Paula: Welcome to Let’s Talk Loyalty, an industry podcast for Loyalty Marketing Professionals.
Paula: I’m your host, Paula Thomas, and if you work in Loyalty Marketing, join me every week to learn the latest ideas from loyalty specialists around the world.
Paula: Thank you.
Paula: This episode is brought to you by Epsilon, a leading global loyalty partner that boasts over 50 years supercharging brand experiences.
Paula: Epsilon is delighted to announce the arrival of its award-winning loyalty solutions to the Middle East and Asia Pacific region.
Paula: Its PeopleCloud loyalty technology and services are designed to create hyper-personalized and emotional connections with customers.
Paula: Perfect for consumers in the Middle East and Asia Pacific countries.
Paula: For more information, visit apac.epsilon.com forward slash letstalkloyalty, or drop me an email and I’ll put you in touch.
Paula: So welcome to episode 66 of Let’s Talk Loyalty.
Paula: And as we come towards the end of the year, I am really excited to be interviewing a lady by the name of Mala Raj, who comes from a company by the name of Strategic Caravan in Mumbai, in India.
Paula: Now, Mala has many, many years of strategic loyalty experience, but the reason I particularly invited her on the show right now was because of a recent post that she put up on LinkedIn.
Paula: So on the occasion of World Statistics Day, Mala took the initiative to pull together some key loyalty statistics, which she herself described as really, really broad, but I really loved the impact that they had, even in terms of just starting a conversation about what we should be measuring and what indicates a good performance for a loyalty program.
Paula: So first and foremost, Mala Raj, I’d like to welcome you to Let’s Talk Loyalty.
Mala: Thank you, Paula.
Mala: Very happy to be here.
Paula: Great, great.
Paula: So listen, as I said, I was really impressed that you took this initiative.
Paula: I myself wasn’t aware of World Statistics Day.
Paula: I was super impressed to see that it’s actually a United Nations initiative from a global perspective.
Paula: And in fact, it only happens once every five years.
Paula: And the global event is designed apparently to connect the world with data we can trust.
Paula: So I think that’s music to the ears of everyone listening to this show, because I know we both share a love of obviously great results and great loyalty, Mala.
Paula: So you took the initiative to go and put this content together.
Paula: So before we get into all of the detail, I’d love to start off with my usual question.
Paula: What is your favorite loyalty statistic?
Mala: Thank you, Paula.
Mala: So, you know, I noticed that my post actually got a lot of responses and a lot of discussion going.
Mala: But as part of the post, I did mention that while there are many metrics to evaluate and many statistics that you see across loyalty programs, my personal favorite is actually member activity level.
Paula: Okay.
Mala: So you have, you know, programs which can, you know, tout the number of members they have as part of the program member base.
Mala: But it’s a whole different story altogether when you talk about how active those members are.
Mala: To me, that’s a key metric of how the program is performing and whether your members are engaged with the program or not.
Paula: Absolutely, yes.
Paula: And it’s certainly not going to drive behavior if they first of all aren’t earning in order to burn.
Paula: So you’re absolutely right.
Paula: And you’re not the only person who really says that absolutely the engagement is key.
Paula: And I did want to also name check our friend, Adam Posner, down in Australia, who really just, I suppose, emphasized your favorite statistic as well, Mala.
Paula: And he articulates it very nicely with a phrase that he uses in fact a lot.
Paula: And he simply says, volume is for vanity and activity is for sanity.
Paula: And I think you liked that one as well.
Mala: Yes, I was very impressed with that.
Mala: And I did tell Adam in reply that, you know, I’m going to steal that and use this in conversation with clients across India.
Paula: Yeah.
Mala: And I did say I would give him the credit for that.
Paula: Okay, yes, fame at last.
Mala: It’s, yeah, it’s pithy, it’s concise, and it just indicates what we want to say.
Paula: Absolutely, and we’re all commercial marketeers at the end of the day.
Paula: So I think we’re all aligned.
Paula: What I loved as well about the activity rate, Mala, and I suppose again, to go back to my own start in the loyalty industry, many of us come into loyalty marketing without a background in this, let’s be honest, very specialized field.
Paula: So we’ll go through all of the other statistics that you mentioned as well, but this particular one in terms of member activity rate, again, you gave a very, very broad benchmark, but 60 to 70% of your member base transacting is good.
Paula: So how would you maybe elaborate maybe a bit more on that, Mala, because clearly it varies hugely from vertical to vertical.
Mala: Yeah, absolutely, Paula.
