Customer Loyalty – The Ultimate Objective of Every

Marketer

As we speak, consumers in India are going through a transformation. They have

become empowered, quite experimental, highly quality conscious and are buying
intelligently. It is reflecting in their buying behaviour, they are more vocal,
expressing their views and demanding better experience. A huge change in
consumer dynamics is being witnessed, with a large-scale shift from offline to
online consumption of goods and services. Also, rapid movement is being
witnessed in new and unconventional categories like furniture, health and beauty
care, apparel and groceries, as opposed to traditional online categories of books
and consumer electronics.

In today’s world where loyalty is becoming a rare phenomenon, be it your friend

or a job, brand loyalty also seems to be fading. Brands operating in mature
markets face intense competition making it difficult to sustain. Therefore, it is
important for companies to know how to retain their existing customers.

REPURCHASES MOST COMMONLY LINKED TO LOYALTY

Brand has come to play a very important role in today’s global and intensively
competitive world. Brand loyalty is the consumer’s conscious or unconscious
decision—expressed through intention or behavior—to repurchase a brand
continually. In common parlance, customer loyalty refers to the repeated
behaviour of purchasing a specific product/brand over time. This behaviour can
be self-induced by a satisfied customer and also many a times induced by the
marketer to drive sales.

Amazon India launched its flagship membership programme, Amazon Prime, in

2016 to boost repeat transactions on its platform, and this effort is already paying
off. Amazon Prime membership provides free and priority delivery, additional
quality check for the consumer creating higher customer confidence for a small
fee. As per latest declaration by Amazon, two out of three daily essentials
transaction on Amazon Pantry, and one in every three orders in the second
highest selling fashion category, is from a Prime member. Overall, Prime
members already account for one-third of all the orders placed on Amazon India.
This success can be attributed to typical behaviour of consumers who, after
committing once, tend to first visit Amazon before exploring other options. Thus,
Prime will make an impact in the long run in making people stick to a single
online marketplace. Major impact will be seen in the FMCG category which offers
a selection of about 1.9-million products from 9,000 sellers on the platform, and
frequency of buying in this category is higher and will drive sales in other
segments also. Amazon is also waiving off the box fee of ₹ 20 (for every 15 Kg
box) for Prime customers. Very recently in May 2017, Amazon had a four day
“Great Indian Sale” where Prime members accounted for 35 % of the orders and
purchases made by them grew 100 % over a similar sale in January.

CUSTOMER ACQUISITION AND LOYALTY

Innovation and brand consultant, Anisha Motwani, believes that free trials or
sampling as a strategy is mostly prevalent and successful in categories that have
deep-seated habits and have high frequency of consumption Brand switching in
this category require attitude and behaviour changes and free sampling
influences customer to try new brands and thus increasing the probability of
purchase. Such categories could include newspapers, food products, etc. Free
trials can also be found in case of expensive offerings where consumers prefer
sampling before making a final commitment.

In March, 2017, a unique trial-driven marketing experiment in the unusual

category of apparel was done by women’s denim brand, Jealous 21. It offered free
jeans to its customers in Delhi, Mumbai, Bengaluru, and Chennai. The process to
avail the offer involved registration by interested women on the company’s
website, get a unique code to visit its store, uploading a selfie in a Jealous 21
garment at the store, and tagging @jealous21 and #freejeansday on Instagram or
on Facebook to walk away with a free pair of jeans. The brand made sure that
there were no hidden terms and conditions which made it a very enjoyable
experience for its customers. Total 30,000 people registered for participation and
5,000 free jeans were claimed. Though jeans as a category does not quite fit into
this kind of trial-driven marketing, but this brand achieved spread of positive
word of mouth leading to referrals. “The real impact of this is the viralization of
such an activity. The brand is earning this buzz—rather than paying for
advertising—and is being talked about,” says Motwani.

Trial-driven marketing is based on the assumption that once the prospective

customers experience the product/service, they might get ready to make a
lifetime commitment to the brand. “A consumer is more likely to buy a product
after trying it. Typically, food products have tried sampling stations while cars
invite you to go on a test drive,” says Alpana Parida, managing director at brand
strategy firm, DY Works.

