Here's how the brands are using 'payback' offers to improve loyalty

Indian consumers are flooded with ‘payback’ offers, whether they are buying online or offline. Brands across categories are using payback as a tool to encourage consumers to shop more as they reward them with points, coupons and promo codes. With so much on offer — the big question is what sort of leverage do brick and mortar and online businesses enjoy while using payback as a tool to onboard new consumers and engage the existing ones. With me-too offers galore, it would be interesting to look at the dos and don’ts of a rewarding and engaging payback strategy.

“As brands build a payback programme, they must take care that there is an element of personalisation in all the offerings. They have to ensure that they offer the right incentive, at the right time, promoting the behavioural shift that will create a virtuous cycle of consumers going for more, thus promoting loyalty among them,” says Rajesh Magow, co-founder and chief executive officer, MakeMyTrip (MMT).

To drive loyalty, MMT in August 2017 introduced a revamped loyalty programme called MMT Black wherein enrolled members would earn wallet credits based on how much money they spend with the company. The initiative is helping the online aggregator register greater repeat rates from its loyal group of customers, improved net promoter score and meaningful top line contribution from these loyal customers. MMT has also introduced a paid membership programme (subscription-based) called MMT Double Black, aimed at acquiring new, medium to high frequency travelers.  Magow says MMT has seen members contribute up to 20 per cent of the company’s top-line with transaction repeat rates that are two times greater than non-Black members.  

Irrespective of the industry type, the truth is that competition for the consumers’ wallet, smartphone space and genuine brand loyalty is getting more intense, so it is imperative for businesses to evolve the value construct of their payback and loyalty programmes to fundamentally change user behaviour. The  idea is to ring fence their valued customers through easy incentives.

For instance, AirAsia has a Freedom Flyer programme wherein its big loyalty members can earn points when they make a purchase on the company website, be it for flights or any ancillary products. Big Loyalty members can also accumulate points when they buy products or services of its designated partners. These accumulated points can be redeemed for free flights. 

According to Rajkumar Paranthaman, head of marketing, AirAsia India, “Being in the service industry, it is extremely important to build a loyal customer base  to be able to win them over consistently and drive brand advocacy. Offers, discounts, points systems also help build a strong  base of customer data, which in turn helps us provide relevant communication.” It also helps the airline reduce the cost of acquisition in the long term and pass on the benefit to customers, effectively lowering the cost of air travel, says Paranthaman.

It is a win-win for both brands and customers. With attractive payback offers, customers get instant gratification and a enjoy the tangible benefit. Brands can collate quality customer data ensuring higher stickiness and advocacy. Integration with social media for easy share and referral and easy point acquisition are other popular tools used by brands. For AirAisa’s Paranthaman technical integration is a critical focus area in  designing a payback scheme. It is also important  for brands to ensure customer data protection while creating such programmes. 

Future Group owned-Big Bazaar credits cashback amounts to targeted customers account on the first of every month. The amount varies from Rs 100 to Rs 300 and customers can use it for shopping throughout the month. The cashback is offered as an incentive and is targeted at customers who are not too familiar or close to the retail format. The cashback woos them to come and experience different product categories at Big Bazaar stores. 

Vinay Bhatia, CEO, group loyalty and analytics, Future Group, says that in the short-term a company or business has to bear the cost of cashbacks but in the long-term and if targeted well, it can serve as a great tool to create a new buying habit among consumers weaning them away from competitors. 

Rijish Raghavan, chief operating officer, PAYBACK India, says, “A payback strategy should essentially make every step/stage in the purchasing cycle of a customer rewarding. Most importantly, for a payback strategy to be successful, it must be contextualised and personalised for individual  customers. Buyers are not out there to just collect points. The offers have to result in more visits from shoppers to the website or physical shopping space and help generate more business from each of the customer.”