Mala: So I did put a caveat there saying that, it will vary not just by vertical, it also varies by brand and the stage of evolution that your program is in, right?
Mala: But just as a broad indicator, if you have a program, whatever size of member base you may have, if one of two members is active, doing something to indicate that they are members of the program, whether it’s a transaction or whether it’s any other engagement activity to indicate that they are part of the program, I believe that’s a good metric.
Mala: So I do believe that if you have rates lower than that, then you need to do something to boost your activity levels.
Mala: So it’s not enough to talk about member bases in the hundreds of thousands, or in the case of India, actually hundreds of millions.
Mala: But it’s also important to know how many of them actually are aware that they are members of your program and therefore are active in your program.
Paula: Absolutely.
Paula: And Mala, I know that you advise lots of the top loyalty programs in India.
Paula: Would you say in your experience and that most of the senior management of those clients, are they aware that the activity rate really is that kind of, I suppose, bullseye KPI, or is that something that you see they need to hear from outside, you know, experienced consultants like you?
Mala: So I think it’s on the rise, Paula.
Mala: You know, the first metric you would talk about, which is top of mind, is really, you know, I have a member base of this much.
Mala: Yeah, so that’s the first metric that comes to your mind.
Mala: But I think there is growing awareness about the fact that it’s important to drive activity and therefore you need to be conscious of what percentage of an activity level that you have within your member base.
Mala: I think it is growing.
Paula: Absolutely.
Paula: And yes, absolutely.
Paula: If only to, you know, make themselves feel better, all of us, actually, I should include myself in that.
Paula: It is important to keep an eye on, you know, how the base is growing.
Paula: But yes, I think if we said, okay, you know, the really big one that we want to focus on commercially is this activity rate.
Paula: I think everybody kind of gets that.
Paula: It’s simple enough for everybody to kind of understand.
Paula: Yeah, super.
Paula: Yeah, brilliant.
Paula: And as many of the listeners will know, Mala, I don’t have a lot of experience, for example, understanding the loyalty market in India.
Paula: I know you’ve done a lot of research yourselves, actually, as a company.
Paula: So I’d love if you would just even give us a flavor of, you mentioned several programs with hundreds of millions of members.
Paula: So I’d love to get a sense of what kind of programs are connecting with Indian consumers.
Mala: So just to go back a couple of years, Paula, we at Strategic Caravan did something like a loyalty census, where we took top programs across different categories, different verticals, and we looked at published information available across various sources, and what was there for the member base of each of these programs.
Mala: So this was in 2017, and we found that two programs at that time dominated.
Mala: So one was Payback.
Mala: We have Payback in India, which is the same really as Payback in Germany, parented by American Express.
Mala: And the other one was Reliance One.
Mala: Reliance is a very big conglomerate, most people would know in India.
Mala: And they have a program for all their B2C businesses, which is called Reliance One.
Mala: And these two programs in 2017 had member bases of about 30 million each, which we thought was huge.
Mala: And we said, wow, two programs account for 60 million members.
Mala: Yeah, of course, there would be overlap between the two.
Paula: Sure.
Mala: However, three years later today, if you look at it and the same published sources of information that you look at, each of these programs claim member bases of 100 million plus.
Mala: And this is just in three years.
Mala: Wow, wow.
Mala: And there’s one more I’d like to mention, which is one of the two big e-commerce players in India.
Mala: I’m talking of Flipkart here.
Mala: And Flipkart has a customer base of over 100 billion plus.
Mala: And I would consider that as member base as well, because if you’re a customer, it’s an e-commerce marketplace actually.
Mala: So if you’re a customer on Flipkart and you transact, you earn that program currency.
Mala: So I would believe that that’s also a member base.
Mala: And they are also talking 100 million plus.
Paula: Wow.
Mala: So it’s huge numbers that we’re dealing with.
Paula: It totally is.
Paula: And it seems to be gathering massive momentum, Mala.
Paula: I mean, as you said, 30 million is already a huge number.
Paula: 2017 doesn’t feel that far away.
Paula: But to get from 30 million over 100 million in three years, I mean, that’s just extraordinary growth.
Mala: Yeah.
Mala: And what’s actually more interesting is that they themselves believe that they’ve just scratched the surface of India, because you’re talking of penetrating people into smaller towns in India, and India itself is a vast geography.
Mala: So I think the potential to grow is still there, even for these 100 million programs.
Paula: Yes, and I did see your colleague, in fact, Mala, Brian, Brian Almeida, and I believe that he commented as well that he’s expecting to see programs in excess of 250 million members in the Indian market in the next couple of years.
