Mumbai: With India maturing as a competitive market, rewards have emerged as one of the most powerful marketing tools for attracting and engaging consumers – be it retail, lifestyle, telecom, banking or any other segment. And in the last few years, rewarding took a march forward moving beyond mere discounts and freebies to enhancing experiences.
“Until the effects of liberalization panned out, India was sellers, and often a monopoly, market. So neither the manufacturers nor the retailers felt the need to explore non-traditional avenues of marketing. But in the last decade or so, the full effects of liberalization started becoming visible. One of the direct fallout was the realization that a high decibel advertising campaign alone would not suffice and companies would have to adopt smarter techniques,” says Javed Akhtar, CEO, RewardPort, India’s largest incentive and loyalty management services Company.
According to Javed, Indian customers are in for a bonanza in terms of getting freebies and goodies with every purchase. “And this is not necessarily a costly process for the company. For instance, we ran a cross promotion programme for Colgate Total where every consumer who purchased the product – which was priced at Rs. 100/- received a free gift voucher from Myntra for Rs.200/-. While the value for Colgate is evident, Myntra benefitted with a new consumer base who, so far had not considered purchasing online.”
The rewards segment, that includes customer loyalty programmes, employee incentives, and customer and channel loyalty programmes, is estimated at Rs. 22,000 crores. With roughly 20 million loyalty programmes against 700 million in the US, India is a mere 3 per cent of the loyalty programme market. However, Mr. Akhtar expects these figures to increase gradually with a 20-25 per cent (YoY) growth rate. “This is the fastest growing segment today. And the scope for growth is immense. A big section of corporates are yet to explore customer loyalty and reward programmes, but those who have tried it once are allocating more time, energy and money on rewards. As pointed out earlier, this technique is rewarding for both the marketer as well the consumer. A recent study has revealed that not only over 80% business comes from loyal consumers but they also end up spending 10 times more than new customer over a lifetime. In addition loyal consumers potentially up-sell a client’s business by 60- 70% through spreading good words,” adds Mr. Akhtar.
One of the few companies driving the growth of this segment is RewardPort. Launched in 2008, it began as an offshoot of TravelPort Holidays, one of the fastest growing travel firms of the time, offering vacation packages and travel gift certificates for a small set of clients. “The early responses were enough to give us an indication that this is a game changer. The market was ripe and India was ready to transition into evolved marketing. We shifted our focus from the travel division, which at that time was going through a recessionary phase, and backed RewardPort. The rest, as they say, is history,” smiles Mr. Akhtar. In the last two years alone, RewardPort posted 200% cumulative growth. By the end of 2014, it was servicing over 250 clients with a team of 150 professionals and notching a turnover of over 75 crores, which in turn is expected to quadruple by the end of the current fiscal year.
“Customer loyalty and rewarding will radically change the marketing landscape of India. With a little bit of creative input and strategic thought it can end up creating value for all the stakeholders. What makes this space exciting is the role of technology, which is expected to add many new dimensions. There is a big bonanza waiting for the Indian consumer in the next few months,” concludes Javed Akhtar.