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Loyalty Programs - INDIA

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CONTENTS

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INTRODUCTION• Loyalty programs are structured marketing efforts that reward, and therefore 

encourage, loyal buying behaviour• Entitles either discount on current purchase or allotment of points for future use 

or special gift vouchers• A way to collect data about the customers.

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Why do we need Loyalty program?

• To not just satisfy customers but delight them• Retain best customers , make good customers better• Reconnect lapsed users• A primary way to interact with customers• Research findings have also supported this realization that it costs up to 

five times more to acquire a new customer than to retain an existing customer and a 5% reduction in the customer defection rate can increase profits by 25% to 85% depending on the industry.

• If a brand sells 1,000 crore units a year, it needs to know who its loyal customers are and who are the new customers that are yet to develop loyalty towards the brand. May be, 20 per cent of the buyers have generated 80 per cent of the sales for the brand. So it becomes essential for the brand to reach out to its top 20 per cent customers.

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Benefits to customers

• Monetary Benefits After earning certain points on the purchase customers can avail the 

discount which is being awarded in their points range  Example:Planet Fashion loyalty program

Lifetime Purchase

Points

0-4k 0%

4-12k 2%

12-20k 4%

>20k 6%

Silver

Gold

Platinum

A customer has to Migrate to Gold 

slab, i.e. spend 13k for accumulating 

200 points and become eligible for redemption 

Cut off for first redemption : 200 Points

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Benefits to customers 

• Non-Monetary Benefits Special gift vouchers Example:Tommy Hilfiger Club

 No entry barrier

 More focussed on giving better shopping experience rather than monetary benefits

 No points program and no slabs

 Surprise gifts anytime to make the customer feel special

 First invitees during sales and brand parties

 This program helps in data enrichment and building customer base

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            Case Study:

• Eligibility Criteria For Enrollment And Upgradation To Different Tiers

Rationale behind point distribution• Blue Tier :- Lower than 2% does 

not remain an attractive incentive• Green Tier :- Other benefits and 

rewards offset  the need to increase points percentage linearly

TierCumulative 

Annual Purchase 

Red >=Rs.500 and 

<=Rs.5000

Blue>=Rs.5000 and 

<=Rs.15000

Green >=Rs.15000

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Heads Red Tier Blue Tier Green Tier

Points • Offer no points • Offer 2% points on sales

• Frequency :- Every purchase

• Offer 4% points on sales• Frequency :- Every purchase

Benefits • Collection, Sale, Brand and Promotion updates

• Collection, Sale, Brand and Promotion updates

• Regular updation of point status after transactions and before expiry

• Exclusive sale preview #

• Collection, Sale, Brand and Promotion updates

• Regular updation of point status after transactions and before expiry

• Home delivery for altered garments• Exclusive sale preview• Stylist wardrobe makeovers

Rewards Nil Nil • Gift Vouchers of Rs.1500 on reaching milestone of Rs.30,000

Campaigns • “Welcome Back” Coupons

• Birthday Coupons• Cross Category coupons

• Birthday Coupons• Cross category coupons• Notification about season launch

Annual Interactions

8 (2 EOSS,1 Welcome back#, 2 Seasons launches, 2 Promotions, 1 Brand Update)

8-9 (2 EOSS, 2 Season launches, 2 Promotions,1 Cross category#,1 Birthday coupon, 1 Brand Update )

8-9 (2 EOSS, 2 Season launches. 2 Promotions, 1 Cross category#, 1 Birthday coupon, 1 Brand Update)

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Growth  Opportunities

Consistent flow of data Flexible and responsive

to sales New technology

integrating data and sales

S Inaccuracy of data Resistance for

technology in unorganized sector

Vulnerable to competitive sector

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Expansion of organized sector

Viral marketing programs Focus spending on priority

programs that drive revenue

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Competitive giants with larger budgets

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SWOT Analysis

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INTRODUCTION