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True rewards for loyal customers

True rewards for loyal customers
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First Published: Thu, Jul 28 2011. 09 58 PM IST
Updated: Thu, Jul 28 2011. 09 58 PM IST
It can be hugely irksome to go shopping at a large format store and constantly be asked if you are part of the retail chain’s loyalty programme. If not, would you mind filling a form? No, you are not a member with them, and, yes, you would mind filling the form. One, being asked four times in the last 20 minutes has made you irritable, and, two, you do not shop at their store too often. In fact, this is your first visit.
The staff leaves you alone only when you eventually raise your voice. It goes without saying that they have been poorly trained and pushed into enrolling as many customers as they can in lieu of personal information. The loyalty card is meant to win you points or rewards for shopping with the retail chain. The more you spend with them, the more gifts and discounts you are entitled to.
In fact, today most of you are likely to have multiple loyalty cards crowding your wallet considering hospitality chains and airlines were among the early adopters of such programmes. Later, liberalization ushered modern retail and a couple of bigger brands managed to build robust loyalty programmes for their customers.
Yet, for most of you the membership of a programme has limited value. You are either not able to reach the threshold level where you could redeem your points or the programme makes it cumbersome to claim rewards. For instance, though my credit card company offers me points on the expenditure incurred on the card and sends leaflets on possible rewards (luggage, watches, jewellery, etc.) I could claim, but it’s simply not convenient to fill forms and mail them back to the company to earn rewards.
However, Indian customers may finally be getting lucky as the complexion of loyalty programmes in the country is set to change. At least two major foreign brands in the business set their foot into the country last week. The popular European company Loyalty Partner, that operates a programme under Payback, launched its card last week. Loyalty Partner came to India a year ago through a strategic investment in i-mint, a local company that ran a multi-partner loyalty business here.
Late last week, LoyaltyOne, North America’s biggest customer loyalty and relationship marketing services company, also announced its India entry through 26% equity in Direxions, a Mumbai-based company in similar business. LoyaltyOne is owned by Alliance Data, a company listed on the New York Stock Exchange.
This is good news for several reasons: For a start, the two brands are specialists in building coalition or multi-partner loyalty programmes. This means that you will now have one card in your wallet that will work across a wide range of brands in products and services.
Payback, for instance, has already tied up with the Future Group and will work at its retail chains such as Pantaloon, Big Bazaar, Food Bazar, among others. Partners of Payback also include the online travel portal MakeMyTrip.com, ICICI Bank Ltd and Air India, among a host of other. Direxions CEO Brian Almeida says LoyaltyOne is in the process of designing its programme here.
Of the nearly 1,000 loyalty programmes currently running in India, barely a handful may be in the coalition format. Most are stand-alone programmes that deliver limited value as a customer is unlikely to keep shopping at one store.
Vijay Bobba who founded and sold i-mint to Payback says coalition accelerates accumulation of points and puts them all in a single bank.
Hypothetically speaking, if your single brand loyalty card gave you 2% return on the Rs 1,000 spent in its store, the multi-partner card will ensure a 2% return on, say, Rs 14,000 that you may have spent across several brands and services immediately improving your reward potential that will be bigger and better.
That’s not all. The foreign brands will introduce their international best practices in terms of technology, programme design and even consumer interface. They not only maximize redemption, they allow you to redeem them where it matters most—at kiosks within the stores.
Globally, they offer the “opting” option, meaning, you enrol only if you wish to. Pestering is not allowed. Besides, since they analyse the data (your personal details) they collect, you will receive only relevant communication from the company instead of random offers.
Brian Almedia promises that customers will also earn points on grocery and other utilities purchase since LoyaltyOne plans to widen the base of consumers who can enjoy the benefits. It will recognize the middle-income consumer segment, he claims.
Of course, it’s a win-win for brands that will benefit from deep insights into consumer behaviour and find answers to questions such as who is buying what and why? Or, what else can he buy?
The arrival of these brands in India is well timed. Though modern retail is still about 6% of total retail in India, it is growing at 35-40% a year and moving into smaller towns. Unlike the owners of the mom-and-pop stores of yore who knew their customers personally, modern retailers employ tools such as loyalty to cards to know their customers and retain them.
Shuchi Bansal is marketing and media editor with Mint. Comment at whatwebuy@livemint.com
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First Published: Thu, Jul 28 2011. 09 58 PM IST