Rewarding buyers for repeat custom isn’t a new idea but now brands are deploying technology as a force multiplier for tried-and-tested tools such as loyalty programmes.
Take Zepto, a delivery platform that recently unveiled its proprietary loyalty programme, Zepto Pass, pricing it between Rs 19 and Rs 39. With Zepto Pass, users can enjoy free delivery for orders exceeding Rs 99 and receive up to a 20% discount on grocery purchases surpassing Rs 299. Media reports hailed the programme as an “instant success,” as it garnered over 1 million subscribers within a week of its launch. The company says the programme will raise the average order value, offsetting the cost of discounts to an extent.
Airlines, retail and hospitality sectors have traditionally been the key proponents of loyalty programmes and the more industrious among consumers have held their loyalty coupons as their trump cards. Kalyan Kumar, co-founder and CEO of KlugKlug, notes that a significant portion—around 30-40%—of customer acquisition can occur through loyalty programmes within businesses. According to a Nielsen report, over 50% of Indians are members of at least one loyalty programme. Analysts say the market was valued at $4.79 billion in 2023 and is projected to reach $8.02 billion by 2028, experiencing robust growth with a steady compounded annual growth rate exceeding 15%.
What is happening now is that brands are deploying emerging technologies to turbocharge their loyalty programmes. As a first step, Vaibhav Kaushik, co-founder and CEO, Nawgati, points out the importance of choosing the right technology to craft and run an ideal loyalty programme. He says, “A good loyalty programme requires an excellent user interface. Technologies that help identify spending trends are also key. The overall experience in the customer journey is very important.”
Consider Vistara, which runs its own ‘Club Vistara’ programme for frequent flyers. Looking ahead, the company anticipates a proliferation of partnerships, digital wallets, and AI-enhanced end-to-end customer journeys as promising design trends for the future.
Meanwhile, Audi India, in line with its digitalisation efforts, has introduced its ‘Audi Club Rewards’ programme in 2022 and is now looking to broaden its scope beyond products, says Balbir Singh Dhillon, head of Audi India.
Vijay Navaluri, co-founder & CCO, Supervity, explains how artificial intelligence (AI) and machine learning (ML) can be put to use while crafting the perfect loyalty programme. “Mobile apps equipped with generative AI can enhance user experience through personalised messages and intuitive interfaces, while generative AI-driven chat agents provide real-time support and engagement, addressing queries about loyalty rewards seamlessly,” he explains.
AI can also optimise inventory management based on reward redemption patterns and predict future customer behaviour to adjust loyalty strategies proactively. “An AI-centric approach can not only enhance the customer experience but also drive higher engagement and loyalty,” Navaluri adds.
A recent EY report also points out that as third-party cookies are phased out, loyalty programmes are becoming a source of valuable zero-party and first-party data, which can inform and personalise various touch points throughout the customer journey. “Data improves customer segmentation, allowing you to tailor incentives and marketing – think birthdays, holidays, anniversaries – improving customer engagement, satisfaction and retention,” the report says.
The report emphasises that technology should facilitate seamless omnichannel experiences, prioritising connectivity from mobile to brick-and-mortar stores. This empowers customers to engage with a brand across channels, enabling the tracking of customer behaviour for tailored marketing campaigns.
That said, Samit Sinha, founder and managing partner of Alchemist Brand Consulting, cautions that over time, tech-prompted programmes can become undifferentiated benefiting no one. “Any loyalty programme must adhere to the fundamental principles of brand management—ensuring relevance, authenticity, imagination, fidelity to the brand ethos, sensitivity to customer needs and a commitment to differentiation.”
Ultimately, the channeling of technology by loyalty programmes should not be used only to automate processes. “On the contrary, companies should create ways to draw genuine and meaningful conversations. It should enable customers and companies to engage beyond transactions, creating emotional bonds,” says Abhinav Jain, co-founder & CEO, Almonds AI.
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