It might be counterintuitive to think about loyalty programs for e commerce retailers given that they are at a stage where a huge aspect of their strategy is about price discounts. So do consumers need any other benefit apart from a clear & obvious price discount. The issue actually is that discounts don’t have a memory! So consumers forget discounts pretty fast & tend to not forget special privileges! So the goal of a loyalty program would be to deepen the relationship with the consumer on dimensions other than just price.
Groupon has recently launched a priced loyalty program. Program is called Groupon VIP & it will give members a preview of the discounts it negotiates with businesses, access to closed or sold-out deals, and a one-click anytime exchange for unused vouchers.
I am actually surprised that nothing significant in loyalty has yet appeared from Indian e-retailers. In the US, 9% of online buyers said they belonged to such a program, while in 2011- 12% of online shoppers confirmed that they were part of a loyalty program (stats from Forrester).
So in India, can we imagine that Flipkart may build a program that matches First Citizen of Shoppers Stop?
Loyalty is dead!
When was the last time your Loyalty program was loyal to you?
It is interesting that companies ask for your loyalty but then consign their loyalty program to their marketing archives with a “give them some points & they will come approach”. Loyalty programs get archived because they lose top management support. They are seen as costs with no tangible return.
More often than not this happens because a senior level evangelist does not own the loyalty program within the company. So critical changes in processes which may be customer friendly are not even tried because of the “holy cow” syndrome. “Holy cows” are beliefs that management will not change in a hurry-for eg “why would you provide an exclusive cashiering line for a loyalty program customer, it adds to costs & is complex to administer within a store”.
Interestingly without a robust “loyalty culture” companies are now clambering onto the bandwagon of coalition loyalty programs. Three of the world’s largest coalition loyalty companies are about to launch their programmes in India. Groupe Aeroplan , Loyalty One & Payback are all here & ready to launch! But loyalty is far more than a card & points alone!
It would be interesting to see whether coalition loyalty would just be a way for companies to outsource their loyalty function rather than making it a far larger part of strategy!
CRM implementation’s often fail! It isn’t to do with the technology or the software but the issue lies more in the Organization dynamics. Who drives CRM-is it the CMO’s job or does the CIO take the initiative? Who really owns it & how it can be co owned across key members of the company’s hierarchy? But it needn't be like this, CRM can succeed!
According to me, there are a few key questions that CEO’s should ask themselves before they set off on this strategy
- Should we move incrementally or do a big bang CRM implementation? Moving incrementally would involve taking on specific aspects of CRM & ensuring you have a “winning case study” before going on to the next piece.
- CRM can broadly have 3 pillars: Service, Sales & Analytics. Where would you like to start? Analytics is the most central & would impact a smaller number of employees to begin with & therefore could be an easier start. Both Sales & service would impact large workforces & need significant change to happen.
- Should technology adoption precede the move or should there be an aggressive move to change Process & structure first & then a sequential move on to the Technology adoption?
- How the CRM initiative should be launched within the organization. How do you give it the thrust similar to the launch of a “new product or service” in the marketplace?
Mc Kinsey has this interesting approach where they talk about companies treating a CRM solution as a product or service & its users as internal customers.
Read more about it here:
Organizing for CRM