A loyalty program still remains a great way to identify, track, reward, recognize and retain customers, especially in the retail industry, which is still evolving towards structured and organized formats. Commonly observed fickle consumer behavior makes it even more important to have a defined strategy to retain consistently active consumers in an effort to gain and sustain their loyalty.
Often, brands devolve their loyalty program to merely a ‘rewards’ program, which appeals predominantly to the deal-seeking inclination of a consumer. They fail to recognize that as buyers become affluent, they are willing to pay more for better quality, richer experience and preferential treatment. Hence, a points-only program may not appeal as much to them. Brands, which are successful in providing these recognition elements without intruding, gain consumers’ trust and often their long-term loyalty, according to Vikas Chandak, Head of Strategic Business, Financial Products, Partnerships and Alliances at JetPrivilege.
And he should know.
JetPrivilege has grown from an over 2.5Mn+ member base in 2014 (when it was carved out as a separate entity with Etihad Airways as the new majority owner) to a 9.8 million member base till a few weeks ago. While the cash-starved Jet Airways suspended its operations recently, there is no denying that its JPMiles, and co-branded credit cards, were amongst the most popular loyalty programs around. The airlines recently issued a statement that the JPMiles will continue to exist and customers can use it across its 150 program partners.
Chandak draws from his experience at JetPrivilege to explain how retailers, too, can develop a loyalty programs ecosystem that evolves constantly to remain relevant for their customers.
Since earning and burning rewards can have a positive impact on customers spending habits, how did JetPrivilege keep enhancing its loyalty program to make it more contemporary?
For a loyalty program to do well, its currency needs to be high on attainability (rapid accumulation of the reward currency at multiple touch-points), availability and fungibility (flexibility to convert to rewards – anytime, anywhere, multiple options) and perceived value (a higher perceived value than the actual value of redemption itself). Most loyalty programs fail in these areas, thereby limiting the influence of their currencies and becoming victims of their own structural flaws. If done well, a loyalty program will work well in a landscape where customers would otherwise change brand loyalty quickly.
With omnichannel becoming omniscient in retail, how can retailers ensure that their loyalty programs are seamless and digital in nature?
Retailers should seek multiple touch-points to make themselves accessible to members and let the program participants define their preferences. However, a strategy of spray-and-pray can be really expensive and not all retailers can afford to be omnipresent. Hence, prioritization depending on the retail category would be a great option.
Additionally, a partnership-based approach wherein the retailer becomes part of a larger partner ecosystem wherein they can become more relevant to the members along with higher visibility on different mediums of interaction would be advisable.
Many retailers are shifting from a physical card to a mobile app to manage loyalty programs. Does this investment in a mobile app justify centralizing customer transactions, especially to gather customer preferences and behaviour?
Real estate on a mobile screen is becoming premium with the launch of every app or use-case. In such a crowded space, loyalty programs that have limited interactions on a day-to-day basis with their members will struggle to find a justifiable reason to continue being on the home screen of the user.
In order to be successful, the program needs to either evolve into a daily use case of such high value, so much that the member retains it on the home screen or it should find a way to become part of an eco-system which is relevant to the member on a daily basis. In its absence, the application will fade into the multitudes of never-used-but-installed ones which is a tragic end for the effort involved in building it.
I believe retail programs that have limited use cases (especially non-ecommerce – fashion / electronics retailers with limited purchase frequencies or groceries with limited value proposition on the loyalty front) should attempt to build or become part of a larger ecosystem of partners who can be more relevant to members on a daily basis. An app from such an ecosystem could be far more relevant on a daily basis and therefore more valuable to all partners in such an ecosystem.