Loyalty programs are taking the world by a storm, and how!
No, It’s not something that comes from the recent uprise of the digital era. Loyalty programs have long been integrated deeply into the roots of every business since decades. After all the only two goals of any small to medium or big business is to acquire new customers and not lose existing ones to competitors. It’s the only end goal for survival be it any business model in any given industry.
Loyalty programs go way back into time. As Sharva Jethwa narrated in his true essence , how a small grocery shop created a competitive advantage back in the 80’s from its nearby alternative which was just 50 meters away. Selling the exact same products at the exact same prices, yet somehow the grocer managed to get his customers to only visit his store. He did not do something exceptional or out of the ordinary, he simply provided his customers with a credit worth Rs 1.5 every time they bought something from him. This ensured that his existing customers would always chose him over his close competitor, eventually leading to a greater customer base.
Businesses usually spend so much time focusing on acquiring new customers, that they pay less attention to customer retention. According to a post by Harvard Business Review, acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one. It is also true that existing customers spend 67% more than new customers. It’s evident that customer loyalty really pays off and customer loyalty programs pay for themselves. So its time businesses started focusing on their customer churn rate which measures the percentage of customers who end their relationship with a company in a particular period for better growth results.
Aggressive competition exists in almost all industries. In today’s ever evolving world, it’s just as easy as hard it is to be profitable and to create a valuable customer experience. Loyalty programs, if implemented successfully are one such strategy that go side by side with a company’s marketing mix.
Customer loyalty is paramount to brands’ success — because loyal customers can grow business faster than sales and marketing — An article by Forbes.
Giants like Amazon, Hilton, Emirates, Starbucks etc. all swear by their loyalty programs and are providing benefits that go beyond rewards. Enhanced customer experience , solving customer problems and soothing pain points are some of the many benefits. Along with rewards customers can expect a lifestyle enhancement brought by a successful loyalty program.
One such example is of Bhatia mobiles which has over 100 stores in Gujarat. With the increasing number of mobile and phone accessories suppliers, Bhatia mobiles was dedicated towards developing a program that ensured repeat customers at all their outlets. They were quick to identify the reasons they needed a loyalty program in place. With the help of Jetbro, a digital agency in Ahmedabad, they were able to design a point based loyalty program, where with every purchase made the customer would get points in their Bhatia loyalty card, which could be redeemed by anyone during a future purchase.
Retention is your store’s defence and acquisition is your offence, play both well to truly dominate the game- A blog by hubspot.com
Bhatia mobile is truly dominating that game, and it’s interesting to outline how they did it, the challenges they faced and how they made it work. Jet bro designed a web based application that would be used at the point of sale. Every customer is issued a Bhatia loyalty card which has the look and feel of a real credit card (and I kid you not ). Once the points are added to the card, it is mandatory to carry it along every time one want’s to redeem those points. Till date Bhatia mobiles has recored over 1 lakh customers registered with their loyalty program within 3 months of implementation.
Now some might argue why the use of a traditional card system and not an online or mobile app loyalty program? With the current trend of digitalisation people rush into designing apps and online systems before even realising what type of industry they operate within and what kind of products they sell. For instance, a mobile phone isn’t a daily purchase like a cup of coffee. There is simply no need to dedicate an app and maintain it for an unsought product like a mobile phone, which customers will not think of buying until they need them in most cases.
Having a card based system worked really well in the cultural and demographic environment that Bhatia mobile operates in. It was also a smart marketing strategy to not just retain existing customers through loyalty points but also acquire new ones through the card itself. The royal look and feel of the card itself emphasised on a brand presence and a brand recall. The tangibility of it ensured customers attention. An added benefit was that anyone could use the card regardless of who owns it , as a mobile phone isn’t a frequent purchase, people could lend the card to family and friends. This ensured newer customers more so often, to a level that it actually became a brand statement.
The only plan in mind was to create a memorable and valuable customer experience leading to substantial word of mouth referrals.
Bhatia mobiles and Jet bro correctly identified that a card based loyalty program would work best for them and moved onto to examining the main aspects of developing it. The four aspects that needed to be dealt with were Hardware, Software, Human and Governance.
Jetbro was committed to implementing the program in a masterful way. At an operational level it was vital to understand the hardware and software viability to all the parties involved. To be cost efficient, they designed it in such a way that a routine barcode scanner which is readily available would work in sync with the loyalty card. Next challenge was to develop a friendly software that they rolled out on in 10 mins to over a 100 stores by simply giving a link to the point of sale system. This not just made future updates easier but also provided with a record of sales to closely monitor the success of their loyalty program.
Bhatia mobiles saw a record 20% increase in sales in 3 months of the initiation of the loyalty program — the prosperous idea being “khata hain” - (Means we have an account there)
Jetbro ensured that the user interface and user experience of the portal was friendly by custom designing it. It allowed one action at a time and was easily passed on to Bhatia mobile employees through just a day of training. Understanding customer needs and the environment the business operates in has always been Jetbros forte. Being a traditional market with hesitance towards new technology, Jetbro and Bhatia mobiles decided to have a Whats app group support for its employees. A community support system where anyone from the 100 stores would solve each others problems if any.
Ideation and implementation was one thing, but governance and monitoring was another big challenge. There are always loop holes that can be exploited when it comes to rewards and loyalty points. Operator fraud started taking uprise as staff started availing points themselves. The idea of a loyalty card never reached the end customer. The whole premise of the idea was at stake.
It’s interesting how Bhatia mobiles and Jetbro took this problem head on and created a monitor for their HQ, a database of how many new people registered at the Point of Sale to how many purchases per loyalty card were made. They also started calling customers for verification of receiving a card to identify the loop holes.
Despite these challenges, Bhatia mobile is growing everyday along with their loyalty program. After all its human nature to stay with a company that is easy to buy from, that provides a consistent experience and customers like consistency. It creates confidence and that’s what drives loyalty.
