APRIL 20209The new-age customer treats the points as personally earned and expects to use them as ubiquitous as cashcustomers, which, in turn, could boost a business's revenue. Based on a report by Manta and BIA/Kelsey, a repeat customer spends 67 per cent more on a given purchase than a new customer does, so in turn, a customer feels the need to be rewarded.This behavior forces business-es to resort to deep discounting or cashback. However, it is impossible for a business to thrive on them. It is a general tendency for people to be attracted to discounts, which is clearly the reason why businesses try to provide cost benefits for cus-tomers. However, the question to-day is, how effective are these dis-counting policies in the long run? For example, Paytm mall's Cash Back Policy provided cash-back on almost 80 per cent of the categories (groceries and daily use products in particular) which has resulted in a steep sales de-cline this year because of which they have removed cash backs on warehouse supplies. "Cashback was the biggest at-traction for consumers on Pay-tm mall, and if that is discon-tinued, it directly impacts sales negatively on the platform," said Mayank Shah, category head of Parle Products. In conclusion, in most cases, customer loyalty is proportionate only to the Cost benefits that are provided to them. Deep discounts create traction for itself which ultimately breeds contempt like Ramakant Khandelwal, CMO of Payback India, rightly said, "Loy-alty as a concept is a strategic act -- you want to be able to retain customers. With bargain hunters, sometimes they're there for a spe-cific deal and then won't return. When a program is designed to attract only bargain hunters, you may be missing out on the audi-ence that truly appreciates what you're doing." With the dynamic business environment and fierce competition between brands, business is willing to offer a share of his pie to ensure a transaction with the customers. Today, it is the buyer's market. So every seller or business should give the buyer or the customer something back constantly to make a transaction. So, it comes as no surprise that the global market for loyalty programs is expected to reach $201 billion by 2022, representing a compound annual growth rate (CAGR) of four to five per cent, according to Beroe Inc., a leading global procurement intelligence firm. But, indeed, just offering rewards will not make a program successful. A customer expects contextual, digital-first experiences that align with their brand values. An article by Loyalty360, an association for customer loyalty, loyalty programs have to move from Conventional to Contextual Loyalty, Digital to Digital-First, Siloed to Seamless, and From Personalized to Predictive. Businesses must have a fore-sight of the future and create pol-icies that would benefit both the parties (Business partners and Customers) rather than focusing only on customers' gratification!The new-age customer treats the points as personally earned and expects to use them as ubiq-uitous as cash. This dictates the needs of the existing loyalty pro-grams- wherein the customer gets freedom, flexibility to use the points anywhere, anytime. In the future, loyalty programs should be structured around a custom-er's needs- they cannot be bound. We need loyalty programs to move from closed loop to open loop structures. Ultimately, so no mat-ter how magnificent or how cool your Loyalty Program looks, its fate is decided by its customers. Shalini Prakash
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