Saturday, January 1, 2011

Low Price Brands and Loyalty?

Should a low cost airline have a loyalty programme?
Should a budget retailer offer loyalty points?
Should a brand assuring no frills service and honest value for money fritter away rewards?

An often quoted stand, in quite passageways of course is.... what would our customers think of us if we start doling out reward points? Would we be sending out the right message? Would they start thinking that we can in fact offer them greater discounts? Wouldn't they prefer that they receive an upfront cash discount instead of some fancy points?

Some perspectives..
1. You are in the business of making profits and your customers know that! So...don't be shy!
2. My customer is price sensitive!..He switches for purchase decision for a few cents!...Undoubtedly, and she would remain so. It's how you play it when the playing field is at par
3. Too much liability!...A liability is created when you don't use the asset.
4. Too expensive!.....This is a matter of execution. It's as risky or expensive as above the line advertising. It's how you can measure the impact and correlate it back to the topline and perhaps even bottomline.

The case for loyalty for brands operating in the low cost consumer domain is possibly as difficult as for other brands.

It's the quest for excellence and the undying passion for capturing market-share that would possibly lead these brands on the journey to better understanding their customers, and hence their loyalty journey.

Your views?


  1. Value-conscious consumers rarely use price as the only decision parameter in the overall brand experience. A "budget" brand has to define clearly what it stands for, and its source of unique, sustainable value. Consider:

    > 99% on-time even for non-metro airports, with convenient same-day returns so you don't have to spend on overnight stay: the number one criterion for a budget business traveler.

    > We know your shopping basket, we know when you shop, and will deliver when you're home. Just what the doc ordered for busy DINK couples. So what if I don't get that 1 kg of sugar free?

    > We'll sign you up for free driving lessons because this is your first car.

    Mere points-based loyalty is so commoditised! Excellence, not raw marketshare has to be a driving force.

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