Mala: Absolutely, absolutely.
Mala: When you have a billion plus population in the country, yeah, 40% of which is urban in India, you can see the scale that we’re talking about.
Paula: Absolutely.
Paula: Well, you won’t run out of work anytime soon, Mala, so that’s for sure.
Mala: Well, fingers crossed.
Paula: For sure, great.
Paula: So to come back to the statistics, Mala, and obviously we’ll make sure that we link to this particular post that you created, as I said, on World Statistics Day.
Paula: So in the show notes, we’ll make sure that this is there for anyone who wants to refer to it.
Paula: But there’s six in total.
Paula: We’ve talked about the key one of member activity rate, but the second one then you mentioned, and I’ll just read it out, it’s the lift in member value.
Paula: And I loved how specific, in fact, this was.
Paula: So you said that basically, you should see a lift in member value of anywhere between seven to 9% in year one, and to make sure that that’s over and above the natural growth of the company.
Paula: So that’s a really powerful figure, I think as well.
Mala: Yeah.
Mala: So again, it’s a broad number that I’ve indicated, a lot depends on individual programs.
Mala: And I did get a couple of comments after that, saying that you would never see growths like this or lifts like this in any of the Western countries, right?
Mala: But the fact is, you are seeing natural growth in India itself in these numbers, right?
Mala: And over and above that, we have seen it across programs.
Mala: And I’m talking about the experience we’ve had across retail programs, across some hospitality programs.
Mala: And you do see these numbers.
Mala: It may not be in double digits in year one, but over and above natural growth, you do see a seven to nine percent.
Mala: So I put it as a broad benchmark and it would be very depending on the vertical, certainly.
Paula: Yeah, yeah.
Paula: But again, it’s great to have a starting point because as I said many times, when I started, I was literally plucking figures out of the air.
Paula: So it’s really hard to get figures like this.
Paula: And just to give listeners a sense of the kind of, I suppose, profile of you guys as a company, Mala, I saw on your website, Strategic Caravan, between you as four founding members, you have 114 years of loyalty experience.
Mala: It only says how old each of us are, but yeah, that’s true.
Paula: Yes, exactly.
Paula: But also 437 loyalty projects across 145 clients.
Paula: And you also mentioned you’ve worked across 12 countries.
Paula: So as much as today, we’re talking about, I suppose, predominantly Indian performance, you have done lots of international work.
Paula: So plenty of reference, I think, from all of the stuff you’ve done.
Mala: Yeah.
Mala: So I actually, each of us to get, has got more than a couple of decades of experience in loyalty and loyalty marketing, loyalty consulting.
Mala: So, and we have worked across clients, not just in India, but we’ve done Middle East, we’ve done Far East.
Mala: Yeah, so that way we’ve done a lot.
Mala: And we’ve got a fair amount of exposure.
Mala: So yes, the numbers that I indicated in my post are broadly based on the experience that we’ve had across all these years, yeah.
Mala: So I, like you said, exactly this, I just wanted to create some benchmarks, some starting points in the minds of people who read it, so that you know where to put, you know, you put a big marker somewhere and then say, you know, where am I?
Paula: Yeah, absolutely brilliant.
Paula: Okay, so the third one we’re gonna talk about is reduction in member churn.
Paula: So your statistic was that you should, as a loyalty program operator, be seeing member reduced by about 10 to 12% in terms of the churn as early as the first couple of years.
Paula: And again, I think that will give an extraordinary number in terms of building, I suppose, the financial models for a loyalty program.
Mala: Yeah, yes, Paula.
Mala: So my objective was really just that, that you must be able to put some numbers down when you’re doing your financial model.
Mala: And the fact is, loyalty as a discipline is accountable.
Mala: Yeah, and it’s very important to put those numbers down.
Mala: And whenever you talk loyalty, you’re not just talking about the growth and development of your existing members.
Mala: Certainly we are.
Mala: You’re also talking about retaining them over a longer period than they would have stayed with you otherwise.
Mala: And therefore reduction in churn is a very important metric.
Mala: Yeah, and so again, I want to keep caveating this as we go along, that these are just benchmarks or generic figures, but it’s important to put them down.
Paula: Yeah, absolutely.
Paula: And in my experience, Mala, churn is definitely something that’s monitored very closely with, I suppose, industry definitions, which are consistent for certain verticals, let’s say like telcos, but in something like retail, for example, do they also tend to talk about member churn or is that more just online retail or what would you see in terms of other verticals?
Mala: So if you look at retail policy, the way they define activity and therefore churn is different.