Success of Reliance Jio in the intensely competitive Indian telecom market brings
forth the strength of trial marketing strategy, even in the service industry.
Reliance Jio Infocomm Ltd offered free sampling of Jio’s voice calling, text
messaging, and data services, and acquired stupendous 100 million subscribers,
of which it continued to retain 72 million even after the free trial period ended.

Conventional wisdom suggests that brands that indulge in trials and discounts
erode brand value. “Here’s the reality though. People value brands. But people
also seek value for money. They prefer to buy brands, especially when they are
offered at the best price or that have been experienced first-hand and generated a
positive word of mouth,” Motwani says.

TRUST AND COMMITMENT – REQUISITES FOR BUILDING TRUE LOYALTY

The concept of true brand loyalty is not just limited to consistent repurchase but
is broader in including all kinds of positive attitudinal elements. Commitment is a
necessary condition for true brand loyalty to occur. Working with Professor
Rogge of the University of Rochester, ICLP (Global loyalty marketing agency)
applied Sternberg’s Triangular Theory of Love to the relationship between
shoppers and brands, and defined the ideal, or “devoted” relationship, as one
where shoppers feel passion, intimacy, and commitment towards the brand.

ICLP research on shoppers’ relationship with particular brands and their

associated loyalty programs throws light on lot of areas which can be used to
build loyalties. Some of the findings are:

Indian shoppers easily feel attached to the brands they shop, but only 21% are
currently in a devoted relationship, especially in respect to the retail brands
which indicates that marketers need to find ways to raise the emotions of Indian
customers to the highest level of bonding with brands.

Another finding revealed that just 44% of Indian shoppers feel sufficiently
rewarded for making a personal recommendation to their friends and only 47%
said that the rewards received are tailored to their individual needs, which gives
direction to the kind of reward programmes which marketers need to develop.

In the current data-driven world, personal data of shoppers so collected through

all different channels, is not capitalised to its maximum potential as only 56% of
Indian shoppers said that their chosen brand made relevant recommendations
for products and services that interest them.

Even as Online retailers like Amazon and Flipkart build loyalties through the
tools of customer recognition and personalization, multi-brand physical retailers
like Big Bazaar and Shoppers Stop are getting consumer trust through consistent
quality, value for money and respect for customers. Thus, different retail sectors
in India can learn from one another as they look to build loyalty and closer
relationships with their customers.

CUSTOMER EXPERIENCE AND CONNECT SUSTAINS RELATIONSHIP

Iglesias et all (2010) in their research studied that loyalty is achieved by brands
capable of delivering a unique and distinctive experience by managing both
functional and emotional elements. Experience adds memories and great value to
the relationship. Giving customers unique experiences as rewards strengthen the
emotional bond customers have with the brand, ensuring the relationship
continues long after the experience itself.

OnePlus phones, which are sold only online, do carry offline plans as well. They
are experimenting with different types of offline selling modes, like recently, they
opened four exclusive service centres which also serve as experience centres for
prospective buyers. They also came up with pop-up stores which remain for a
short period. One such store in Mumbai drove in huge traffic. Pop-ups are a way
to make users meet and experience OnePlus brand and meet some of their staff.
Company also uses this as a way of feeling the pulse of the market. “Consumer
loyalty is boosting our organic growth”, says OnePlus co-founder Carl Pei.

Connect with the customers is the key to developing loyalty. A conversation-

driven sale that is high on empathy and knowledge, low on price and discounts
has long been a staple of loyalty. It focuses on understanding the needs of
consumers and delivering an exceptional experience. We are living in the age of
“conversational commerce”, a term coined by Chris Messina, the inventor of the
hashtag, which refers to the ability of a digital tool to interact and engage with a
consumer using natural language. And multicultural millennials constituting
nearly half of the demographic are the new set of consumers to interact with, who
know what they like, and are not shy about sharing that information with their
friends and contacts. According to Forbes magazine, “a good Word of Mouth
marketing (WOMM) campaign generates thousands of conversations,
recommendations and triple sales in just a year (even for the boring products)”.
“When it comes to loyalty, multicultural millennials give as much as they get,”
said Buzz Marketing Group CEO and founder Tina Wells.

