PLAYING THE LOYALTY CARD RIGHT

01Getting a grip on the customer’s psyche is a tall order. In a market like India, which is close to a demographic inflection point, the challenge is even more complex. In May 2013, AIMIA roped in IMRB to study consumer behaviour in urban India. The exercise also aimed to gather insights into consumers’ relationships with brands and their awareness of loyalty programmes. The study threw up some interesting findings.

  • It’s now or never. The young Indian consumer (‘millennial’ henceforth) is smart, aspirational and impatient. Unlike their parents, they are not prepared to wait indefinitely for material satisfaction. As the economy continues to open up, the millennials are embracing the change whole-heartedly, getting brand-aware at a younger age than ever (Economist 2011). It is forecast that by 2020 this group will account for nearly 75 percent of the total spend.
  • Tech’s fun, but won’t throw caution to the winds. The last few years have witnessed a surge in mobile and Internet adoption in India. Most millennials were born digital natives — 60 percent of them own a smartphone. And more millennials — 22 percent — had their first experience of the Web via their mobile or tablet in the last year than via a desktop — 18 percent. At the same time, they care a lot about data securit y, clearly indicating they will share personal information only if its privacy is promised. Eighteen percent of millennials and 20 percent of non-millennials called reassurance on security their primary need. However, 24 percent of millennials indicated they would not share personal information under any condition.
  • There are holes to plug. There is a huge gap between awareness of and participation in loyalty programmes. Seventy percent of millennials and 74 percent of non-millennials have heard about loyalty programmes, but only 54 percent and 56 percent, respectively, are actually members of any programme. While some of this gap can be attributed to the socio-economic context, there remains a more fundamental issue. Young Indians are not dancing to the loyalty beat because it simply doesn’t excite them at the moment.
  • We identified four core reasons for this discrepancy: (a) Propensity for a quick buck. Seventy-two percent of ‘in a hurry’ millennials believe they should be able to earn rewards in under three months, which is distant from reality; (b) Infra woes. The weak Internet infrastructure makes it challenging to access loyalty programmes enough to see adequate value from them;
  • Lack of meaningful rewards. Loyalty programmes need to better answer the ‘What’s in it for me?’ question. Thirty-five percent of millennials and 40 percent of non-millennials reported that relevant rewards would encourage them to join a loyalty programme; and (d) Insufficient point-earning opportunities. We feel a robust loyalty programme proposition for India would include the ability to earn across multiple purchase points. Many programmes in India are currently restrictive in these areas. Not everyone can, or wants to, have a credit card.

COMING UP TRUMPS

  • Keep it simple. Complexity is a turn-off, especially for the time-poor and information-inundated consumer.
  • Facilitate early redemption. Waiting for months, let alone years, for rewards is not going to work.
  • Mobile-optimise. Manage customer relationships through smartphones. It’s not the future – it’s the present.
  • Promise privacy, keep word. The Indian consumer typically starts from a position of active mistrust. One slip-up, and they are gone.
  • Forge alliances. Joining forces with non-competing organisations can help overcome the barriers to participation. One plus one is bigger, better and more noticeable than one on its own.

By Akash Sahai, Managing Director, Aimia India

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