Consumers have learned to differentiate between loyalty programmes and rewards, and have moved towards personalised experiences, said panellists at the 7th edition of the News Corp VCCircle India Loyalty Conclave 2017.
Reward points and discounts are passé modes of retaining customers. Organisations can now leverage big data and technology to design hyper-personalised customer loyalty programmes, they added.
“When we started our loyalty programme for Tanishq some 10 years back, it was largely to know who our customers are. We wanted to build trust along with giving them a unique experience,” said Bidyut Nath, head of Tata Group Loyalty Program, Tata Insight and Quants. “In the last eight to nine years, we have achieved a customer retention rate of around 65% because of personalised services that we offer, which is based on their past purchasing history,” he added.
According to Raj Gupta, chief executive of Lowe Lintas, companies need to build a strong purpose around their loyalty programme and it can't be restricted to redeeming reward points. “Besides Shoppers Stop’s 'First Citizen’ programme, the only other programme we found recognisable was Jet Airways, where customers could relate rewards with loyalty,” Gupta said.
Most retailers offer reward point programmes but refer to them as loyalty programmes. In most cases, consumers do not even redeem points but choose unique experiences and services to remain loyal to certain brands or services.
Loyalty is bigger than reward points, he explained.
“When we launch any loyalty programme that involves a third party, 90% of the time, the consumer calls us when they have any query regarding the services of those third-party partners because they relate the programme with us (American Express). Hence, choosing our partners for loyalty programmes is equally important,” said Arnika Dixit, vice president of marketing and head of central marketing organisation at American Express.
Reminiscing about his time at Shoppers Stop, Jaydeep Shetty, CEO of Mineral Fashion Pvt Ltd, who was part of the team that launched the First Citizens programme many years ago, said that even at that time, they focused more on offering customers personalised services, instead of reward points. “This may look funny now but in those days giving free parking or giving our loyalty programme members extended time for shopping during Dashera to Diwali got us more loyalty than anything,” he added.
“Now, I run a women’s fashion brand and in this segment too I have realised that loyalty can be built around the brand by offering something fresh and differential rather than giving discounts,” Shetty explained.
On a different note, Dr Pratima Sheorey, director at SCMHRD said that if you want to engage customers, you have to see how you will touch upon their minds and hearts. “Even on e-commerce sites, people rely a lot on other people's experiences and they read reviews. Also, consumers can differentiate between genuine and paid reviews,” she said.
According to Sheorey, research has shown that while loyalty is one aspect that drivers customer engagement, word-of-mouth advocacy is another. “It is the personal memory of a brand that will drive loyalty,” she added.
