And therein lays the promise. The size of the Indian loyalty market is humungous – approximately about INR 5000 crores. With a country that has 500 million people under the age of 24, an increasing disposable income and a never-ending appetite for alignment to all things fancy, the loyalty market holds great promise.

Loyalty as it stands today in India
Increased literacy, access to brands, opportunities for international travel, exposure to the global marketplace and realization of value of loyalty are the key drivers for growth of the loyalty market in India.

However, today the loyalty industry in India is largely segmented. We have the airline loyalty programs, petroleum loyalty programs and retail loyalty programs – all of which have met with varying degress of success.
However, the penetration of these programs is limited. And the reason is that they are brand specific and do not provide a holistic benefit to its patrons.

The psychology of the average Indian
Before we look at the optimal loyalty model for India, it is important to understand the psychology of the average Indian customer.
India is a land of rising opportunities. The majority of Indian consumers have a history of struggle – not just economic but also social. The competitive nature of society manifests in increased expectations, reduced patience and the need for instant gratification.

These are the needs that any partnership should cater to. The successful ones are those which understand this basic need of the average consumer and come up with schemes to address the unique needs of these people. The Indian consumer has always been a stickler for value for money. She wants to get benefits for every rupee that she spends no matter where she spends it. All the more, she is interested in aggregating the benefits from multiple sources.

The model for India
The lack of a pan Indian reach of brand-specific loyalty programs is indicative of the fact that this model does not work in India.
So what works for India? While airlines and retailers have been the pioneers for loyalty in the nation, the single model that I see succeeding is one that transcends a specific brand and goes on to engulf multiple brands across multiple segments. Technically, this is called Coalition Loyalty. Here, there is one loyalty platform that brings together multiple brands - and consumers gain no matter where they shop/spend.

Challenges faced by Coalition Loyalty
Every opportunity comes along with its own set of challenges. And setting up a Coalition Loyalty within a country like India brings its own set of challenges. These include the following:

Partner acquisition
Coalition Loyalty players would find it extremely difficult to get partners that subscribe to the program. More so, the program will be successful only if large businesses having pan India presence and good brand recall are members of the program. In most cases, such brands would already be having a loyalty program in some form or the other and would be very egoistic about their own brand. Coalition Loyalty players would find it difficult to convince individual brands to give up their differences and adopt a single loyalty face.

Redemption Platform
There needs to be a sound and diverse redemption capability. There are 2 aspects to this. 1)The Loyalty Program needs to have a network of redemption partners and 2)The Loyalty Program needs to have the backend operational strength to cater to redemption requests – activities such as processing, packaging, shipping etc. It’s easier if people can do the redemption online and individual merchants take care of the fulfillment, however, there will be many cases where merchants don’t have that capability and would look up to the Coalition Loyalty Program owner to provide that service.

Education
While loyalty is known to many, there are even more businesses and individuals that need to be educated on this model. Awareness has to be increased using every media available – print, internet, television. For a program to be successful, corporates and individuals need to be aware of the concept of loyalty and understand its value.

Accessibility
Having a loyalty program is one but having people use it readily is another thing. The program needs to be such that people can access it from anywhere within the country and using a ubiquitous medium such as the cell phone.

Financial Feasibility
All good things cost money. And so will setting up the Coalition Loyalty Program. Apart from the costs of Management, IT and Fulfillment, there are other operational costs that also need to be considered. For example, if the program decides to give a loyalty card to each of its members, this is going to be a significant cost. The economic model of the coalition loyalty program should take care of all its costs – both initial and recurring.

Technical Feasibility
Needless to say, technology forms the backbone of this venture. For any business wanting to launch such a program in India, it is preferable that the technology vendor is also local. If you scan the marketplace for such vendors, there are very few technology houses who can provide a ready-made platform that can scale not just to the volumes but also effectively manage the complexities of a large loyalty program – a platform that is made specifically to meet the demands of a Coalition Loyalty Marketing Program. The other selection criteria should be the focus of the vendor onto this space. You want a vendor who is dedicated to building this product and is constantly monitoring the marketplace to keep track of the latest trends in loyalty marketing and making sure that the product caters to those trends. You would not want to buy a solution from a company that gives you an inexpensive solution without the guarantee of being in business 2-5 yrs down the line.

