From Ola to Zomato, brands are rethinking old school loyalty programmes

In an age where brand loyalty is considered to be a dying ethic and brands see their relationship with consumers as a series of short-term engagements, old-school loyalty programmes are making a comeback, albeit in a new avatar. Be it Bookmyshow, Zomato, Ola, Uber, Swiggy and several other digital brands, subscription-led relationships are driving a new form of fidelity between customers and brands.  

A host of schemes abound across the universe of aggregator apps, bundled together under the common moniker of subscription schemes, whose aim is to lock customers for repeat transactions and long term use. And the numbers are growing by the day, as customers and brands find value in the engagement.

For Zomato, a special membership programme called Zomato Gold offers discounts on dining out and Piggybank rewards customers eating in. For both programmes, the aggregator works with a band of partner restaurants. The success of the engagement model depends as much on the value it drives for consumers as it does for the partner restaurants.

Rival Swiggy has Swiggy Super that offers perks on every purchase, while Bookmyshow has Filmypass that discounts the purchase of tickets and provides access to special experiences. Both Ola and Uber have ride passes and membership clubs.

“Traditional notions of loyalty are eroding as we live in a service-driven economy where access is more important than ownership. Brands are winning by offering frictionless ways to leverage their products and services based on the personalised needs of their customers,” says Ashish Mishra, MD, Interbrand India.

Customers have bought into subscription schemes such as Zomato Gold

The change in consumer behaviour, where decisions are based on experiences and not products or services, has helped popularise such schemes. In 2018, 29 per cent of the total value of the top 100 brands ranked by Interbrand in Best Global Brands was in subscription-based businesses, versus 18 per cent in 2009.

The programmes, besides providing an assured base of users, help strengthen the networks being leveraged on the aggregator’s platform. Zomato Gold, which claims to be the fastest growing subscription programme, says it is helping partner restaurants while driving affordability for users. “Gold helps drive discoverability and increases restaurant footfall. According to our findings, 80 per cent of users discover a restaurant for the first time using Zomato Gold, giving them an edge over non-Gold restaurants,” said a Zomato spokesperson.

Loyalty programmes for aggregators trump those by single brand retailers. “Aggregators offer consumers a variety of services and a one-stop view on the options available. They are able to attract consumers by ensuring speed of delivery, deep discounting, better offers and empowering them to do a comparative analysis with the available options,” said Piyali Konar, executive vice president, Insights Division, Kantar.  

In some instances, the subscription schemes also bring about behavioural changes. For Bookmyshow, for instance “In just over two months since its launch, around 90 per cent of customers have increased the frequency of their transactions. The Filmy Pass has also helped add new users, said Ashish Saksena, COO, Cinemas, BookMyShow.

New consumer attitudes and the demand for curated experiences form the pivot of the new subscription economy, says Mishra. Plus the emergence of review-led consumption behaviour adds to the popularity of such models, showed data by Kantar IMRB.  

Many brands have added more layers and features to original subscription schemes. It is important to keep refreshing the promise because the millennial consumer is easily fatigued with a brand, said everyone. Hence the constant tweaks and shifts in the schemes in play.

Subscription models have helped aggregators who worked on wafer thin margins find a way to enhance the value per transaction too, say experts. “After thinking of various possibilities and scenarios, we concluded that there are far better ways to improve the margin profile of our food delivery business than taking the irreversible step of competing with our own partners (restaurant owners). In the long term, we stay committed to not competing with restaurants—and we will help the best food operators build larger businesses,” said Zomato’s founder and chief executive Deepinder Goyal in the company’s annual report.