Indians are some of the most demanding, but loyal, customers in the world, according to new research today launched by Collinson Group. 83% expect high quality, consistent customer service however they interact with a brand, and 81% expect brands to be easy to do business with. This compares with the global averages of 69% in both categories. Once loyal to a brand, India consumers become dedicated customers. 81% agree that programmes make them purchase more, and 82% would recommend a brand that offered a loyalty programme. This is also well above the global averages of 66% and 65% respectively.
Brands, however, are failing to tap into this loyal behaviour. In India, there has been a 24% drop in membership of loyalty programmes among the affluent middle class since 2014. Collinson Group surveyed attitudes to programmes run by supermarket and grocery stores, airlines, credit card providers, retailers, hotels, telecom and media companies, coffee shops, and banking. Membership was down across all industries:
47% hold frequent flyer memberships, down from 71%
63% participate in credit card programmes, down from 69%
65% are members of supermarket loyalty programmes, down from 77%
Retailers also performed poorly, with a drop in members to 59% from 75%
Telecoms and media providers were the only sector to enjoy a rise in membership, up 2% to 47%
“This is a critical wake-up call to brands using points-based programmes offering only generic rewards. Given the importance of affluent middle class consumers on the fortunes of companies, brands must lift their game and rethink how they recognise, engage and reward customers,” said Anurag Saxena, India country manager, ICLP, owned by Collinson Group. “Despite lower membership numbers, the results show that personalised and relevant loyalty initiatives do positively influence consumer behaviour. Three quarters of respondents who are actively engaged in a loyalty programme said it encouraged them to spend more.”
Collinson Group polled 6,125 of the top 10-15% of earners from Australia, Brazil, China, France, Hong Kong, India, Singapore, the United Kingdom, the United States of America and the United Arab Emirates.
Globally, the affluent middle class is also now less likely to repeat purchase, recommend a brand to friends or refrain from switching to a competitor as a result of generic loyalty programmes. India, Brazil and China however buck this trend, suggesting these societies are yet to experience the frustration of uninspiring programmes seen in more mature Western markets.
When asked what would encourage higher and more frequent spending with their preferred brands, 42% of Indian respondents requested a loyalty programme, and 77% valued the flexibility to choose the rewards and benefits they are offered.
“There is a clear appetite for loyalty and customer engagement initiatives, but consumers are turning their backs on programmes that no longer resonate with them. The affluent middle class value spending time with, and providing for, their families, as well as saving for the future. These rank far higher than driving a good car or going on a luxury holiday. Brands should seek to tap into what motivates their customers, instead of reaching for only discounts or material goods as rewards,” continued Anurag Saxena. “Brands that are not innovating and addressing evolving customer expectation will simply be left behind.”
The financial services opportunity
Customer expectation is highest in financial services, with four out of five (79%) of affluent Indian middle class customers expecting their bank to reward them for their loyalty. Again, India is the most demanding country, 14% higher than the global average of 65%. Retail banks and credit card providers can meet this demand by developing innovative loyalty programmes that draw on the wealth of customer data held on record.
Of all the industries surveyed, the financial services sector is best placed to succeed, as 77% of Indian respondents agree that their bank knows and understands their needs. This 12% increase since 2014 suggests the sector is learning the value of a relevant and personal customer experience. India also beats the global average of 49% suggesting a forward looking sector.
Further, Indian banking loyalty programmes specifically were found to encourage 95% of members to spend more (82% globally), while credit card initiatives positively influenced 85% of respondents (79% globally). The research also uncovered increases in the levels of trust in financial services’ ability to manage personal data (+9%), and faith in institutions to act in their customers’ best interests (+9%).
The financial services sector must however be aware of challenges to their business in the form of new fintech start-ups offering services that impact revenues, as well as the reduction in interchange fees which have traditionally been used to fund loyalty programmes.
To succeed, financial services and other industries must:
Recognise the value of relevance – The abundance of generic programmes has diluted the impact of loyalty programmes causing consumer fatigue. Brands need to balance programme objectives for motivating short-term behaviour and driving deeper engagement for long-term loyalty. Personalisation and breadth of rewards and benefits is key for brands to remain relevant.
Address how loyalty programmes are funded – For financial services, the loss in interchange fees can be mitigated by increasing fees in other areas of the business, developing their own loyalty programmes, increasing collaboration with merchant funded programmes, and building bank-wide loyalty through account add-ons like insurance.
Embrace digital – The smartphone is becoming the consumer device of choice for many brand interactions. Indeed, 84% of Indian respondents make digital payments whenever possible, and 80% agree that online banking is incredibly important to them. Incorporating loyalty programmes and initiatives into payment card and mobile ecosystems will drive engagement and increase consumer brand affinity.
Move beyond transactional rewards – Although discounts and cash-back provide instant gratification, they do little to drive long- term loyalty. Brands should instead get to the heart of what matters to their customers. For the affluent middle class, this is often their friends and families, so rewards should be more experiential, lifestyle and life-goal oriented.