Mala: So if you’re looking at, let’s say, grocery retail, you would expect a frequency that’s weekly or monthly, at least monthly, if you’re grocery.
Mala: Therefore, if the way you define things like dormancy, latency or churn, it will vary.
Mala: So if I’m not back in a grocery store, in a, let’s say, three to four month period, I would be perhaps flagged off as dormant, yeah?
Mala: If I’m not back in another eight months, I would be flagged off perhaps as latent, and then, you know, churn thereafter.
Mala: Whereas if you’re looking at, say, department store, or you’re looking at, you know, let’s say apparel and accessories, yeah?
Mala: Maybe you would expect a visit a couple of times a year.
Mala: So the way you define activity and therefore churn will vary depending on the vertical that you belong to.
Paula: Absolutely, yeah.
Paula: And again, I think it’s fabulous to have people like you guys, Mala, and certainly in the past, my own consulting work, to be able to advise companies on what the industry average should be.
Paula: So again, to have insights from a global perspective, or particularly, I suppose, from a national perspective is super, super useful.
Mala: Thank you.
Mala: Yeah.
Paula: Yeah.
Paula: So the fourth statistic was around shift or new customer acquisition.
Paula: And I suppose you’ve described it as obviously making sure that you can measure whether your member base is growing faster than your customer base.
Paula: And hard to give a benchmark on this one, but are you looking, you know, just in general at customer acquisition and members?
Paula: You know, how do you, I suppose, help clients with that one?
Mala: So Paula, we look at this in two ways, right?
Mala: Now, if you’re looking at, you know, organizations or brands which are running their own programs, yeah?
Mala: When you look at shift or member acquisition, it’s really about acquiring more of your customers into the program, yeah?
Mala: It may not be acquiring more customers to the brand.
Mala: So you see, you have a customer base of, let’s say a hundred thousand.
Mala: I’m just using a random number here.
Mala: And maybe you have, you know, 20,000 of those as the members of your program, yeah?
Mala: Now the question is, your customer base is probably growing at 5% every year.
Mala: Is your member base growing faster than that?
Mala: Which means you should be penetrating deeper and deeper into your customer base.
Mala: So that’s what you’re talking about.
Paula: Great, yeah.
Mala: However, if you’re looking at something like coalitions, of which we have in India, like I said, I mentioned earlier, you have a reliance one and you have a payback, which are coalitions in India, right?
Mala: There, you’re actually looking up, you know, sponsor organizations and brands join a coalition because they look for acquisition from the other partners, right?
Mala: So they are actually looking at totally new customers coming in because they become members of the coalition.
Mala: So that would be a different metric that you measure.
Mala: So I’m looking at not just, you know, members of the coalition growing, but as a brand, which is part of the coalition, am I getting totally new customers as well?
Paula: And I think, you know, that the terminology that I’m familiar with for the point you’re making, Mala, for example, like I would have talked to a lot of convenience retailers over the years and also grocery retailers.
Paula: And in fact, you know, given that, you know, so much of their products are actually so similar, they’re just sold in very different ways.
Paula: I’ve seen dramatically different levels of penetration, and they would use terms like swipe rate, for example.
Paula: And I’ve heard like grocery stores referring to, so is this the same area that you’re referring to?
Mala: Yeah, broadly, we don’t use the term swipe rate in India.
Mala: Yeah, but yeah, but but yes, yeah, broadly, I would be referring to the same thing.
Paula: Okay, it may be an Irish thing, I don’t know, but and again, or it may be that particular company, but I do tend to think industries develop their own language and jargon, and maybe it’s, you know, but by even just in Europe might be might be more familiar.
Paula: But I suppose the reason that I find it fascinating, Mala, is particularly in that sector, in terms of buying, you know, FMCG products, I’ve seen anything as low as maybe five or 6% in convenience retail, which I would describe as very immature in many markets, and from a loyalty perspective, because it’s all about speed of transaction.
Paula: And even in fuel stations, for example, but up to then, as you said, the more heavily engaged, you know, grocery shopping, where they would be targeting, in my experience, something like as high as 60%.
Paula: Like, would you see a range as massive as I have in my mind?
Mala: I would think it’s the same, yeah.
Paula: Okay, okay, good.
Paula: Well, again, for convenience retailers, you know, if they are, you know, worrying whether or not at the same level of grocery, not to panic, plenty of work to be done for sure.
Mala: But yeah, the thing with convenience retail is a lot of floating population, right?
Mala: That goes through.
Paula: Yeah.
Mala: So that’s the thing.
Mala: You would see this range in numbers in that case.
