Vodafone India has joined hands with Loyalty Solutions and Research for the latter's multi-brand coalition loyalty programme, Payback, adding telecom to the mix of retail, e-tail, fuel and banking spread.
On the rationale behind joining the Payback loyalty programme, Bjas Murthy, associate director, voice products, services and customer value management, said, “When we thought of key areas to look at within the company at the consumer end of our business, it was about customer retention more than anything else. The telecom sector has seen a lot of changes over the years. It’s become more dynamic and far more competitive. So keeping that in mind, we thought that loyalty programmes are key to customer retention.”
Asked about specific deliverables he expects from Payback’s loyalty programme, he noted, “Our plan is to enroll over three million subscribers into the programme, and enhance our customer base in India by providing them with a differentiated experience, which will be consistent with our brand promise.”
Vijay Bobba, chief executive officer and managing director, Payback India, notes that in the last 10 years, the need for loyalty programs increase significantly, and terms the Vodafone association as a landmark development. The Payback loyalty programme reaches over 10 million customers, and serves companies across categories: retail, banking, fuel and now telecom. ICICI Bank, HPCL, Makemytrip, Mbookmyshow, UniverCell, Pantaloons, Big Bazaar are already part of the Payback coalition.
Campaign India’s Rishi Vora caught up with Vijay Bobba on the company’s plans and future of loyalty programmes in India. Excerpts:
How big is the loyalty market in India?
Loyalty as a market is still growing in India. There is a certain percentage of sales which can be set aside from a customer-value-proposition point of view. Clients typically spend about one per cent of their retail sales on loyalty/retention programmes. Some part of it goes into managing the programme, while the remaining goes into giving away reward points to customers. Typically, you would give out 70 per cent towards reward points, and 30 per cent into managing systems, software etc. If you look at the sectors which use loyalty programmes, be it retail, banking or telecom, these are all organised sectors. So one per cent of their retail sales is a pretty big number. In that sense, it’s a massive market.
Where does Payback stand in the market as we speak?
We’re the pioneers in the business. We started out in 2006 and have been growing consistently since then. We’re by far the largest coalition (loyalty) company in India. It is literally left to us to grow the industry, and we will grow the industry by riding on the growth of our partners.
How do you see the market growing? Do you expect a few companies entering the space?
We’re still at a very early stage of the industry growth. The past two years have been good as far as the growth story is concerned. Slowly but surely, the concept of coalition loyalty is gaining more importance and relevance for brands as retention, all of a sudden has become an important issue in India. Without retention it’s going to be tough to survive. 80 per cent of the profits come from 20 per cent of the customers. Every business will pinpoint at that 20 per cent. How are you going to do that? That’s where these programmes come into play. They were not the norm three or four years ago, because retention was still second priority. The first priority was acquisition. We saw that in telecom, you’re seeing that in retail with FDI coming in. You’re seeing that in banking. As for your question on competition, I think the industry is large enough to accommodate multiple players.
What are the value propositions one can offer clients with loyalty programmes?
There are three elements of value propositions. Number one is retention. Second is increase in wallet-share, and third is acquisition of customers. We approach the market in the same order. But, a few companies may need a different approach.
After all these years, the fact that some of the biggest players are still effectively using our platform is a clear indication of the scope of the business.
Is there a huge change in consumer behavioir after they’ve redeemed their reward points? Is there enough data that suggests that?
Behaviour of the customer after redemption is very different in terms of the wallet-share. It means they’ve increased spends and have made frequent purchases. We track that on a daily basis. We conduct studies. Each time, it is very pleasing for us and our member partners to see the spends from customers increase.
What is Payback’s business model?
We’re in a very transaction-oriented business. So we take a certain percentage of the sales as a fee. We do not engage in a model where we deliver a consulting assignment. That’s not the business we’re in. Our model, unlike many other loyalty programmes, is purely based on percentage of sales.
How has been the growth for Payback been over the years? And what’s the kind of growth you’re expecting this year?
Payback has been growing literally in double digit numbers year-on-year since past two to three years. Given our leadership status, it is important for us to continue to innovate. If we innovate and are able to add value to our partners, I expect this year to be much better than past few years. Our association with Vodafone is a landmark development, and that’ll further boost our growth in the coming few years.