Loyalty programmes there and here

I’ve been reading and thinking about loyalty programmes for a while now, especially since we decided to go the programme way, and comparing the situation in White Men’s Lands to that here. Three things stand out in retail:

1. LARGE BUDGETS: Before loyalty programmes came, retailers there spend a great deal of money on non-targeted communication. They’d send out flyers every week, issue press ads all the time, and advertise heavily on TV during festivals. The marketing departments had substantial budgets. The first task of the loyalty programmes was ensuring these budgets were spent better.

Retailers in our country don’t come anywhere near in ad spends. So the programme funds come out of profits instead of existing budgets. This is a huge problem.

2. LARGE NUMBERS: There is not one FMCG (e.g., groceries, medicines, video rental) retail chain in India whose number of stores runs into triple figures. Only a few reach double figures, though none cross 50. (Brands like Bata and Titan have large numbers of stores, but few of these are big. They are not into fast moving items either.) In WML, many chains have many stores. The programmes’ fixed costs are sort of spread out.

Also, with millions of members, and tens of millions of transactions, involving thousands of SKUs (even our Food Bazaars don’t seem to have a thousand SKUs) they can slice and dice data in many meaningful ways. We can’t. The segments we get are so small that almost all observations are unreliable. (That is not to say that the data collected here isn’t an enormous improvement over flying blind.)

Thirdly, retailers there can combine their customers’ data with (demographic and credit rating) data from other sources to enrich their databases. We can’t.

Fourth, they can do nationwide tie-ups with other national chains. Manufacturers are eager to be useful too, because each deal takes care of tons of sales.

3. LARGE TEAMS: In all the cases I’ve read about, programmes there are largely managed and maintained by large in-house teams. External agencies are involved as consultants and for creative. Here we have only a CRM or DM manager, if that.

Consumer habits there may be poles apart from ours, but that’s not apparent in the material with me.

What do you think?