In India, one kind of retail channel on which a large part of population, especially
the lower rung of society depend upon is the ration shop. This traditional,
government-controlled retail provides basic everyday consumed commodities
like sugar, oil, etc., at subsidised rates. Due to lack of proper management and
leakages, the network of ration shops has come under lot of criticism. However,
their wide network and strong connection with daily lives has caught the
attention of Kishore Biyani of Future Group. He took up a mammoth project of
giving a complete makeover to 5,000 traditional ration shops in Rajasthan. This
public-private experiment is not just to revive and rebrand this channel but
Biyani plans to supply FMCG products to them, train the manpower, and
computerize the outlets. Other states of Chattisgarh and Madhya Pradesh are also
being explored for the similar initiative. This seems to be a great way for Future
Group to make inroads into the remote areas of these states which are devoid of
modern retail facilities. This is creating early customer familiarity with the brand
which can get converted to loyal customer base as and when Future Group’s
modern retail stores make their entry in those areas.

Easyday, one of the store of Future Retail Limited, launched its very first loyalty
program in September 2016 called “Har Mahine Bonus” which offers free
bonuses and vouchers worth ₹ 300 to every shopper who buys goods worth ₹
1,000. Easyday is a supermarket chain of 330 stores and has this loyalty program
running across segments. On the importance of customer connect, Manish Sabnis
- CEO Easyday - Future Retail Limited, puts in very beautifully, “Success of
supermarkets lies in becoming the store of the community. At Easyday, we take
multiple initiatives every month to become the preferred “Pados ki Dukaan”.
“Har Mahine Bonus” is a program launched to incentivise loyal shoppers and at
the same time attract new customers to our stores.”

In today’s world where consumers have wide choices available in all categories,
loyalties have weakened. India’s retailing giant, the Future Group, is all set to
pioneer into setting up “loyalty-driven convenience stores”. There are 2 basic
ideas which go behind these stores. One, to provide member-shoppers with
higher discounts than those offered by brick-and-mortar chains such as D’Mart,
or online rivals like Amazon and Flipkart, and two, to stock each store with
merchandise suited for that locality and consumer base. The concept is a hybrid
between the kirana (neighbourhood) store, connected commerce, and large
supermarket. It targets to have five-lakh members in the fiscal 2017–18, and has
plans of opening 10,000 of such stores in next 4 years.

A strong groundwork has already been done by Future Group to ensure success of
this new format. The entire ecosystem such as logistics, partnership with FMCG
companies, and customer database around the stores has been built.

Big competitive advantages have been created by Biyani. While rivals have been
focusing on big-box formats, he took the acquisition route and in past 5 years
acquired almost all convenience-store format brands that existed in India. As a
result now, the new smaller stores (loyalty driven) planned by him will have three
badges—Easy Day, Heritage Retail, and Nilgiri’s. Also while rivals are pure-play
retailers, Future Group itself owns FMCG and logistics company, thus, having
advantage through integration in the chain. To make it more attractive it has tied
up with mobile payments and commerce platform Paytm to enable the wide base
of Paytm-users to shop Big Bazaar goods on the online marketplace.

CONTINUOUS INNOVATIONS—A SURE WAY TO RETAIN CUSTOMERS

Innovations give life and new energy to the brands. In order to retain the best of
the customers and to influence all of its stakeholders, brands have to innovate
continuously. Technology and digital media has opened up innumerable
opportunities for brands to innovate. Future Group which has many new
initiatives to its credit has launched a digital wallet, FuturePay, to integrate its
loyalty programmes across different Future Group outlets—Big Bazaar, Ezone
and Hometown.

Best experience coupled with lowest prices is what FuturePay offers its
customers. “Price Match” is its one important feature, which matches items from
the customer’s bill with the advertised prices of any competitor retail store. If it
finds a lower price elsewhere, it credits the difference to the buyer’s wallet.
Another feature is its Oxygen Services, which enables customers to make
transactions at any of its retail outlets, or through credit and debit cards, and net-
banking.

