A look at what\'s wrong with most points based programs in India.

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’

10. But Most Programs Are Scratching At The Surface

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

13. Key Question
Is the customer at the centre of this program ?

14. Developing Customer Centric Programs

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

21. Pokisham –
The Touchtel STD PCO Loyalty Program

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

26. Making The Mindset Shift

27. Transactions To Transformation
Two step process
Intent
Customer knowledge

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

29. Thank You !