EngageMint 2022: Loyalty Program - Worth the effort?
Courting Loyalty Template Version
1. Loyalty Programs – From Transactions to Transformation!
Kartikeya Kompella – Lowe Lintas
2. The Era Of Acquisition
A growing economy with a large population
Consumption oriented growth booming
Acquisition the name of the game
Retention / loyalty – not a focus area for most
But Loyalty Programs Are Important !
3. How Do Loyalty Programs Help ?
If 80:20 is true and it is, then it’s too much of a risk to
take
Competition is eyeing your customers and vice versa
Customers can defer purchases
Happy customers – give good referrals
4. A Rash Of Loyalty Programs
Loyalty programs - sprouting up at every corner
The energy and focus required for loyalty programs - seem to
be lacking
Leading to largely undifferentiated programs
An evolutionary phase ?
5. Loyalty Programs Are Struggling
Colloquy Loyalty Census : The average U.S. household
has signed up for 14.1 loyalty programs, but only
participates in 6.2 of them (44%).
Low awareness - Lintas survey
6. Why Are Loyalty Programs Struggling ?
They just don’t touch customers
Transactional
Predictable
Lack relevance
7. Loyalty Programs Defined
Loyalty programs are structured marketing efforts that
reward, and therefore encourage, loyal buying behavior —
behavior which is potentially of benefit to the firm
Repeat purchase – the proof of loyalty
Hypothesis: The greater the joy a program provides, the
greater consumers’ willingness to repeat purchases
8. Two Ways Of Running Programs
The transactional approach – build your programs around a
set of transactions – points, birthday cards
The transformational approach – build your program
around the customer
9. If you ran a program for your most important customers ….
‘You’d want to enhance the relationship’
11. Transactional Programs
Most programs in India are points based
A ready model can lead to incrementalism / lack of
imagination
Lends itself easily to transactions
12. Driving A Program Through Points
Points – a welcome freebie but not a relationship
enhancer in any manner
You can spoil the best relationship by making it
purely transactional
Driving a program only through points takes away
the magic
15. Build Appreciation
Crossword does book readings
Levis runs a special edition clothes and accessories
that money can’t buy
Tanishq factory visits help customers know more
about the product and the craft
16. Help Customers
Add a product to a service and vice versa
An apparel brand can offer fashion stylist
services
An airlines can offer airport bookstore coupons
17. Random Acts of Kindness
Everyone loves a pleasant surprise
Predictability leads to expectations
Need to be spontaneous
Hyatt’s Gold Passport – free breakfast or drinks on
the house
18. Reward Disproportionately
Redemption gives some joy
Most points go unredeemed
The toss up - give points to all your customers and have a
majority unredeemed or reward your main customers
disproportionately
19. Keep Rewards Attainable
Ista Hotels
After the 4th visit, free upgrade to a suite
After the 6th visit, free two day stay
20. Customer Knowledge
Knowing what a customer wants to buy and when can
convert a sale into a service
Make conversion or sale become more fun or rewarding
22. The Background
The STD PCO business in the early-to-mid 2000s was largely
a BSNL monopoly
Touchtel, an unknown private player had a tough challenge
Even in booths where Touchtel managed to get a presence,
loyalties – and revenues – were divided
With margins more or less at par (with BSNL), a stronger
differentiator was needed
Pokisham, a loyalty program for STD PCO customers was
launched in this backdrop
23. Program Construct
Points based program
1 basic point for a net billing of Rs.100
Greater reward for greater loyalty – 1.2 points for ‘exclusive’ STD
PCOs
Additional rewards for length of association – tenure bonus points
in line with no. of years with Touchtel
Bonus points for meeting specific targets/ achieving milestones
Green token lucky draw – tactical promotions – win
consumer durables
Red token lucky draw – win a car
Programs for the family – movies, drawing competition
24. Redemption and Rewards
Customers could redeem their points against a host of
merchandise – jewellery gift vouchers, white goods, holiday
packages etc.
Additionally lucky draws conducted monthly and quarterly
Program culminated with a gala ceremony where customers
were invited with their families
Rewards and prize distribution
Lucky draw for one mega bumper prize
Variety entertainment, food and beverage
25. What Made It Special ?
Excitement, spontaneity was a part of the program design
Completely customer centric
Involvement across the team starting with Senior Mgt
Family involvement brought in pride
28. The Future
Programs will continue to proliferate
While companies will analyse data better – this may not
help consumers
As more brands question their loyalty programs – programs
will become more customer centric