PayBack and AIMIA tie up with the Future Group and Tatas to launch multi-partner loyalty programme.
From single to multiple brands – the loyalty programme market in India is undergoing a sea-change. The first step has already been taken by Kishore Biyani's Future Group. The retail giant has just launched a coalition programme with Payback, the Germany-based loyalty management firm.
Biyani describes the new initiative as one of the biggest such undertaken by his group so far. Till now, Future had a standalone programme, largely for its Pantaloons fashion chain with two million members. This is slated to grow with the new initiative.
Says Biyani, “Retail is about lift and shift where we make consumers spend, and if possible, shift them to other stores through loyalty. The advantage of a coalition programme is that you have multiple brands or sponsors within a single programme. Consumers obviously benefit from this as opposed to enrolling into myriad standalone programmes.” Payback, which is partnering with Future, stepped into India following the acquisition of local player i-mint last year.
By industry estimates, the market for loyalty programmes in India is roughly Rs 2,000 - 2,500 crore in size. It has been driven so far by standalone programmes from diverse players such as airlines and hotels, oil marketing companies and financial services. Coalition programmes haven’t been the norm, partly because managing multiple partners is not easy, and also because firms have not felt the need for it so far. As Biyani says, “Loyalty in India has pretty much been a one-way exercise involving the firm and the consumer.” But this is changing now as international players step in.
Besides Payback, two more players have entered India, LoyaltyOne and AIMIA, in the last one year. The latter through a joint venture with Tata Capital to manage the Tata Group’s loyalty programme called Empower, while Canada-based LoyaltyOne acquired a stake in local firm Directions earlier this year.
According to Bryan Pearson, president & chief executive officer, LoyaltyOne, coalition programmes will begin to grow as organised retailers as well as allied players begin to take it up aggressively.
Pearson claims to be speaking to various retail players in India. “The Future Group is out of the question. They already have a tie-up. But there are other guys we are talking to,” he says, declining to indicate the possible partners.
As far as the Tata Capital-AIMIA joint venture goes, market experts say it is a good example of how a standalone, group-level programme is now looking to take the coalition route. Govind Sankaranarayanan, chief financial officer & chief operating officer, corporate affairs, Tata Capital, says that apart from Tata companies, AIMIA, will also talk to non-Tata firms in a bid to induct them into the programme. “This is basically in those areas where the Tata group has no presence,” he says. So talks are on at the moment with an airline, bank and petrol station chain to induct them into the programme,” he says.
The revamped programme by Tata-AIMIA combine will be launched next fiscal. And the likelihood of extending it beyond Tata group employees is also being evaluated, says Sankaranarayanan. Market experts say that the eventual success of the Empower programme will depend on how many people it can reach. Therefore opening it up to non-Tata personnel will help, they say.
The Future-Payback programme, for instance, proposes to touch 10 million members in the first year itself. As more retailers step into the fray, say market experts, the fight will increasingly be to acquire more customers. Investments then will play a critical role. While both Future and Tata Capital decline to indicate the investments going into their respective programmes, market experts say it is easily about Rs 5-6 crore per programme depending on the complexity and number of sponsors.
The Tata-AIMIA programme proposes to have a total of about eight to 12 sponsors, while the Future-Payback programme has over 10-15 partners.