These technology-based innovations are definitely creating impact on everyone,

especially on the digital millennials. The company states that they already have
60,000 downloads for FuturePay so far (by Oct 2016) and are targeting one crore
downloads in the next 18 months.

There is also a flip side to the use of technology. Customer loyalty can get
completely jeopardized over an unsatisfied digital experience. Indian Digital
Experience report by SAP, unveiled in April 2017, stated that only 8 % of
customers unsatisfied with their digital experience would continue to remain
loyal to the brand. In order that the brand remains relevant for its customers a
strong digital infrastructure is imperative.

There are many brands in other sectors, too, which are experimenting with
different ideas, and the success largely depends on the relevancy factor that those
experiments attend to. Like McDonald’s is planning to lure consumers through a
new breakfast menu that will include culinary delights suiting Indian palates,
ranging from masala dosa burgers with molaga podi sauce, to the familiar anda
bhurji.

As part of a brand transformation, McDonald’s is moving towards a healthier

menu over the past few years offering lower sodium in fries and nuggets, lower
calorie sauces, and preservative-free patties. The restaurant is also launching
soups and salads. All initiatives going in line with the current consumer trend
towards choosing healthy food options

McDonald’s India is also launching a series of concept restaurants called

“Experience of the Future” (EOTF), with features of self-ordering kiosks, table
service, and healthy menu. The first one of this kind has already opened in
Mumbai in March 2017, with enhanced digital capabilities to improve customer
experience. It plans to open 5–10 more outlets in the city in the next 18 months.

Another big brand that is walking the health route is Nestle. This world’s largest
packaged food group has made a scientific breakthrough by discovering a
completely new way to use the traditional, natural sugar so that it get reduced in
its candy products by up to 40% with no difference to taste.

CRITICAL FACTORS FOR THE SUCCESS OF LOYALTY PROGRAMS

Rijish Raghavan, Vice President, PAYBACK India, in one of his interviews has
emphasized on factors like transparency, convenience, relevance, engagement
and ease of use for the effectiveness and success of a loyalty program. A clear and
transparent communication while providing offerings and benefits to the
customers goes a long way in developing their loyalty.

In the online world, personalization of experiences is the key to purchasing

consideration while segmentation with locational considerations is critical to
offline retailers.

Consistent delivery on the promises is what turns customers into loyal ones.
Brand advocates cannot be made overnight. Building an effective loyalty program
and pool of brand advocates can stand brands in good stead in times of crisis.

THE FUTURE

In the current environment, loyalty to the brand has become crucial from the
marketing strategy perspective where the very survival and continuity of the
organization relies on loyal customers, who may be willing to pay more for a
brand.

Brand loyalty generates greater market share and brings in new customers with
Word of Mouth publicity. Brand loyalty is not just a marketing instrument but its
strength goes beyond and influences the goal and vision of the organization.
In India, loyalty transactions have been growing consistently over the past few
years due to more real-time and personalised experience being delivered to the
customers. Loyalty programs are omnipresent in business and have evolved and
grown beyond the discounts and coupons game. The demographics are changing
and big spends are being made in all different categories from fuel, apparels,
entertainment, travel, financial services and daily needs. In such a dynamic
scenario, coalition loyalty program would be game-changer as it offers a diverse
portfolio of partner brands with options to earn and spend points, and avail
rewards. Loyalty programs which consolidate the rewards across partner brands
will go a long way in ensuring customer long term retention.

QUESTIONS

1. ‘Trust, commitment and customer satisfaction are the pillars to building customer
loyalty.’ Enumerate through different examples, keeping the case in context.
2. ‘Delivering customer value has a strong linkage to generating long-term customer
loyalty.’ Provide arguments from diverse sectors supporting the statement.
3. Relevance, experience, engagement, personalisation are some terms gaining
importance in the current age for customer acquisition and retention. Explain how
these have added new dynamics to the game of building brand loyalties.
4. Customer relationship management (CRM) process aims at enhancing customer
loyalty. What are the various initiatives on the establishment of customer connect,
management of data, investment in technology, and people development being taken
by organisations today for an effective CRM strategy?

SS