Loyalty programs few years ago revolved around a simple rule -the more you spent, the more loyalty stock you gain. It’s now a tech-tool to retain young customers. A brand with right reward rule can be a success criterion to long term value in retail.
A recent study by Deloitte says that millennials are the chief wage earners in India with a 47-percent share in the working age population and there are 440 million of them presently. And unlike their older generations, this large share of a new breed of consumers aka the millennial buyers, choose convenience over queues and pay more attention to exclusive discounts over annual sales.
As the millennial adopt a whole lot of new spending habits, personalization, experience and convenience top the list of these new age shoppers. On realizing this, most brands have understood the potential of the new age buyers and are customizing brand building exercises, just to suit their needs. Loyalty programs, which a few years ago revolved around a simple rule- the more you spent, the more loyalty stock you gained, is now a tech-tool to retain young age customers. Big brands too endorse strong loyalty programs in a bid to ensure that millennial do not crossover to rival brands, while most of the successful millennial-dominated brands have incorporated the points system while retaining customer personalization.
For instance, Starbucks uses the tried-and-tested point system and also integrates an app with personalized content such as music streaming and ‘just for you’ new drinks to try. Similarly, luxury makeup brand, Sephora, has an interactive app where consumers can virtually try on the products and access exclusive in-app purchases. With the Beauty Insider loyalty program in the app, consumers can earn points through purchases that directly translate to products and exclusive makeovers.
Loyalty programs for long-term value.
According to Shopmatic co-founder Anurag Avula, loyalty programmes have always worked to keep customers loyal and locked to a particular brand. “Given that the e-commerce landscape has multiple players claiming similar propositions, customers are getting wiser about whom they are signing up with today.What sometimes gets masqueraded as a loyalty programme, often ends up being spam mails for customers, which results in disengagement. If well-planned, loyalty programmes can often serve as the single most important success criterion for long-term value in retail,” he says.
Customer retention
According to StrategyOne, a consultant group, once a millennial has found a brand they like, 80 percent of them will remain loyal to it.Further, Avula stresses that well-designed loyalty programs clearly map out when to engage with customers, how often to engage with them and what to engage them with.“This calls for a deep understanding of the customers behaviour and mind-space.When customized, they work wonders in keeping the customers loyal to the brand- so much so that even if the brand makes a mistake, customers forgive them for the aberration,” Avula says.
The unique factor
“Typically in a day, at least 10 brands approach a customer with exclusive offers all stating it is valid for a day or over the weekend. So, how and why will a customer choose a brand and stay loyal to it? Most often, the promotional mails end up as spam mails,” asserts Maharsh Shah, a millennial, who owns Enakshi, a new age ethnic wear site. While Enakshi has been launched recently and is in the process of building a strong customer base to personalize loyalty programs, he says the reward points have huge potential for customer engagement. “No shopper is the same on two different platforms, even if he is shopping from the same brand. The way a customer engages in an app is different from the way he shops in stores. Given such constraints, it’s important for any brand to create loyalty programs that will cater to the customers who are present everywhere, any time,” Shah says.
Power of social media
Although social media is the right platform to engage the millennial consumers if the buyer is not aware of what to do with the reward points or other offers, the whole exercise can become futile in engaging customers, warns Namya Patel, co-founder of Enakshi. “The biggest advantage of social media is it enables two-way communication with the customer. But if a brand fails to rightly involve customers, and help them understand how to use the loyalty programs to their benefit, the goal falls flat. The consumer should know what to do with the programs and why they should go back to the brand. And social media plays a huge role in bridging this gap,” Namya says.
Source: Indian Retailer Magazine