This document discusses the evolution of loyalty programs from being transactional to transforming customer relationships. It argues that most current programs are struggling because they focus too much on transactions and rewards rather than enhancing the customer experience. The document provides several examples of more transformational programs that build appreciation, help customers, provide random acts of kindness, and disproportionately reward best customers. It concludes that future successful programs will need to prioritize understanding individual customers better in order to shift from simple transactions to truly transforming the customer relationship.

1. Loyalty Programs – From Transactions to Transformation!
Kartikeya Kompella – Lowe Lintas

2. The Era Of Acquisition
A growing economy with a large population
Consumption oriented growth booming
Acquisition the name of the game
Retention / loyalty – not a focus area for most
But Loyalty Programs Are Important !

3. How Do Loyalty Programs Help ?
If 80:20 is true and it is, then it’s too much of a risk to
take
Competition is eyeing your customers and vice versa
Customers can defer purchases
Happy customers – give good referrals

4. A Rash Of Loyalty Programs
Loyalty programs - sprouting up at every corner
The energy and focus required for loyalty programs - seem to
be lacking
Leading to largely undifferentiated programs
An evolutionary phase ?

5. Loyalty Programs Are Struggling
Colloquy Loyalty Census : The average U.S. household
has signed up for 14.1 loyalty programs, but only
participates in 6.2 of them (44%).
Low awareness - Lintas survey

6. Why Are Loyalty Programs Struggling ?
They just don’t touch customers
Transactional
Predictable
Lack relevance

7. Loyalty Programs Defined
Loyalty programs are structured marketing efforts that
reward, and therefore encourage, loyal buying behavior —
behavior which is potentially of benefit to the firm
Repeat purchase – the proof of loyalty
Hypothesis: The greater the joy a program provides, the
greater consumers’ willingness to repeat purchases

8. Two Ways Of Running Programs
The transactional approach – build your programs around a
set of transactions – points, birthday cards
The transformational approach – build your program
around the customer

9. If you ran a program for your most important customers ….
‘You’d want to enhance the relationship’

10. But Most Programs Are Scratching At The Surface

11. Transactional Programs
Most programs in India are points based
A ready model can lead to incrementalism / lack of
imagination
Lends itself easily to transactions

12. Driving A Program Through Points
Points – a welcome freebie but not a relationship
enhancer in any manner
You can spoil the best relationship by making it
purely transactional
Driving a program only through points takes away
the magic

13. Key Question
Is the customer at the centre of this program ?

14. Developing Customer Centric Programs

15. Build Appreciation
Crossword does book readings
Levis runs a special edition clothes and accessories
that money can’t buy
Tanishq factory visits help customers know more
about the product and the craft

16. Help Customers
Add a product to a service and vice versa
An apparel brand can offer fashion stylist
services
An airlines can offer airport bookstore coupons

17. Random Acts of Kindness
Everyone loves a pleasant surprise
Predictability leads to expectations
Need to be spontaneous
Hyatt’s Gold Passport – free breakfast or drinks on
the house

18. Reward Disproportionately
Redemption gives some joy
Most points go unredeemed
The toss up - give points to all your customers and have a
majority unredeemed or reward your main customers
disproportionately

19. Keep Rewards Attainable
Ista Hotels
After the 4th visit, free upgrade to a suite
After the 6th visit, free two day stay

20. Customer Knowledge
Knowing what a customer wants to buy and when can
convert a sale into a service
Make conversion or sale become more fun or rewarding

21. Pokisham –
The Touchtel STD PCO Loyalty Program

22. The Background
The STD PCO business in the early-to-mid 2000s was largely
a BSNL monopoly
Touchtel, an unknown private player had a tough challenge
Even in booths where Touchtel managed to get a presence,
loyalties – and revenues – were divided
With margins more or less at par (with BSNL), a stronger
differentiator was needed
Pokisham, a loyalty program for STD PCO customers was
launched in this backdrop

23. Program Construct
Points based program
1 basic point for a net billing of Rs.100
Greater reward for greater loyalty – 1.2 points for ‘exclusive’ STD
PCOs
Additional rewards for length of association – tenure bonus points
in line with no. of years with Touchtel
Bonus points for meeting specific targets/ achieving milestones
Green token lucky draw – tactical promotions – win
consumer durables
Red token lucky draw – win a car
Programs for the family – movies, drawing competition

24. Redemption and Rewards
Customers could redeem their points against a host of
merchandise – jewellery gift vouchers, white goods, holiday
packages etc.
Additionally lucky draws conducted monthly and quarterly
Program culminated with a gala ceremony where customers
were invited with their families
Rewards and prize distribution
Lucky draw for one mega bumper prize
Variety entertainment, food and beverage

25. What Made It Special ?
Excitement, spontaneity was a part of the program design
Completely customer centric
Involvement across the team starting with Senior Mgt
Family involvement brought in pride

26. Making The Mindset Shift

27. Transactions To Transformation
Two step process
Intent
Customer knowledge

28. The Future
Programs will continue to proliferate
While companies will analyse data better – this may not
help consumers
As more brands question their loyalty programs – programs
will become more customer centric

29. Thank You !