Customer Loyalty Programs in India: A Comprehensive Guide

India is a country of love and relationship and this also is true for customers. If you want to grow your business make a good relationship with your customers. Shopping is more than a transaction it is about your customer’s experience at your store which ultimately turns into a relationship. Imagine you go to one store where your preferences are understood and celebrated. Your every purchase there feels like a reward and you will be more likely to go there again and again. That’s the magic of customer loyalty programs, which makes a unique relationship between your customer and store by building a sense of belonging for every shopper.

Running a business is hard, especially when you want to get new customers interested in your brand. Getting new customers takes a lot of time and attention. This can make you feel tired and less able to focus on other important parts of your business. That’s where customer loyalty programs come in handy. A good customer loyalty program not only helps your business to attract new customers but also helps you to retain your old customers. This is not only true for India but also worldwide. According to a report from Zendesk, around 74% of people feel loyal to at least one brand or business. This means 7 out of every 10 customers are loyal to one brand.

The Power of Customer Loyalty Programs

Entrepreneurs face a significant challenge in acquiring new business, but what if we shared alternative ways to grow your business efficiently with fewer resources? Sounds appealing. Well, the key to this solution is implementing ‘Customer Loyalty Programs.’ Existing customers tend to generate more revenue compared to acquiring new ones.
Deloitte’s retail survey found that businesses with customer loyalty programs are, on average, 88% more profitable than their competitors without such programs. Turning a new customer into a regular one takes time, so it’s important to think about having customer loyalty programs.

It reflects customers’ eagerness to choose a brand repeatedly. This loyalty develops when customers have positive experiences, are content with the product’s value, and receive good services with their purchases. Entrepreneurs focus on delivering excellent customer service to encourage ongoing brand purchases.

Dedicated customers often spend more on brands they favor and are likely to share their positive experiences with friends and family. However if you are facing difficulties in managing your stores inventory then read our article on Grocery Store Inventory Management.

The power of ‘word of mouth’ has become a valuable marketing technique, proving more effective in attracting new customers than traditional brand advertising.

10 Types of Customer Loyalty Programs in India

In the dynamic landscape of customer engagement, loyalty programs play a pivotal role in retaining and rewarding customers. India, with its diverse consumer base, witnesses a range of innovative loyalty initiatives. Here, we explore ten distinct types of loyalty programs that businesses in India employ to build lasting connections with their customers. From point-based systems to innovative coalition programs, each approach caters to different consumer preferences and industry dynamics. Let’s delve into the varied world of loyalty programs shaping the Indian market.

Point-Based Programs

Customers participating in point-based customer loyalty programs, like Anuttara by Tanishq, earn redeemable points corresponding to their spending. This model encourages repeated purchases, and higher spending translates to more lucrative rewards, fostering customer loyalty.

Explanation

Customers earn points based on their spending, redeemable for free products or services. The more spent, the more points earned (e.g., Rs. 50 = 1 point).

Example

Anuttara by Tanishq rewards customers with points for each purchase, offering exclusive benefits like previews of new jewelry for Royale members.

Tiered Programs

Tiered loyalty programs, exemplified by Jet Airways’ JetPrivilege, reward customers based on their tier level. As customers accumulate points, they ascend through tiers, unlocking progressively enhanced benefits. This tiered structure incentivizes customers to stay engaged and loyal.

Explanation

Customers move up tiers with benefits as they accumulate points. Encourages loyalty with increasing rewards.

Example

Jet Airways’ JetPrivilege program has tiers like Blue, Silver, and Gold, offering enhanced benefits as members earn more miles.

Paid Programs

Paid loyalty programs, such as Club Mahindra’s membership, involve customers paying a fee for VIP membership. In return, they receive exclusive benefits, making it an effective strategy for businesses with a strong customer base.

Explanation

Customers pay a fee for VIP membership, receiving exclusive benefits. Effective with a strong customer base.

Example

Club Mahindra’s membership program offers various holiday plans, allowing members to choose seasons and accommodation sizes.

