In Asia Pacific and beyond, the world is changing with every passing second — from customer attitudes to loyalty, payments to technology. Is your company keeping up? Download a special 26-page COLLOQUY Asia Pacific Report to learn more about this vibrant customer engagement landscape and the lessons it holds for brands and marketers worldwide. Here’s one of the stories from this compelling report.
Working together is vital – through mini-coalitions, partnerships and shared technology. And data is still king.
Loyalty programs provide an information advantage to brands and therefore thrive in mature oligopolistic markets. As more information becomes available and players consolidate, loyalty programs proliferate. However, the traditionally simplistic program is quickly evolving into something more interactive, collaborative, insightful and tech-savvy.
As the Indian loyalty market gets ready to adapt to the next wave of change, it’s an apt time to take a look at the trends shaping it.
The move away from plastic
Moving on from tangible membership tokens, mobile numbers (and sometimes email IDs) are fast becoming norms as member IDs. This means easier identification at the till and higher tagging rates on in-store transactions (cards being infamously absent in wallets) as well as cost savings. Programs like Payback and most newly launched retail programs are good examples.
Embracing shared technology
Mobile apps have become commonplace, replacing the “so many cards” problem with a “so many apps” one. Tech suppliers are looking to offer white-label solutions with integrated (across multiple programs) back-end engines, and with currency exchange and clearinghouse services for various programs. Programs battle with the role the app must play (beyond self-service) in member engagement and with the amount of information that should be made available to tech-service providers. EasyRewardz and Loylty Rewardz are examples of shared technology with integrated back ends.
Currency partnerships and multi-motivator plays
Brands have grown wiser to the attainability problem for low purchase frequency, small ticket size and small-margin categories. CFOs have acknowledged that they cannot or do not want to fund the entire liability or manage the end-to-end engagement on their own. Currencies (unless they come from an extremely strong brand ego or program strength) have become friendlier and more fungible. Programs have adopted the partnerships and multi-motivator route as a recourse. It is therefore not uncommon to see cross-redemptions or crossover rewards, sometimes known as points conversion, extended among loyalty programs. While this has the potential to undermine a currency, the customer value proposition will become more flexible and offers an opportunity for a natural balance (in liability trading) to set in once the winning currencies are identified and equitably leveraged.
India is a country with large corporate houses, often diversified in their business interests. As most brands and services start to meet hygiene expectations, groups have started acknowledging the importance of their customers spread across multiple business units and are keen to bring them onto the same platform to cross-leverage retained and happy ones. This has resulted in multiple group-level programs sprouting up, acting as mini-coalitions and looking to generate value for the group. Some of those include RelianceOne — Reliance Retail; Future Group’s Loyalty and Analytics business unit; Tata One — from Tata Insights and Quants; and Shoppers Stop’s attempt to bring the various loyalty programs together.
An increasing number of retailers are launching loyalty programs on the back of a good tech deal and a need to collect data, but quantity does not imply quality. There is a real risk that most of these “me-too” versions of currencies will have very little to differentiate themselves.
Changing program economics
With the above changes — a move away from plastics, shared and pay-as-you-go tech, multi-motivator, crossover rewards and partnerships or group-level programs — there is an inevitable shift in loyalty-program economics. The breakage versus redemption conversation is being impacted for the smallest of currencies, and there will eventually be a natural transfer of value from the weaker to the stronger currencies. Brands that can see this happening should adopt a more deliberate approach to facilitate this value transfer and seek strategic advantages through relevant partnerships with such stronger currencies.
Data is still the king; relevance is the enforcer
Relevant value proposition with relevant marketing has been the holy grail of loyalty programs since conception. There is no perceptible shift in this, and data collection, insights and analytics continue to be selling points for loyalty programs in India.
POSSIBLE FUTURE TRENDS
As data and data mining become important to all businesses for customer acquisition, interaction and policies, newer industries are looking at different forms of loyalty to collect and analyze relevant data. Companies in healthcare (Max Bupa), insurance, entertainment (PVR, BookMyShow) and more are dabbling with different forms of customer-interaction data.
Data analytics has been limited by the ability to do something with the output it provides. As technology enables more real-time interactions, loyalty programs will likely employ real-time offers and triggers for customers based on transactions and behavior through multiple channels and mediums. Those include app notifications, real-time alerts, near-field communication, device recognition and more. Examples of those exploring new technologies include Capillary and Pine Labs, among others.
The wallet story
This is one story that could fundamentally disrupt the way the industry works. Wallets are integral to any virtual currency, and loyalty programs have long acted as stored-value closed wallets for their members. With enabling technology, wallets are quickly becoming a solution to achieve fungibility, acceleration and easy currency utilization. Expect wallets to play a large role in changing loyalty-program dynamics and user experiences. We’re already seeing examples of MobiKwik and Citrus playing with loyalty currencies.
The social story
Currencies that are successful in the intimate social network space will find a higher-than-average longevity of member affiliation and much stronger ROI for marketing efforts. But stepping into this volatile media requires boldness and a surrendering approach, which has proved difficult for many a strong brand. We are bound to see a few gamification attempts at breaking into this space.
As loyalty programs proliferate, so do membership accounts. We will see some interesting plays in this area with aggregators attempting to secure a preference with the largest member sets. Given the exchange of information this will enable, this will present both an opportunity and a threat for programs.
Distributed ledger story
There are murmurs of block-chain technology finding commercially viable use cases, which has the potential to disrupt this space entirely. A virtual currency ecosystem could benefit immensely from such a technology, but will each program find relevant economic use cases and bite the bullet?
There will be growing attention from the regulators as large corporate houses run separate firms to manage their group programs; currencies start playing with wallets; and data analytics and relevant real-time interactions become more frequent and conflict with privacy norms. The regulatory attention will impact how loyalty operators design, run and account for their programs.
Change is afoot, with multiple forces acting on a traditionally passive industry. I urge each of you to look afresh at the loyalty industry, its contours and possible interplays and frame your own opinion of how you see it evolving. Should you find something interesting or want to discuss any of the above further, please get in touch.