Paula: Yeah.
Paula: And to me, the game changer, actually just a quick observation on technology, Mala.
Paula: I don’t know if it’s happening in India, but certainly in Europe, and there’s a lot of card linking happening where, for example, you can, you know, designate a specific payment card, like a Visa card or, you know, a MasterCard and say, okay, this is going to be my loyalty identifier.
Paula: So you don’t need to present a loyalty card or even open the app at the point of sale.
Paula: So it becomes a much higher penetration actually then, because once somebody uses maybe the same debit card, obviously they are tracking all of their activity in that way.
Paula: Is that type of thing happening in India as yet?
Mala: Not yet, Paula, quite frankly.
Mala: Here, what we do is the most common identifier that we use across programs is your mobile number.
Mala: So that’s the standard one.
Mala: So earlier India would still be the land of membership cards, right?
Mala: And you still have that.
Mala: So the thing with India is it’s so diverse, right?
Mala: So you have the smaller towns where a card still holds a lot of value, in your really small towns in India.
Mala: It’s got flash value.
Mala: It’s a sense of a tangible sense of belonging, so to speak.
Mala: So people like to keep the cards, but not so in the metros or the larger towns.
Mala: You will not have that.
Mala: It’s the mobile number that’s used.
Mala: And now more and more, it’s the app that’s used, right?
Mala: So not yet a designated payment instrument, which is then used to identify.
Mala: No, not yet.
Paula: Not yet.
Paula: No, but I like your term there, flash value.
Paula: Very succinct.
Paula: That’s really great.
Paula: We used to talk about that a lot in British Airways.
Paula: And actually, I’m sure all airlines, it’s certainly not unique.
Paula: But we used to say that actually, the sense of pride that a premium card holder has, just by having the exclusivity of a gold card tag on their briefcase, really in many cases, exceeded the benefits of the free flights they may get.
Mala: Yes, yes.
Mala: This is absolutely the case.
Mala: I think human nature is the same everywhere, Paula.
Mala: So, if you see frequent flyer programs, the fact that you have the priority check-in queue or your baggage comes out faster or you have lounge access, none of this is applicable now because of COVID, unfortunately.
Mala: But yeah, these are really huge benefits that you see more than the miles that you are.
Paula: Totally, totally.
Mala: Perhaps more than the mile, because there are still some people who are avid collectors of the miles and I don’t want to generalize.
Paula: I know.
Paula: But I would make the distinction, Mala, the practical benefits that do actually make things faster or more convenient, those other softer benefits you mentioned, I totally get that they’re very practical and rational.
Paula: But just because the gold is on my briefcase, that’s actually not at all practical.
Paula: Do you know what I mean?
Paula: It’s just the succinct difference of the little bit of ego that we all allow ourselves, I think, from time to time.
Mala: That’s true.
Paula: Brilliant.
Paula: Great.
Paula: So the second last statistic then is the redemption rate.
Paula: And this is certainly one of my favorites.
Paula: And you have mentioned that program operators should target that at least 40 to 50% of members redeeming and 80% of the points redeemed.
Paula: And anything lower means your program is not engaging.
Paula: So this is music to my ears.
Paula: So tell me what’s your experience in terms of setting redemption goals.
Mala: So I did that.
Mala: I actually put that down with a little tongue in cheek, you know, intention, because I do believe that redemption is one of the biggest moments of truth in a program.
Mala: If you have a program with a currency, which members have earned, you should surely well be doing stuff to get them to redeem it.
Mala: So there are a couple of things here.
Mala: You want one in two members of yours redeeming, and you want the bulk of your points being redeemed before they expire.
Mala: This also means that you need to have a range of rewards, which means even the small earners, at the base of your pyramid, so to speak, they are able to redeem it for something.
Mala: And then you have those.
Mala: So, we typically say in programs, you have people by human nature, they are either redeemers or they are hoarders, right?
Mala: So, you have to appeal to both.
Mala: There are people who like the quick wins and they want to redeem every now and then.
Mala: There are other people who will do that initially because they want to test your system and see whether they get the reward or not.
Mala: But then they start gunning for the larger rewards.
Mala: They want to accrue more and more, and they’ve gunned for the larger rewards.
Mala: You have to appeal to both, and you have to be driving redemption.
Mala: I don’t feel it’s really critical.
Paula: Yeah, yeah, and I remember actually long before I worked in loyalty directly, I was holding a credit card with them, with Skywards, in fact, here in Dubai.
Paula: And I literally used to say, because all of my friends, we all had them, and we used to talk about it extensively.
