 "Anirban Dutta")
Forming and executing loyalty programmes well is not just a marketer's job; it is equally an operations, technology and finance head's job, Anirban Dutta tells Devina Joshi
Do you believe the loyalty programmes that exist in the country today are successful or do most retailers have them for namesake, without a correct understanding of customer relationship management?
Every loyalty programme ought to start with an objective which is financial-metric driven. When you start a consumer engagement programme, you must establish a baseline that this programme will generate 'X' number of sales in a certain time limit. If you don't meet your objective, you don't have a baseline for such a programme. And this is the awareness we are trying to bring about with our clients as well. The objective has to be financial-a loyalty programme is as much a CFO conversation as it is a CMO conversation.
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Consolidation is a good way forward. In the classical cycle, there are early movers, following which there will be proliferation and then consolidation. India is at the end of the proliferation cycle. Over the last five to seven years, retailers have launched loyalty programmes and only a few of them have been successful. In India, we are struggling with what 'good' looks like, at the last mile. For instance, at a food outlet, a cashier who is also contending with a queue that is fast building up to make a payment, is the one who lands up managing your loyalty programme.
Enabling great execution is one of the key design metrics that we are discussing with our clients. If you don't make it simple enough or empower consumers - technologically or decision-wise - it will fail at the front end no matter how exotically it is designed at the back-end.
Clearly there is a lack of streamlining with the redemption process as well. A customer gets nonsensical 'points' which she has to redeem at different desks and the reward may not be all that rewarding. What's the solution?
After addressing the basic tenet of why a loyalty programme is being created, the next stage is to trigger a chain management process for it. That is where organisations are struggling. The execution of it is not just the marketing team's job; it is as much an operations job as it is a technology team's job to be enablers in this. It is also the finance team's job to be able to take a return on investment view of it. It is an organisation-wide effort to engage the consumer.
Imagine a reward in a high-frequency retail scenario where you're running across four desks trying to get your reward. You'll do it once or twice, but you'll probably not do it again. A loyalty programme is often confused with 'points earn and burn' but it is not that. It is a structure, a tacit transaction between a consumer and the brand where the consumer gets a reward and recognition from the brand. On its part, the brand gains not just a consumer, but also information about consumer behaviour through transaction history. One person's information gets extrapolated to thousands of others and one can just imagine the richness of that data. If you make this exchange difficult, you won't get that information.
When one talks of Big Data, retailers seem to be sitting on a bank of information that they are not utilising well. What are the ways to monetise it?
The first and most obvious monetisation is using that pile of information to make changes in the way you talk to your customers, the way you load up brochures and even the way you design the stores, or even the way you price the products. All of us receive information from retailers. If retailers could store this kind of information, they would know that a customer shouldn't be targeted by emails if she responds by her texts instead. So it isn't just shopper behaviour; it is about knowing a customer's media consumption habits too.
Do you think a concept like loyalty coalition, such as Imint that you worked on, is the next big wave in the loyalty industry?
In Canada, we invented coalition as a concept with Air Miles (a retail-based coalition with seven partners formed in 1993). There are loyalty programmes, then they evolve it into great loyalty programmes, then partnerships start getting formed to augment the offering. This eventually evolves into a coalition. Will it be in the same form like it happened in Canada? I don't think so. There will be an Indian avatar that will come up. With such a heterogeneous country, one size will not fit all and it will be hazardous to copy-paste an existing model.
Coalition is a set up that works in a data rich environment. It not only helps a retailer to know what a consumer is buying from him but also what she is buying from others. However, Indian retailers need to take a stab at their own data before getting into concepts like coalition. A retailer must track his own pricing, his own merchandising and his own promotions before taking on a multi-partnering concept like coalition. Having said that, we are not very behind the West in terms of loyalty. Those markets took 25 years in achieving sophisticated loyalty marketing. Because of legacy, it is difficult to make leaps. Since we don't have a legacy of loyalty marketing in India, we have the opportunity to make that leap.
Service industries like aviation and hospitality seem to understand loyalty better than others and take it more seriously. Why aren't product-based retailers catching up?
Yes, some have adopted it faster than others. Loyalty is most relevant when the frequency of purchase is high. You probably wonder if you should be signing up for loyalty programmes for transactions you do once a year. Grocery, fuel, banking or telecom are high frequency transactions, as opposed to, say, jewellery. Some industries like retail are struggling to get organised in the first place. So once retailers get the fundamentals of their business right, we will see a growth in organised loyalty concepts. Services do not have a tangible product, so recognition and a relationship is very important here. Banks have a huge opportunity to use data for example, like risk data. It is an integral part of their business to analyse credit-worthiness data anyway, so they may as well look at the response part of it as well. Co-branded cards are a result of such analysis. Or a bank may use data to figure out to whom can it give a great home loan rate, for instance. Retail will catch up.
Is it a wise strategy to send mass emails out to a database? Often these are irrelevant, and look like 'spam'…
Loyalty programmes give retailers information about the transaction and the consumer. Mass proliferation in loyalty programmes doesn't work. We need to undo the damage done by retailers already in this regard. It's important to focus on the three 'R's of loyalty programmes: rewards, relevance and recognition. Retailers must stitch their offering around these. For example, during our work with leading grocers in Canada, consumers were offered coupons that contained the photograph of the store manager - that's the level of personalisation I see coming into India too, with the aid of technology and design.
A loyalist
- Anirban Dutta is a key member of the LoyaltyOne global senior leadership team
- A Chemical Engineer with a post graduate degree in Business Management, Dutta has 16 years of work experience in financial services and retail. During his stint with ICICI Bank, he spearheaded the launch of several co-branded cards programmes with grocery, telecom and speciality retail partners
- Dutta led a team that conceptualised, designed and launched Imint, India's first loyalty coalition
- During his stint with Reliance Retail, Dutta helped launch RelianceOne, the company's proprietary pan-format programme
