Loyalty programs can play a crucial role in creating brand loyalty and by using new-age technology solutions in automating rewards, holistic benefits can be realized in the FMCG space.
Valued at $230 Bn in 2023, the fast-moving consumer goods (FMCG) segment is estimated to grow by 27.9% CAGR to reach $1288 Bn by 2030.[1] There are enormous success possibilities and with demographic dividend, booming economy, and lifestyle upgradations on its side, the India FMCG sector can script a new success story in the coming years. That said, the industry is not without its share of challenges. Flickering choices, scattered customer loyalty, and switching behaviours are significant issues the sector is contending with. In fact, when it comes to the overall churn rate of customers, the FMCG sector is among the worst-impacted sectors of the economy.
83% of retailers accept that being a part of a loyalty program influences them to buy from the same brand. It means that loyalty programs are great for boosting customer retention and their effectiveness in converting casual buyers into loyal customers is well known in the FMCG industry. These programs are wonderful for attracting new customers, strengthening brand loyalty, and achieving superior growth and profitability. However, all loyalty programs are not created equal and differ in their ability to bring customers to the fold. Especially, firms that lack automation in their loyalty reward systems often suffer from low customer engagement, lack of personalization, and high processing costs incurred in running loyalty costs. The inability of the companies to digitalize their loyalty programs also leads to poor customer experience, shaky brand reputation, and failure to capitalize on emerging opportunities in the business space.
Digitalising Rewards: Automated Loyalty Programs
In comparison to the conventional approach, digitalized loyalty programs with automated reward features are the most effective for keeping customers engaged and maintaining long-term relationships with them. The Digital Loyalty program is great for offering personalized experiences and by automating the rewards, these play a crucial role in enhancing the lifetime value of customers besides increasing their average order value over time. Digitalising loyalty programs also plays a crucial role in driving repeat purchases and strengthening the commitment of customers to brands.
Automating Loyalty Programs: Key Technologies
a) Artificial Intelligence (AI): The power of AI can equip FMCG firms with actionable insights into customers’ preferences and purchase behaviours. This knowledge, in turn, helps in creating personalized loyalty programs with reward points that can be redeemed automatically at regular intervals.
b) Gamification: Gamification is another wonderful technology that can help in the automated redemption of loyalty points. It is also a great technique for getting insights into desirable features that can be incorporated to make loyalty programs even more interesting and relevant to customers.
c) Retailer Gifting Software: Specifically programmed to incentivise consumers on their purchasing patterns, retailer gifting software automatically notifies FMCG firms of consumers who are eligible for the gifts and rewards. The software is specifically built to increase loyalty, enhance order value, and encourage repeat purchases among others.
QR Code Loyalty Program: Future of Automated Rewards
QR code-based loyalty solutions can automatically track and incentivize customers for their purchasing patterns. The technology allows customers to scan QR codes to accumulate points, unlock rewards, and avail discounts in a fully automated manner. The technology is equally rewarding for firms as each scan offers them valuable insights into consumer spending habits and buying behaviour. These inputs, in turn, help firms tailor their loyalty programs to the specific preferences of different customer segments.
Conclusion
Automating Loyalty programs is the need of the hour and by using QR-based solutions for loyalty programs, holistic benefits can be delivered to all stakeholders in the FMCG business ecosystem. The QR Code-based automated loyalty reward systems are quite popular among Gen Z and although some customers might have skepticism of the technology, an increasing number of consumers are embracing it wholeheartedly. QR loyalty solutions are also a good way to keep up with modern-day technology advancements and by automating the reward system, these are helping FMCG firms to decrease customer churn, strengthen brand loyalty, and strike a stronger bond with customers.
Author is Founder and CEO, Genefied