Paula: We literally used to describe ourselves as loyalty junkies.
Paula: And even now, actually, I’m literally watching my Skywards account because I’m waiting for a redemption flight.
Paula: So the behavior is certainly like I know I behave differently.
Paula: And as you said, the point of getting the reward, I’ve been saving now for quite a long time to get this actual flight.
Paula: So it’s a really big deal.
Paula: And it has to be something that the, I suppose the program operator has to enjoy giving it to you as much as we have.
Paula: Yeah.
Paula: Yeah.
Mala: I totally agree.
Paula: Yeah.
Paula: And I think that’s probably coming through finally, but I think we’ve probably both seen maybe 10 years ago or a little bit longer, there was targets around breakage.
Paula: And finance departments would have been hoping to have a revenue line that’s literally breakage.
Paula: So, I mean, just in your, I suppose, financial modeling work, Mala, would you tend to put breakage on the overall financial model for a program’s profitability?
Mala: Yeah.
Mala: So I just want to comment a little bit my thoughts on breakage.
Mala: So this is one of my pet peeves actually.
Mala: So whenever we consult with clients on design, we always kind of recommend to them, don’t plan or design for breakage, right?
Mala: If it happens, it’s good.
Mala: And let it be written back to you as a saving, as and when it happens, but don’t design for that, design for high redemption, because that’s going to pay off in the longer run for you, right?
Mala: With the higher transactions and whatever.
Mala: But yes, when we do the financial modeling, we do have a line item for breakage.
Mala: You would keep that at minimal levels so that you’re not gunning for large savings because of breakage.
Mala: Then the whole purpose of the program is defeated.
Paula: So yeah, I like that actually.
Paula: Set an expectation.
Paula: And I suppose be very open and honest that this isn’t the goal that we’re gunning for, and it will happen.
Paula: So just to allow for it.
Paula: But again, I suppose it’s the education process again around, you know, really we’re building loyalty here.
Paula: We’re not just building, you know, a spreadsheet that that’s gonna look good.
Mala: Exactly.
Mala: So it’s not about, you know, making the money in the short term and showing that your program turns positive in year one or year two.
Mala: It’s about the longer term payoffs that you’ll get if you actually drive people to accrue the currency and start redeeming.
Paula: Yeah, love it, love it.
Paula: So the last one then Mala is around program penetration of total sales.
Paula: And this might have been actually my swipe rate question for you earlier.
Paula: Just now I see your definition.
Paula: So you’ve said, again, I know it’s very broad, but a great starting point, a good program will account for 70 to 80% in fact, for some programs total brand sales.
Paula: So what kind of sectors would you see that happening in?
Mala: So I was actually referencing retail over here.
Mala: And I must make a mention of this referencing one of the large programs in India.
Mala: So we have this chain of department stores in India called Shopper Stop.
Mala: And they have a long running program, which has been over two decades, I think.
Mala: It’s called the First Citizen Club.
Mala: And the First Citizen Club of Shopper Stop actually accounts to close to 80% of the department store sales.
Mala: So that’s really, really good.
Mala: Yeah, it’s been long running.
Mala: So I don’t expect this will happen in the initial years of the program.
Mala: It takes time to build up.
Mala: But that’s what you should be gunning for.
Mala: And this goes back actually to the earlier metric of is your member base growing faster than your customer base?
Mala: If it is, and your members are active, then you should be penetrating more and more of your total sales.
Paula: Yeah, yeah, absolutely.
Paula: And you reminded me actually of a quote.
Paula: In fact, I’ve said this before on the show, Mala, but Jeff Bezos, obviously the famous founder of Amazon, he describes Amazon Prime as a program.
Paula: He doesn’t use the words loyalty program in fairness, but it is obviously a core part of the business.
Paula: But he says it should be so compelling that it’s actually irresponsible not to join Amazon Prime.
Paula: So like you can hear the level of ambition.
Paula: And in my mind, they’re literally saying, okay, 100% of Amazon customers and perhaps the likes of Flipkart you mentioned there in India could almost be literally saying it’s 100% connected with our loyalty program.
Paula: So I definitely think in some sectors that’s absolutely possible.
Mala: So this is, yeah, like you said, it’s a really ambitious statement, but that’s what.
Mala: If you want your offering to be that compelling, you have to have that ambition and you have to have the proposition that then makes it happen.
Paula: Well, I think it does set a lovely expectation because again, it moves everybody away from the mindset of breakage or away from, how much can we get out of our customers and flip it around to really being customer centric.
Paula: So I think it’s a nice shift, I think in terms of the overall intention.
