Wednesday, March 07, 2012: 03:18:51 PM

Retail Guest Column

Loyalty management program - an effective way to retain customers

With the implementation of loyalty management programs, companies look to cash in on its current consumer base and increase loyalty

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With the unmatched growth that the retailing industry has witnessed over the last few years, the importance of loyalty programs has gone up subsequently. In today's scenario, client acquisition is in itself an expensive affair. In addition to that, customer retention is another important and far more challenging issue. Companies have to realise the importance of retention, no matter how challenging it may be. It simply makes more business sense to retain your old customers than trying to take in some new. It is also more profitable.

 
The Indian consumer spending in retail, e-commerce, auto, entertainment and lifestyle categories have increased substantially. With more and more companies in every product category vying for essentially the same customer pool, the growth of the loyalty marketing business has spurred.
 
With the implementation of loyalty management programs, companies look to cash in on its current consumer base. In today’s highly competitive world, it is important for any firm, whether dealing with retailing or with e-commerce, to retain its present consumer base. That is when the issue of loyalty management programs come in. These kinds of programs help to build strong relationships with the people who affect their business the most, such as customers, channel players and employees within the organisation.
 
However, when it comes to SMEs and their use of it, loyalty programs are often expensive to develop and manage. Thus, the chances of SMEs having one becomes minimal. The other belief is that a loyalty program is suitable for companies with more than, say 20000, users. However, these are merely myths that need to be dealt away with. There are programs developed by specific loyalty management companies which concentrate specifically on SMEs. As for example, RewardPort’s basic module helps SMEs get started at Rs 5000 a month for as few as 50 users. Our upcoming SaaS module will allow SMEs to pay as they go for loyalty, while our recently launched mobile based retention platform for as low as Rs 5 per customer engagement will facilitate in making the mobile numbers become the consumer’s membership number. These programs are specifically meant for small retail businesses having 1-5 outlets across the country.
 
Implementing CRM
 
Implementation of a strong customer relationship management (CRM) is another important factor for SMEs in the retail industry. In fact, CRM is the starting point for the loyalty journey. Having data and managing it is of paramount importance. But from here on its converting the data (while reading customer preferences and information) into meaningful exchange with the customer to foster loyalty is the main game. Some companies think that capturing the data and using technology to give points is all that a loyalty program is about. This attitude fails to recognise that a loyalty program, which fails to engage a customer emotionally, is bound to fail. We are very clear that a loyalty program without EQ (emotional quotient) is a failure already. We do not forget that giving the existing customers of the company an offer to buy or redeem points for their own products is sales promotion and not loyalty.
 
Dr Heena Akhtar is the COO and co-founder of RewardPort, India’s leading loyalty & reward solutions provider

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