Can the Customers Profit from Loyalty?

Published by MBA Skool Team, Published on March 14, 2015

Keep them happy that’s when they come back for more! Based upon the accumulated points customers might be able to items out of the whole lot which maybe not valuable for our use. They are mostly offered in bulk for customers irrespective of buyers or not. Loyalty programs are an effective device for identifying the best customers and moving them through the stages of customer engagement and by giving those rewards, recognition and relevant communications.

Loyalty programs are to manly identify the buying behavior and capacity of every customer so that measures can be taken accordingly for the same to satisfy them with the readymade programs offered. It is also an opportunity to award customers for shopping the same brand for a long time. Target customers area to be decided who can be students, businessmen, working people or housewives.

For example:

If you travel in the same airlines which calculates miles points based upon your sector and travel distance with a particular expiry date, consumers mindset will be to travel often and increase miles. These miles offer upgrades, luxuries and offers on rental and so on. The tendency of customers change due to so many services offered with miles. Therefore importance should be given to customers according to their buyer capacity. They have to position themselves in the market and communicate what they are offering like

• My Starbucks Rewards – ‘Come here often’

• Lifestyle Rewards (Inner Circle) – ‘Exclusive Privileges, Exclusive Rewards’

• Club ITC(ITC Hotels) – ‘A World Apart’

In India various hotel joints like Starwood Group, ITC Group, Hyatt Group, Hotel Mariott, Taj Group have their loyalty cards for their customers. Every customer is treated like a warm welcomes guest till the end. These groups of loyalists are very particular about value proposition where they are offered points against the money value purchased. The reimbursements of these loyalty cards have a different approach they can be categorized based upon the purchasing capacity or the card type. A few are

• Cash vouchers for different retail stores

• Discounts for the existing card within the same group products

• Upgrades and bonuses for extra purchases made during festive seasons

• Cash back percentage for purchases made

If we look back maybe 10 years before there was no such thing as internet or cards. A person having a bank account with a debit card and a credit card were considered as exclusive customers. But today the idea of “Free size – One program fits all” is out of question as the earning capacity and spending capacity differs from person to person and family to family. Being loyal to the products help in knowing the product/service better and it is important for them to know the value for being such a member. India started their loyalty programs almost two decades before which was initiated by Shopper Stop. Today it has reached so many consumers that they want to increase their points and want only upgrades.

In the recent years, The Future Group and the Landmark group have become very popular about loyalty for customers. They have successfully partnered with their other products which will increase their points and provide several benefits which results in better personality engagement. The benefits are so good and adds a value to the product that the retailer comes back often to purchase and increase their points. It might be simple benefits like discounts on total bill, free movie tickets, more promotional products with total purchase etc.

Similarly a decade back Jet Airways started their privilege program in India. Initially there were very few people using air as a mode of transport and it seemed very expensive for everyone else. Slowly the era changed and lot of people started using Jet Airways as they were the most prominent airline during that time. Their privilege program has benefited a lot of people as they were travelling regularly and upgraded themselves to the next level accordingly. Others who did not want upgrades were given excellent discounts in hotels, exotic destination packages in India and discounts in restaurants etc. which were a big hit for a lot of consumers.

Loyalty points depend upon customer understanding and user friendliness. If the card is easy to use lot of other consumers may enroll into getting a loyalty card. It can alienate the customers who are not frequent buyers but are loyal to the brand and they will not be recognized and will be out of the competition with no marginal increase in their points. It is very important to know your target customers; with the help of which they can come to conclusions as a customer are they profited by it or not. Customers are profited as the basic necessities are fulfilled and are just fulfilling their Veblen needs which are different. As a supplier it is always better to target more customers and also enroll them for their loyalty program. It is also necessary to communicate the benefits of the program and this well strongly invite the customers to buy more from the same place and utilize the points for other purposes offered. Be it airlines or retail store it is in their hands to convince a consumer to buy or enroll. It’s the art of satisfying them even though they are proportionally less than income.

This article has been authored by Ananthalakshmi C V, HR Administrator from Mace Macro International


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