Value-Based Programs

Value-based loyalty programs, like Shiksha by P&G, focus on aligning rewards with customer values. This approach, particularly effective in the e-commerce sector, resonates with customers by supporting social or environmental causes.

Explanation

Focuses on creative and unique rewards aligned with customer values. Effective for the e-commerce industry.

Example

Shiksha by P&G, a CSR program supporting education with customer contributions through purchases.

Coalition Programs

Coalition loyalty programs, as seen with Payback, form partnerships with various businesses. Customers earn points across a range of partners, providing flexible rewards and expanding customer prospects.

Explanation

Loyalty programs are formed by partnering with other businesses for flexible rewards and customer prospects.

Example

Payback is a multi-brand loyalty program in India, where customers earn points across various partners like Amazon and Big Bazaar.

Cash Back Programs

Cashback programs, such as TopCashback.in, offer a percentage of the spent amount back as cash. This straightforward model is easy to understand and helps reduce customer churn rates.

Explanation

Offers a percentage of the spent amount back as cash. Simple, easy to understand, and reduces churn rates.

Example

TopCashback.in provides cashback on online purchases, allowing customers to withdraw funds through various channels.

Hybrid Programs

Hybrid loyalty programs, like Walmart’s, combine elements of different types, offering both points and other attractive rewards. This versatility caters to a broader audience with varied preferences.

Explanation

Combines more than one type of program, offering both points and attractive rewards.

Example

Walmart’s hybrid program involves a coalition with various brands, providing discounts and monthly rewards based on purchases.

Healthcare Card Loyalty Programs

Loyalty programs in healthcare, like Bajaj Allianz’s Jiyo Fit, provide insurance customers with loyalty cards. These cards offer discounts on various healthcare services, promoting customer well-being.

Explanation

Insurance companies offer loyalty cards for healthcare expenses, providing discounts on medical services.

Example

Bajaj Allianz’s Jiyo Fit program offers health debit cards with discounts on gyms, spas, and health clinics.

Stamp Card and Mobile App Loyalty Programs

Programs involving stamp cards or mobile apps, such as McDonald’s Breakfast Club, allow customers to collect stamps for purchases. These stamps can be redeemed for free products or services, creating an interactive and rewarding experience.

Explanation

Customers collect stamps for purchases, redeemable for free products or services. It can also be implemented through mobile apps.

Example

McDonald’s Breakfast Club rewards customers with free items based on stamped cards, and McDonald’s Gold Points are earned through orders on their app.

No Program at All

In some cases, strong brands or unique products, like Apple, don’t need explicit incentive programs. The inherent strength of the brand or product itself attracts and retains customers without the need for additional loyalty programs.

Explanation

Certain unique products or strong brands don’t require incentive programs to attract or retain customers.

Example

Apple relies on its product and brand strength without implementing a specific customer loyalty program.

Conclusion

Indian brands have recognized and harnessed the potential of customer loyalty programs to build robust connections with their customers, positioning themselves as leaders in their respective industries. Whether through the user-friendly digital interfaces of major e-commerce players or the tailored rewards and strategic partnerships of retail and hospitality establishments, loyalty programs have become a cornerstone of the overall customer experience in India. As these programs continue to evolve, Indian brands serve as a model, illustrating the significant positive impact that customer-focused strategies can have on business achievements. Loyalty program is crucial for buisnesses especially if your are just starting out. you can also read our advice for opening new grocery stores in india.

FAQs


Which is the largest loyalty program in India?

PAYBACK stands out as one of India’s premier multi-brand digital loyalty programs, boasting a vast network of over 100 partner brands. This extensive coalition includes prominent affiliates such as Amazon, Flipkart, Myntra, and various others.

What was the first loyalty program in the world?

The origin of loyalty programs can be traced back to the use of copper tokens, as reported in a New York Times article by Nagle in 1973. This marks the beginning of what is considered the first modern loyalty program, which started around 1793. At that time, a merchant in Sudbury, New Hampshire, began giving customers ‘copper tokens’ as a way of appreciating their loyalty.

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