How many does India need?
Globally, every successful model gets copied. And this is true about India also. So the natural question that comes up is this: How many does India need?
We as a nation are blessed with such a huge population, one that is young, educated and looking for brand adherence. Loyalty programs have the potential to thrive in such an environment. As long as the Indian psychology of total value for money is catered to, any number loyalty programs can exist. My estimate is that as a nation, we can easily have 10 successful pan-India programs with memberships upwards of 10 million each.

Conclusion
As we go along the path of loyalty, the only model that will find mass appeal is the Coalition model. This is because the Coalition loyalty model shifts loyalty from an enterprise’s tactic to get more business to a customer’s preference for greater value. Increasingly it will be a customer-driven imperative rather than an enterprise driven initiative. While individual loyalty programs would still continue to exist, they would be forced to align with such coalition loyalty programs to remain attractive to their members. The average Indian would stand to gain from the wide partner base thereby getting the much desired value for money.

When cash is at a premium, Marketing departments are looking for cost-effective and easy to roll out ways to make their Loyalty Programs continue to succeed. Here are a few easy to implement ways to ensure that your Loyalty Programs continue to be a hit with your customers even in a recession.

Make on boarding of new members simpler
One of the reasons people are wary of joining a loyalty program is because of the complexity involved in the whole process. Beginning with the lengthy form they have to fill in, to the subscription fee and the lack of any motivation to join in. Marketing departments need to understand this and find out ways to make people take the leap. Here are some ways to achieve your goal of increased membership:

Throw out the multi-page enrollment form and replace them with smaller and simpler forms - extra information can always be collected later by your contact center staff

Eliminate any joining fees – your source of revenue should be future business from a loyal customer. Any fees during a time of economic constraints and you can kiss your new members good bye.

Give extra (preferably non-cash) benefits for registering during a recession. To make things more attractive, you need to consider giving extra benefits for registering during a downturn. These need not be expensive, but should convey that you care and appreciate them signing up for membership.

Instant gratification
Waiting for a reward is the most agonizing thing in any rewards-based loyalty program. The keeping track of transactions, daily reviewing of account balance and the constant mental calculation of points earned removes the fun out of a loyalty experience. Wouldn’t it be nice if, for once, you didn’t have to worry about how many points you’ve accumulated before you decided to redeem them? Here are two says you can provide instant gratification to your members.

Give benefits instantly – do not wait to have your loyal customers accumulate points to be redeemed later. Points should be redeemable the moment they are accrued. Any thresholds should be eliminated to facilitate this. You earn them and you can burn them. It should be that simple.
Shower your loyal customers with benefits that don’t cost you anything extra. Not everything has to be cash-based benefits. Simple acts such as handing over a newspaper at the check-in counter or a designated seating area or reserved tables in case of hotel loyalty programs – acts that don’t cost extra – can go a long way in creating stickiness among your loyal customers

Communicate & Demonstrate
Tough times call for more communication. Communication should be such that it does not take the form of a spam but truly sends out the message that you value and appreciate their patronage. You need to blow your own trumpet and there is nothing negative about this.

Tell the world how your loyalty program is truly valuable. Take help of inexpensive media such as the internet. Concise emails that explain your value differentiators always help. See if you can also generate word of mouth publicity for your loyalty program. A simple way to do this would be to give members the ability to make recommendations / forward such communication to their network. If they can personalize this message then nothing better than that.

Demonstrate to your loyal customers how the benefits are being extended only to them and not to the general public. Actions speak a thousand words. Make sure that your loyal customers see and realize that some benefits are being extended only to them. That will make them feel special and increase their loyalty towards your brand.

