DMAi 2012: Similarity of loyalty programmes can hamper customer retention

This was the idea that resonated at a panel discussion at the DMAi Conclave 2012, with experts emphasising on the need to bring in innovations into direct marketing techniques to drive customer loyalty.

On Day Two of the Direct Marketing Association India (DMAi) Conclave 2012, at a panel discussion titled 'Dam the Customer', panellists deliberated on the challenges faced by marketers to retain customers and their loyalty. The panel comprised Sandip Tarkas, president, customer strategy, Future Group, CEO, Future Media, and CEO, T24 India; Ramesh Iyengar, managing director, Select Direct; Ajay Kakar, CMO, financial services, Aditya Birla Group; and S Swaminathan, CEO, Hansa Cequity. The discussion was moderated by Rakhshin Patel, partner, M&C Saatchi.

Kick starting the discussion, Patel threw the floor open for the panel's view on the critical reasons plaguing customer relationship management (CRM). Kakar was of the opinion that the two reasons why brands lose out on customer loyalty are lack of awareness and short-sightedness on the part of marketers. "We are in a constant race to add new customers. But we forget the existing ones. This oversight on our part is one of the major reasons why we lose out on customers," he said.

Tarkas pitched in with a view that the customer loyalty programmes of most brands are transactional. He said, "A majority of customer loyalty programmes in India are transactional in nature. They offer a customer points if they do business worth a set amount. And hence, these programmes are not designed to build loyalty. Instead, they drive disloyalty. As marketers, it is our responsibility to devise plans that apart from bringing in new customers and retaining old ones, do not add to the cost incurred by the brand."

The panel also highlighted the importance of data analytics and metrics to measure customer loyalty programmes. Tarkas said that the data that is made available is not sifted and delved into properly and only superficial analysis is conducted. This results in less than optimum customer relationship management solutions being employed by brands.

Swaminathan rued the lack of proper metrics and said that customer retention is not looked at an enterprise level. He said, "The major issue these days is that we do not have a uniform definition of customer retention and loyalty. Hence, our programmes fall short of performing to the best of their abilities."

Iyengar was of the view that customer loyalty should not be looked at as an absolute. He said, "We are living in the times of 'elasticity'. The customer is in a harem where he is spoilt for choices. What you do, do differently. We should think of customers as flesh and blood."

The panel also touched upon the issue of innovation in direct marketing techniques to retain customer loyalty. Patel lamented that most loyalty programmes designed to retain customers are same and questioned whether the sameness is the reason for the increasing rate at which customers turn to another programme. Swaminathan said that the key is not to treat customers as commodities. He said, "All the data that is made available should be properly studied and analysed according to a uniform metric to decide what each customer wants. Apart from addressing specific issues of individuals, it will also break the clutter and usher in innovation."