Are customer loyalty programmes dead?

April is International Customer Loyalty month and we caught up with Pratik Kumar (founder and CEO of OCharge) and David Olilo (founder and director of Moot) to get their insights on where customer loyalty and loyalty programmes are heading to in the Kenyan market.

The short answer is that they are very much alive and will be an interesting space to watch over the next few years!

What do you define as customer loyalty and a customer loyalty programme?

Pratik: When a customer chooses to stick with your brand in a competitive landscape, beyond its 4P advantages.

David: You’ll want to acknowledge and reward customers who help to support your business and keep them coming back for more. An effective way to show your appreciation is through a carefully designed and implemented customer loyalty program.

How do you feel loyalty and loyalty programmes have changed over the past 5 years in Kenya?

Pratik: For brands, loyalty comes into focus only in a competitive environment. Big companies in Kenya have typically enjoyed monopolies, and therefore haven’t worked on loyalty historically. Only recently are we seeing more appreciation for loyalty programs across the board, but understanding on how this works is still very limited. I think the next 5 years will be more interesting than the last 5 years.

David: Traditional loyalty programs measure behaviour only after a customer has completed their purchase. They don’t go to in to detail to understand what influenced the shopper to actually buy or understand the customer’s behaviour from decision to purchase.

What do companies need to do in order to build and sustain customer loyalty?

Pratik: Brands need to focus on creating positive customer experiences repeatedly, across all their channels, and keep loyalists engaged by rewarding desirable actions and behaviours.

David: Companies need to virtually shop alongside their customers. The data garnered through a consumer’s use of a mobile loyalty programme can be used to track shopping behaviors and draw conclusions, allowing retailers to accurately measure how effective their loyalty programmes are.

What is the difference between a loyalty programme and a rewards programme?

Pratik: Rewards can only be a part of a loyalty programme. Loyalty programmes require a more holistic approach towards customer-centricity.

David: Shoppers may be given redeemable points, as a token of appreciation, during their check out process — the larger the transaction, the more points a customer can gather. That is a rewards programme. A loyalty programme however, targets customers who are sticky to a specific brand even if other options may be less expensive or more convenient.

Where do you see loyalty programmes evolving to, over the next 5 years?

Pratik: I see companies putting more focus on customer centricity and relationship building. There will definitely be more focus on rewards. I also think Kenya will have its own journey on how this will evolve, and not mimic the west or other geographies — Kenyans are very peculiar people!

David: Loyalty programmes will move away from paper or plastic loyalty cards to smartphones instead. This however will be a challenge since every company would prefer to have their own branded unique loyalty program. This may bring a challenge to shoppers who may be forced to install numerous applications just to stay in sync with these programmes.

Many companies struggle to demonstrate value/ROI from loyalty programmes — why is this?

Pratik: Companies which think that an off-the-shelf loyalty module or 3rd party provider is a silver bullet to increasing market/wallet share, are going to be disappointed. Loyalty starts with customer-centricity, and no rewards programme can help you if you are not that.

David: Without access to consumer data, it can be difficult to determine whether or not loyalty programmes influence consumers to shop at specific brands. The true impact of a loyalty programme is the ability to break down consumer data into useable takeaways that drive future successful marketing decisions. Understanding your customers is the key to measuring the effectiveness of a loyalty programme.

And finally, what would you recommend are the top 3 considerations for businesses looking to implement loyalty programmes?

Pratik:

1. While data collection is important, acting on it is even more important. Not acting meaningfully on collected data creates distrust in users.
2. Move from the CFO driving your business to the CMO driving your business.
3. Defend your loyalist base by meaningfully rewarding experiences.

David:

1. Leverage location-based technology to drive timely physical conversions.
2. Change consumer behavior with incentives.
3. Incorporate gamification to drive re-engagement and retention.

Thanks to both of you for sharing your insights!

Pratik is the founder and CEO of Ocharge. OCharge is a Rewards for Payments app, that rewards its users with exclusive deals and discounts from a variety of local brand partners for making payments through the app.

David, is the founder and director of Moot. Moot offers a data-rich platform for retail stores looking to strategically build their market share and increase foot traffic via proximity marketing.