Do not forget your other customers
Customer today, loyal member tomorrow. While trying to please your loyal members, remember that you have a large untapped base of potential members. It is important that you do not alienate them so much that they begin to carry resentment towards your brand.

Treat every customer as important. Your level of service should not drop at any point in time. Special training might be required to your frontline staff to ensure that they don’t falter. A happy customer today might be a loyal customer tomorrow

Have some benefits for any customer that walks in the door – type of benefit should be slightly lower than the one offered to loyal customers. Again, by extending non-cash benefits to your non-members you can create a sense of goodwill towards your brand which could draw them to your brand.

Recession or no recession, your loyal customers are your most important assets. Ensure that you increase their numbers and take good care of them and you can ride any wave of recession. Especially in challenging times, they are the ones who could make the difference between success and failure. It doesn’t take rocket science to extend superlative service nor does it have to cost an extra penny. All it takes is a little bit of imagination and the possibilities are endless.

There are various costs that go into the running of a successful loyalty program. Of these, some are absolutely essential such as the software that runs it, while most of them contribute to the flab. The various cost heads for a loyalty program include:

IT:You need the basic software to run your loyalty program. This is the corner-stone of any loyalty program. Apart from the base license cost for the software, there are additional costs of hosting it, the maintenance of it and the regular updates and patches that also cost you money.
Service Center:

You have customers and customers have problems. And this is where your service center comes into picture. The service center is the entity that your customers turn to when they have an issue or are faced with a problem on their loyalty program. Across the world and across industries, service centers are extremely resource intensive. More so if you have global operations that require you to have a 24×7 service center or a more evolved follow-the-sun model. Either ways, you end up having a sizeable number of service center staff.

Fulfillment:
There are the welcome kits, brochures, pamphlets, membership guides, loyalty cards etc. that you would like to give to your members. Loyalty programs around the world try to out-do each other in the design and quality of these collaterals. And in doing so, they spend tons of dollars on it. Apart from the creation of these collaterals, there is the cost of the external agency that does the packaging and shipping of these.

Loyalty Management Staff:
This may be a cost head from an organizational view-point but actually this will not have a major impact on your bottom-line. Typically, the loyalty department comprises of 3-5 people and is usually a part of the marketing team. So the costs, though they exist, are not pronounced.

An analysis of the cost heads clearly identifies the top spenders – IT, Service Center and Fulfillment. Let us look at a 3 step way to reduce or eliminate these costs.

Get a good IT solution from a good vendor
The solution you select will have a great impact on your savings. It should be a solution that is world-class, requires very little IT involvement to make business changes, can be configured easily by your business team and can cater to your growing needs. Furthermore, it should be from a vendor who is there in this business for the long term and is committed to enriching this product to cater to the latest developments in the field of loyalty. A key decision making point in selecting the vendor (in addition to the quality of the product) should be that the vendor should be big enough for you to trust its future existence but small enough for you to matter to it. If you select a very large vendor, chances are that you would be one of the many customers it has and your voice may not be heard.

Create an online help – an e-CRM solution
This is a very powerful tool. Not only does it eliminate the need for a service center, it also enables your members to benefit from a self-help solution. Consequently, the amount of time they have to wait from the creation of a trouble ticket to its final resolution can be reduced. This will increase your customer satisfaction significantly and make your loyalty program more appealing. You may build it in-house or you may have your loyalty system vendor build it for you. Remember, about 80% of people who use your loyalty program are tech-savvy and so will relate to this approach of yours.

Do away with all collaterals
Except for the loyalty card, all other collaterals that you send to your members, in most of the cases, end up in the recycle bin. This is lost money – for you. The smart way to counter this would be to give your members the ability to print their card and make all other collaterals available online that can be accessed at the touch of a button.

Conclusion
Smart decisions by the loyalty team can not only reduce the impact on the environment but also save you a significant amount of costs. All these savings can then be channeled into your loyalty program to make it more attractive.