Mala: Yeah, I completely agree with you.
Paula: Great, great.
Paula: And then two other final things you’d mentioned to me when we were offline, Mala.
Paula: One was around just a pattern for some loyalty program operators in India.
Paula: I know you mentioned sometimes there’s a, I suppose a temptation to auto enroll their customers into their loyalty program.
Paula: And I wanted you to explain to listeners maybe how that has happened over the years and maybe how that’s evolving in the Indian market.
Mala: Yeah, so the context to this is actually the data privacy regulations, which are becoming stronger in India.
Mala: So we are actually not officially governed by GDPR, like Europe would be, but we have our own set of data privacy regulations.
Mala: And I must say that marketers are becoming more and more responsible these days to want to follow some kind of privacy rules, right?
Mala: Now what happens in a lot of retail organizations in India is that when you go to shop, they ask for your mobile number and they record it against the purchase, right?
Mala: So every transaction perhaps has a mobile number, or let’s say most of the transactions have a mobile number linked to it.
Mala: Now what happens is when a brand like this decides to launch a program, sometimes what they do is they auto enroll the entire base of mobile numbers that they have, and they say, you know, they send out these SMS communications and say, welcome, you’re now part of the program.
Mala: Now, when you do an auto enrollment like that, a lot of things can happen, right?
Mala: So there is a majority of the base who would just delete the SMS before they even look at it.
Mala: So they don’t know that they are members of the program.
Mala: There are some who will take note of it and not bother anything more about it and say, you know, I don’t even want to know.
Mala: And there is the small subset which says, wow, okay, I’m now part of the program.
Mala: Let me start getting involved.
Mala: Now let’s say the program has a currency and they start earning or accruing the currency.
Mala: When the time comes to redeem, then you have to follow the data rules, right?
Mala: You can’t redeem unless you accept the terms and conditions of the program.
Mala: And then they kind of become conscious of the fact that, hey, I’m a member of the program, right?
Mala: So then all those rules start kicking in.
Mala: So this is a trend that you’re seeing in some of the retail programs across.
Mala: So I personally do believe that a solicited enrollment works much better than auto enrollment.
Mala: It depresses the member base.
Mala: Sure, you get lower numbers, but you get a more involved base because they are more conscious of the fact that they chose to become a member.
Paula: Totally, totally.
Paula: Yeah.
Paula: And I know another channel that a previous guest had mentioned to me as well, Mala, was actually WhatsApp for Business.
Paula: And I know that India is a country that WhatsApp is prioritizing for commercial applications, such as particularly customer support, which I love, in fact, I love, you know, things like KLM.
Paula: I will definitely name check as an airline that three years ago, in fact, sent me my boarding pass and everything I needed for a flight on WhatsApp.
Paula: And increasingly, I’m hoping that we as loyalty program operators can use these messaging applications.
Paula: So is that something that you’re starting to see as well on the clients you work with?
Mala: So not really for loyalty as yet.
Mala: You’re seeing it for customer support.
Mala: That we are seeing, right?
Mala: So you do see the use of WhatsApp for confirming a transaction.
Mala: You know, so financial services have started using it to remind you about your premium to be paid on your policy, on your insurance policy, stuff like that.
Mala: Yeah.
Mala: Not yet so much for program communication that goes out.
Mala: That is still largely SMS, but I do believe that it will shift.
Mala: Soon it will shift to WhatsApp as well.
Paula: Yeah, yeah.
Paula: And it’ll be interesting to see because again, I know we were comparing notes on a personal basis and you know, some people find SMS more intrusive, some people find WhatsApp more intrusive.
Mala: So I’m a diehard WhatsApp user.
Mala: So I would find it intrusive if I got program communication on WhatsApp.
Mala: I do remember you telling me that you are a SMS user and you find that intrusive.
Paula: Totally, totally, yeah.
Paula: It’s funny, it is funny, yeah.
Paula: And I guess it is up to, you know, as again, technology evolves, to give the member the control to basically opt out of maybe SMS and opt for something else.
Paula: So please God, all of our technology partners are building that.
Paula: I’ve certainly seen it in a couple of places.
Paula: So listen, Mala, we’ve covered a load in terms of statistics.
Paula: Again, I want to nominate you to be our loyalty statistics guru on a regular basis if you have the time and opportunity.
Mala: And the data, and the data, Paula.
Mala: I have to be able to get the data, but I’m sure I’m sure going to try.
Paula: I really think somebody needs to lead the charge.
Paula: And I think if you’ve set yourself up now in a perfect position, is there anything else Mala that you wanted to mention before we finish the show?
