ROYAL POINTS ON LOYALTY PROGRAMMES

Chennaibest speaks to Farooq Shabvani, Chief Operating Officer, Royal Points, about loyalty programmes for customers, employees and business partners.

Citibank has been a pioneer in loyalty programmes. Its something like, each time you use the card, you win some reward points. These reward points, you can redeem, at a later stage, for some product or service. Internationally, these programmes have been very successful, but in India, they are limited to large companies, as very few companies have the resources to invest in the infrastructure required to keep track of these loyalty programmes. Also, as this is not the core/focus area, the Company may not want to invest in these programmes. This is where Royal Points comes in. It manages the backend of the whole process. Royal Points not only gives away these reward points, it also runs these loyalty programmes for various Companies; its other activities include liaisoning with the merchandiser and also stocking  products that are given away in exchange for the reward points.

The core areas that Royal Points focuses on are customer loyalty, employee retention and partner development, based on the tenets that keeping customers is profitable and costs only one-tenth the cost of acquiring new customers. Retaining customers is most important. Everybody likes free rewards. Here we are typically rewarding them for doing everyday things like shopping, dining out,  logging on to a particular site or doing some e-shopping etc. In the process s/he collects some points, which s/he redeems to choose from an array of products and services that we have lined up for him/her.

That’s true. But the whole thing hinges on what a particular portal wants to incentive. Which are the activities it wants to reward? The incentives are lended to many different activities like, first time use, using the email or e-shopping. The first time you visit the site you are rewarded, then if you use the email you are rewarded further, and if you use both the email and the e-shopping facility, you earn more reward points, than you will, if you perform only one of the activities.

Employees are rewarded points as an incentive and once they acquire a significant number of points, they choose from various products. For example, on each Diwali, typically employees are given a particular gift, which is common for all. Instead, if they are given these reward points, they can redeem them to get some product/service of their choice. These reward points cannot however replace cash bonuses, but they are good incentives. These reward points can typically be given for the sales staff or customer service staff. It can be related to stuff like, right from, who picked up the phone before the third ring, to who has done a good follow-up job, to who has closed a sale very fast in the sales team.

For most employees it’s the recognition that counts more than the monetary benefits. When they are recognised for doing their job well, it gives them immense satisfaction. Also these kind of incentive schemes add some excitement to the job, particularly when good performance is recognised on a weekly basis.

The companies where we have loyalty programmes in place are the best judge. They tell us whether its working or not. Recently we introduced a loyalty programme at JM Morgan Stanley, under which each time an employee sells a fixed deposit, he will earn some Royal Points. These points are collected for a period while the programme lasts and redeemed for a host of products. From what we have heard, it seems to be working well.

Direct mail and email are targeted at different audience. The online bit seems to be more effective and easier to track than direct mail. Also when it is via email, the person using the service can keep track of how he or she is performing. The messaging has to be different as they are targeting different audiences. The online version has to be more catchy, crisp and to the point. As people do not really have the patience to go through a lengthy mail online. Also there is the constraint of download time on the net, and you cannot use many pictures. While using direct mail, you have the advantage of making it more visual.

Once the customer earns enough points and comes to the point of redeeming his or her points, the information is transferred to the Royal Points website. Then we ship it out to him. When the customer does not use email, we have to maintain records of the whole process offline.

The Royal Points Loyalty programme, which we run through our website depends on the various types of companies and their products. The margin can be anywhere between 30 to 40%. Where Royal Points manages these loyalty programmes for other companies, the revenue is the cost of operations plus managing fee.

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