Loyalty programs driving retail sector, reveals research by Hansa Cequity

Hansa Cequity, a customer marketing company has released its latest report on ‘Impact of Loyalty Programs on Consumer Behaviour’. The report highlights the increasing number of members enrolling in a loyalty program in the retail sector followed by banking and e-commerce. The report was released at The Loyalty Summit held in Mumbai on February 3^rd and 4^th, 2016.

As per a nation-wide survey conducted by Hansa Cequity to rank more than 75 loyalty programs (carefully chosen to represent nine diverse sectors) age has been a significant factor especially in the airline, health and beauty and fuel loyalty program enrolments.  Airline and fuel loyalty programs were more popular among the higher age group (46–59) whereas health and beauty sector loyalty programs have high penetration in the 18–24 age group. The survey also revealed that respondents of age group 60 and above have higher penetration index in the hospitality and jewellery loyalty programs.

Interestingly, 78% respondents of this survey also were the members of at least one loyalty program. Moreover, over half of the respondents belonged to one or more customer loyalty programs of competing businesses. The survey also revealed that the respondents had a good understanding of the purpose of a customer loyalty program.

In addition it was found that though membership to these loyalty programs did influence the purchasing behaviour positively but the basic facilities like parking, store ambience, staff behaviour etc. are far more important. The most critical factors in achieving customer loyalty were product quality (73%) and variety of choices (58%), followed by prices and discounts (51%) and store ambience (38%). Consumers were influenced to join and use the customer loyalty programs mainly by the rewards and benefits offered. Furthermore, it was found that customers tend to favour programs offering instant gratification in terms of either discounts or points redemption.

Commenting on the survey findings for the report, S Swaminathan, CEO and Co-founder, Hansa Cequity, said, “In India, currently mobile and digital is driving the proliferation of loyalty programs. As the research reveals, the challenge for companies is not to entice customers to a loyalty program but engage and build an experience for them. It is imperative for companies should adopt a more customer experience-driven model in order to retain the edge of differentiation in its loyalty program. Companies need to move away from a one-size-fits-all approach and opt for more analytics-driven, contextual marketing approach.”

Adding to the same, Ajay Kelkar, COO and Co-founder, Hansa Cequity said, “Customers today exhibit a more polygamy behaviour towards loyalty programs. Consumers are now viewing loyalty as a ‘relationship’ with a brand and not just as a way to get returns. To develop a robust ‘loyalty culture’ in the market brands need to look at assigning its loyalty program to a senior level evangelist who will not only own but also drive it.”