Mala: Yeah, so there’s just one last thing I want to kind of round up with.
Mala: So, you know, there were a lot of reactions to this post because my post first talked about largely the transactional or the quantitative metrics.
Mala: Okay, and then there were a lot of comments which came and said, what about engagement?
Mala: What about Net Promoter Scope?
Mala: You know, so the softer measures, yeah?
Paula: Yeah.
Mala: And then there were counter views to that, saying that, you know, engagement is all very well, but you know, what if all members are engaged and they are not transacting, what then?
Mala: So I do believe that it’s hard to kind of exclude one or the other.
Mala: And if you’re to truly judge the effectiveness of a program and its impact, you need to look at a set of key quantitative metrics that you’re tracking, and equally look at a set of qualitative metrics that will lead to the quantitative metrics.
Mala: So let’s say that you’re looking at member participation, you know, in terms of the events or whatever that you do, or you’re looking at member satisfaction or net promoter score, right?
Mala: And actually these qualitative metrics will, if a member is satisfied and he promotes you, it will invariably lead to better transactions.
Mala: So it’s important to track both set of metrics.
Mala: It’s like a balanced scorecard for a program and to see where you are on all of it.
Mala: It’s a wholesome, you know, evaluation program.
Paula: Yeah, yeah.
Paula: And that’s a really good point as well, because I know from time to time, we also get into debates around, you know, correlation and causation as well, in terms of, you know, I suppose, really understanding what we can attribute to a loyalty program versus what might have happened anyway, just by virtue of the fact that the member has, you know, wants to shop regularly and self-select and join your program.
Mala: Yes, Paula, this was actually a very valuable comment you made on my post, yeah?
Mala: And yes, this is the inherent flaw, so to speak, in measuring the impact of loyalty programs, that the program is relevant to high performers anyway, so they would enroll, so the metrics would anyway be higher.
Mala: But in order to measure the impact, therefore, I’m not going to get into the methods, but it’s important to neutralize the, you know, the effect of self-selection.
Mala: So you would have to use comparable cohorts and stuff of non-members, members, pre and post metrics kind of thing to ensure that you’re, I don’t think you can eliminate it altogether, but you’re at least minimizing the impact of self-selection.
Paula: Absolutely.
Mala: Or the bias caused by self-selection.
Paula: Absolutely.
Paula: And I think as well, you know, the first time I was asked the question, again, I hadn’t really thought that far ahead myself.
Paula: Somebody kind of asked me about it and I didn’t have a good answer.
Paula: So again, with help from the likes of yourselves, you know, you can literally prepare people to say, yes, we acknowledge this is, you know, a flaw in the system, but you know, we manage it as best we can.
Paula: And again, then internal stakeholders in the client have an answer prepared if somebody does challenge them.
Paula: Yes, yes.
Paula: Wonderful, brilliant.
Paula: Well, listen Mala, it’s been a fascinating conversation.
Paula: I’ve no doubt we’ll be talking regularly together in the future.
Paula: As I said, I’m gonna make sure to link to Strategic Caravan in the show notes, link to your own profile and link to the particular post with all of these key statistics.
Paula: So all of the people listening to the show can really benefit from your own credible expertise.
Paula: So I just want to say from Let’s Talk Loyalty to Mala Raj, the managing partner of Strategic Caravan in India.
Paula: Thank you so much from Let’s Talk Loyalty.
Mala: Thank you, Paula.
Mala: This has been a delight.
Mala: I enjoyed the conversation.
Paula: This show is sponsored by The Wise Marketeer, the world’s most popular source of loyalty marketing news, insights and research.
Paula: The Wise Marketeer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 170 executives in 20 countries as certified loyalty marketing professionals.
Paula: For more information, check out thewisemarketeer.com and loyaltyacademy.org.
Paula: Thanks so much for listening to this episode of Let’s Talk Loyalty.
Paula: If you’d like me to send you the latest show each week, simply sign up for the show newsletter on letstalkloyalty.com and I’ll send you the latest episode to your inbox every Thursday.
Paula: Or just head to your favorite podcast platform.
Paula: Find Let’s Talk Loyalty and subscribe.
Paula: Of course, I’d love your feedback and reviews and thanks again for supporting the show.
Publisher’s Note:
This transcript was generated with the help of AI and podcast publishing tools such as Apple Podcast’s transcription service.
In the interests of efficiency and minimising our costs as a small business, it has not been checked by a human.
If you have any comments or concerns about the accuracy of this content, please do contact us for changes or corrections.
