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7 Reasons Why Loyalty / Reward Programs Failed in India

What is the common link between all major stores/chains like Mega Mart, Pantaloons, Shoppers Stop, Lifestyle, Reliance Retail, Hyper City etc….Answer is Loyalty / Reward Programs. Whenever u r making a payment for ur purchase on these store, the person on counter ask..Sir, do you have membership card? But Loyalty / Reward Programs have failed in India.

When i was young, some years back..I was quite excited about collecting all these membership cards. I used to thought that retail store value me as a customer but now the weight of all these cards is much more than weight of my wallet…Last week, with heavy heart i decided to part away with my valuable collection of some 15 membership cards as i never got any benefit out of these cards. In short, i decided to part away with my loyalty with these cards :)

On records, a Loyalty / Reward programs might claim that they have few million members but how many are actual users or it is right to say that how many are frequent/repeat users of loyalty card…Like me, million of indians would not like to miss anything which is free…Whether it is of any use or not, if it is free then no questions asked. At the same time i don’t think that anyone of us buy any product or service becoz he or she is part of that particular stores loyalty program. Infact I am 100% sure that 99% of my readers have not received any tangible benefits from these Reward Programs…

In a nutshell Loyalty/Reward Programs are big failure in India, Reason being Indian Customers are not Loyal :). They might be loyal to their wives/husbands, employer, friends etc but not in their shopping habits.

As i always say we are very good in copying the so called foreign concept but without applying logic that westernized concept require changes in order to succeed in india. Loyalty / Reward Programs are successful in western countries becoz of standardization of products and services. The quality of product and service level is standardized on quality parameters therefore people remain loyal to product or service for longer time.

Lets us understand key reasons why Reward programs are flop show in India

1. Indians are value seekers & are not loyal in their shopping habit.

2. In the absence of product/service quality standardization, repeat usage is not guaranteed.

3. Indians want instant gratification but none of Reward programs in India offer instant gratification

4. Reward programs are devalued by offering membership to anyone and everyone..Initially Kingfisher and Shoppers Stop tried to maintain exclusivity but later they realized, India is mass market. Infact Hyper city charges 200 Rs for membership card but again benefits are available only on selected range instead of total purchase, which makes it unattractive.

5. Loyalty Programs are too complex to understand i.e. what all benefits are attached to it, process to redeem the points, exclusive benefits to members etc

6. Most of retailers participate in loyalty programs just for the sake of visibility, whereas on ground participation is key concern. Practically, on cash counter if there is a queue then store executive don’t bother to load the points in card becoz it takes at least a minute to load the points. Similarly on petrol pumps, there are huge queues & if u flash your loyalty card for swipe then attendant will give u villain type looks. Most of the times, he make an excuse that machine is not working

7. Limited validity of reward points make it un-attractive. Firstly, the value of each point on an average is just 25-30 paise on purchase of 100 Rs & in order to redeem against decent purchase u need atleast 500-600 points therefore in order to accumulate 500 points, u shud shop for approx 1.5 Lac. Secondly, if u will not utilize the points in financial year then they will lapse. Its a smart strategy from retailer but at the end of the day, he is cutting the branch on which he is sitting.

India is vast country with varied shopping habits of Indian Customer. The marketeers working for Loyalty Programs need to understand the ground realities & consumer behavior, in order to make these programs successful in India. If the objective is, just to distribute membership cards then it is not difficult & we can say program is successful but if we need to make any loyalty program really successful by hooking customer to the brand, then lot needs to be done.

The basic objective of Loyalty /Reward programs is to induce repeat usage and if this objective is not met then we can easily say that program has failed but as i mentioned, in India success is measured by no of cards issued therefore its time for introspection on how this powerful tool can be used by retailers for repeat sales and program should also create pull factor.

Copyright © 2011-2012 Nitin Bhatia. All Rights Reserved.

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12 years ago

U done well and everyone who feels such should follow ur experience because marketing by major Stores/chains is only money oriented not for consumer’s benefits. Why one should be loyal to their schemes and be got cheated by them.

12 years ago

Really what a wonder full writer.I really enjoy it offcourse it helps me alot on my several doubts regarding Home Loan.Please Continue these types of sharing and honestlty very thankful for this sharing.

8 years ago

Hi Nitin,

Just read your blog on loyalty program, a bit old post and agree with your post.

Now,I have a question How to make it successful, I know as per trend it is a
bit difficult and might be a time consuming process. But if we need to
make a success story in loyalty, how could we?
looking forward for your suggestions.



Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  rajankumar

I will write a post on successful loyalty programs shortly. Request you to wait for same.

Abhishek Kushwaha
Abhishek Kushwaha
8 years ago
Reply to  Nitin Bhatia

Want to read your post on successful loyalty program.

7 years ago

Every point of this content still true ( 2016)

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