Redemption season

When slowdown strikes, does redemption behaviour change? Do customers burn more points from their loyalty programmes — especially when festive shopping is in full swing and coincides with a downturn?

When Payback India, India’s largest multibrand loyalty programme, analysed data on redemptions during the last couple of months, it certainly found a change from the past.

There has been more redemption of Payback points against grocery invoicing at modern trade outlet Big Bazaar, for instance. “This is a time of low confidence when consumers are conserving resources,” says Ramakant Khandelwal, CMO, Payback India. He also says consumers are increasingly cashing in points to buy vouchers from brands. On the Payback platform, you can redeem your points against vouchers from 100-plus brands, including Flipkart, Amazon, Myntra, Bata and Levi’s. “We are getting transactions upwards of ₹15 crore per month on vouchers,” he says, describing how this has doubled over last year, and peaked just before the big sales on e-commerce platforms.

This, says Khandelwal, signals an opportunity for brands. It is a well-known fact that when customers have a voucher for ₹100, they could shop up to eight times the redemption value. For brands, this could be a great strategy to drive more sales at times like these, he says.

Two kinds of consumers

Loyalty expert Ajay Kelkar, co-founder Hansa Cequity, however, divides consumers into two buckets — the experience seeker and the bargain hunter. He feels the marketing challenge for brands will be to stimulate the non-price sensitive consumer persona with triggers that are of value to them.

“A loyalty programme should have a mix of price & experience-based rewards that allow them to trigger varying consumer personas. Analytics today can be sophisticated enough to help profile different personas,” he says. However, he does say that redeemers will end up having a higher ticket size.

A Redseer Consulting report on the big festive season sale by e-commerce majors like Flipkart, Amazon and Snapdeal says there was a 30 per cent increase in Gross Merchandise Value this year as compared to 2018. Khandelwal says that on the Payback platform it has seen GMV increase four times more than last year — a clear indication of the growth in redemptions.

Khandelwal says that the humongous amount of data generated by the way consumers are redeeming is helping them re-purpose rewards. “We keep looking at what customers are doing currently to make the rewards more meaningful,” he says.

Very soon, Payback will be announcing a partnership with one of the largest OTT platforms, he says. Also, seeing the high interest in food delivery services, Payback is working out a programme. Already, Swiggy is an affiliate platform, but currently customers can only earn on the platform, not redeem.

If we look at today’s consumer life, then cab hailing is another category where customers may like to redeem points, he says. Payback currently offers vouchers for Uber, “but there is more we are looking at doing in the space,” he says.