Editor’s Note: The author is part of the team at Strategic Caravan, a strategic advisory firm based in Mumbai, India and specializing in customer loyalty and profitability. Aparna is a member of the CLMP™ community and recently hosted and participated in the Loyalty Academy™ public workshop in Bengaluru, India during August 2023. In this article, Aparna shares insights into the Indian loyalty market.
Is bigger always better when it comes to loyalty programs, or could the pursuit of scale be the very thing that stifles their potential for greatness?
In the world of business, the concept of "bigger is better" often reigns supreme. Companies strive for rapid growth, expanded customer bases, and larger market shares. While growth and scale are certainly vital for success, there's an essential caveat to keep in mind that strikes a balance against the “bigger is better” idea. That is - “Scale is the enemy of great."
In this article, we will explore the idea that in loyalty programs, chasing scale without maintaining a focus on quality can undermine the very greatness that these programs are meant to achieve.
The Essence of Loyalty Programs
Loyalty programs are designed to cultivate and maintain strong relationships between businesses and their customers. These programs incentivize repeat purchases, foster brand loyalty, and create a sense of belonging among customers. When executed effectively, loyalty programs can lead to increased customer retention, higher spending, and positive word-of-mouth marketing.
At the heart of any great loyalty program is the ability to offer personalized, meaningful experiences to customers. The rewards and benefits should resonate with each individual, creating a sense of exclusivity and genuine appreciation. However, the pursuit of scale can sometimes lead businesses to lose sight of this crucial element.
In a country with a population of over a billion, India's loyalty program landscape is nothing short of colossal. From telecom giants to e-commerce powerhouses, loyalty programs have become an integral part of the consumer experience in the subcontinent. With millions of members and an ever-expanding array of benefits, these loyalty programs have reached a scale that is nothing short of astounding. Let's look at the scale of some of the biggest loyalty programs in India:
Tata Neu is a relatively new digital platform and app introduced by the Tata Group in India. The platform aims to provide a unified interface for various services and offerings from Tata Group companies, which span a wide range of industries, including retail, telecommunications, finance, and more. Tata Neu has 75 million members reflecting the massive customer base of this platform.
Flipkart, a leading e-commerce platform in India, introduced its Flipkart Plus loyalty program. This program is reported to have 20 million members.
Bharti Airtel, a prominent telecom operator, introduced its Airtel Thanks loyalty program. Airtel is one of India's largest telecom companies, and its loyalty program has millions of subscribers.
The Pitfalls of Scaling Up Loyalty Programs
While growth is a natural goal, it can become the enemy of greatness if not executed thoughtfully. Within the domain of loyalty programs, where quality and customer experience are paramount, scaling up comes with its own set of risks and challenges that, if not navigated with care, can lead to disillusioned customers and diminished returns.
- Dilution of Value: As a loyalty program expands to accommodate a larger customer base, there's a risk that the value of rewards and benefits may be diluted. Generic offers or rewards that apply to a broad audience may lack the personal touch that makes loyalty programs great.
- Generic Offers: When programs grow too large, the ability to tailor rewards and experiences to individual customers can become challenging. Personalization is one of the cornerstones of an effective loyalty program and, when it's compromised in favour of scale, the program's effectiveness wanes.
- Overwhelming Customer Service: A sudden influx of new members can strain customer service resources. If support becomes overburdened and response times lengthen, it can lead to a decrease in overall customer satisfaction and engagement.
- Inconsistent Quality: Maintaining consistent quality across a large-scale loyalty program can be a significant challenge. Customers who have been with the program for a while may notice discrepancies in their experiences, leading to dissatisfaction.
- Loss of Brand Identity: A loyalty program should reflect and enhance the brand's identity. When scale is the primary goal, the program can become detached from the brand's core values and customer-centric focus, leading to a loss of uniqueness and authenticity.
The path to scaling up in the realm of loyalty programs is fraught with complexities, and even some of the most recognizable names in the Indian market have not been immune to these challenges.
Let’s look at a few examples in the Indian context:
Airtel's Reward Program
Bharti Airtel faced backlash when it introduced its Airtel Thanks rewards program. While the program aimed to reward customers with various benefits, including streaming services and discounts, many customers found it difficult to redeem rewards due to complex terms and conditions.
The program's rapid expansion and complex structure confused users and resulted in a poor user experience, which led to customer dissatisfaction.
Paytm, a popular mobile wallet and e-commerce platform in India, launched "Paytm First," a loyalty program offering a range of benefits such as cashback on movie tickets, flight bookings, and other services.
Paytm First faced criticism for certain restrictions on cashback redemption and some users felt that the program's value was not commensurate with the subscription fee. The program underwent adjustments to enhance its value proposition and address user concerns.
Reliance Digital's My JioMart
Reliance Retail introduced its loyalty program called "My JioMart" for its online grocery and retail platform. This program was part of the larger Jio ecosystem. While the program aimed to provide benefits to customers, it faced issues with customer complaints about the unavailability of certain rewards and discounts. Customers reported difficulties in redeeming rewards. The rapid expansion of the JioMart platform may have contributed to these challenges.
In these cases, the rush to expand and acquire a large customer base often led to issues related to program quality, customer communication, and fulfillment of rewards. Companies may have underestimated the importance of maintaining a high standard of service and communication with their customers during periods of rapid expansion.
Balancing Scale and Greatness
While it's crucial for businesses to achieve scale in their loyalty programs, it should not come at the expense of greatness. Here are some strategies to strike a balance:
- Focus on Quality: Prioritize the quality of the loyalty program over its sheer size. Ensure that the rewards and benefits continue to be relevant and personalized to the customer.
- Tiering & Segmentation: Ability to evolve with growing demands and expectations, with additional tiers/benefits.
- Invest in Technology: Leverage technology and data analytics to maintain personalization as the program scales. Invest in analyses and insight to create more relevant offers and experiences.
- Maintain Consistency: Establish clear guidelines and quality control measures to ensure that the program maintains a consistent level of excellence as it grows.
- Regular Evaluation: Continually assess the program's performance and gather feedback from customers. Use this information to make necessary adjustments to maintain or enhance the program's greatness.
- Communicate Values: Ensure that the loyalty program reflects the brand's core values and reinforces its identity. Customers should feel that the program is an integral part of their overall brand experience.
In the realm of loyalty programs, "scale is the enemy of great" serves as a valuable reminder that prioritizing size and rapid expansion should not come at the expense of quality and personalization. A great loyalty program delights customers, keeps them engaged, and fosters a deep sense of loyalty.
When a loyalty program loses its personal touch and becomes too focused on growth, it can undermine the very goals it was meant to achieve. Striking a balance between scale and greatness is the key to building a loyalty program that stands the test of time and truly benefits both the business and its loyal customers.