as I never got any benefit out of these cards. In short, I decided to part away with my loyalty with these cards.
On a deeper thought, it is to be examined if brand loyalty still alive in Indian retail and why consumers like me has chosen to give up with the loyalty schemes from the retail brands. Explaining the issue, Vasanth Kumar, Executive Director at Lifestyle International-Max Retail Division said, “Need for trustworthy brand will always remain irrespective of availability of various options. There will always be need for loyalty, customers will approach 3-4 brands to meet their need, be it fashion, food etc. Plus there is an aspiration-al angle to it. As long as there is aspiration-al angle, no single brand can meet all the need of a customer and so we call them as loyalty basket rather than calling loyalty to a single brand. Besides, it is important for the brands to remain top in their customers mind and keep adding superior value to their shopping experience and retain their loyalty. So loyalty will surely be here to stay irrespective of multiple options and brands are launched.”

Loyalty Now & Then
Five years back loyalty cards used to be very traditional one with points and rewards in retail and in even restaurants. There was much accumulation system like after every purchase, you used to earn and accumulate certain points and you used to SMSed about the same. Then, both the accumulation and the redemption process were very slow. Whereas, today it has completely changed, the loyalty programs have become cardless, and the loyalty is portable now and the redemption has become multichannel and even across industries. Like you can earn the points in some apparel store and redeem the same in some restaurants. In eCommece it is very instantaneous, whereas you can buy certain products today and earn cash back the next day. So the loyalty programs are now cardless, portable, multichannel and across industry because of the partnership of multiple industries. Bijaei Jayaraj, CEO, Max Get More shared, “Earlier loyalty programs had lesser data to depend on. But now in the digital era, loyalty programs have evolved from a mobile number database to knowing the nerve of the customer through uniquely generated analytics-based insights, down to his preferences, as well as his annoyances. With eCommerce, the customer has more or less been devalued. Before eCommerce there was personalisation. Now there is a brute force that is exerting itself on every customer. Not that the customers haven’t got good deals and discounts on products, but there is still a lack of understanding on what each segment of the customer wants and the lack of promotional sensitivities thereof.”
Ashish Saxena, Executive Director & CEO at TexMex Cuisine India Pvt Ltd that runs popular restaurant Chilis Grill & Bar said, “Earlier, only airlines popularised the loyalty programs. In India, Air India and Jet were the first ones and have the largest member database. Since then many retailers like Shoppers Stop, Reliance etc. have also adopted the principles of loyalty programs and are tapping such tools to increase repeat purchase. Today, the eCommerce retailers are using discount strategies to acquire and then periodic discount coupons as incentive to bring back the customer to their portal. In addition, many F&B players have launched loyalty programs either on their own or in partnership with a multi brand loyalty program.”
Chilis runs a loyalty program wherein the scheme has completely done away with the traditional plastic card as is popular with airline and other loyalty programs. Saxena said, “We saw this as a need as guests do not want to carry multiple cards with them to be able to earn and redeem points. Especially since many times a restaurant visit is unplanned and hence guest may not always carry the card with them. We have achieved this by linking the guest’s mobile number as their membership number. The guest only has to quote the mobile number to earn and redeem points. For accrual, the guest receives an SMS right after the transaction with the number of points added to their account. To redeem points, the guest receives an OTP on their mobile that authenticates and authorises the restaurant to debit the points for redemption.”
Also, points accrual is linked to the amount spent by the guest in the restaurant. There is a tier structure wherein 10 per cent points are issued for bill value up to 3000, 15 per cent from 3,000-5,000 and 20 per cent for bill value above 5,000.
Kumar said, “Even today redemption of loyalty cards are not so easy task, to wither away with the difficulties, we are updating and integrating our loyalty schemes so that customers can avail the benefits on different products and at multiple channels giving more cue to the customer to use the loyalty schemes.”

New age loyalty schemes
Speaking on the need of designing smart loyalty programs, Jayaraj said, “With the integration of data & insights generated through analytics into business, our clients have been able to reduce the CAC (Customer Acquisition Cost) by 57 per cent. Intelligence based acquisition can create the most ideal loyalty program, where the segment size falls down to 1. Simply put, data can let you target each and every customer with specific focus and understanding. Not only is the CAC low, but the LTV (Life Time Value) of these acquired customers is far higher than a customer who has been acquired through other promotion mediums like discounts or sale.”
Clearly it is understood that loyalty program is a way to value your customers and keep the trust factor intact onto your brand. Although it is not the ONLY weapon, nevertheless the impact can be lucrative. 

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