From the pages of Images Retail (June 2009)

Right-sizing on Loyalty
By Bhavya Misra

When it comes to best CRM (customer relationship management) practices and effective consumer loyalty, India largely remains an uninitiated market, where retailers are still trying to figure out the best way to understand and retain their consumers. Loyalty programmes have come out to be a shortcut to success on the route of a much broader practice of CRM. Thus, while Shoppers Stop’s ‘First Citizen,’ Westside’s ‘Club West,’ and Landmark groups’ ‘Inner Circle’ have been acclaimed for their effectiveness in building consumer loyalties, there are others still who have been occupied with their deeds of derringdo in the name of building consumer loyalties. The greater fear that looms is that such ‘cards’, which seek to gain loyalty at a discount, don’t promise to go far – either in terms of building strong customer relationships or ensuring profitability. Pantaloon Retail, which has a loyalty programme called ‘Green Card’, explains the benefit to its members in the simplest terms. The four-tier loyalty membership is segmented into one star, three star, five star and seven star member groups, whose benefits primarily include a gift voucher worth Rs.200 for the one star members (at the time of enrollment); a discount of five per cent for three star members, a discount of 7.5 per cent for five star members and, a whopping discount of 10 per cent for the seven star members on every purchase. That being said, Pantaloon Retail is clear on its approach to tap consumers’ loyalties, by luring them with an instant discount on their purchases.

Aditya Birla Retail Limited offers exclusive discounts to customers who are members of its ‘Clubmore’ loyalty scheme. The latest promotional offer at ‘More’ supermarkets includes price-offs ranging from Rs.2-Rs.50 on the MRP on different products and a discount of 15 per cent on MRPs of certain snacks, among others.

Such schemes may seem fascinating, but when viewed in the wider context of customer relationship management and earning loyalties, the loyalty programmes do not augur well. The fact that Indian consumers seek value for money may have been largely misinterpreted by retailers to imply discounts and price-offs, while ignoring the real meaning of ‘value’, which transcends the idea of playing on consumers’ hedonism and offering instant gratification in the form of ‘discount cards.’

Harish Bijoor, brand expert and CEO, Harish Consults Inc., states, “Consumer loyalty is a function of product quality. It moves on the lineage of the company, the image of the brand, the age of the brand and its continued usage over the generations, its basic utility and most certainly its irreplaceable ubiquity in the home. CRM practices in India seem to have degenerated to ‘discount cards’ and ‘quantity purchase schemes’ in the guise of loyalty programmes. Loyalty is built on the basis of emotion and involvement and not crass consumer discounts.”

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