Powered by Confidential and proprietary © 1Lattice November 2024 Foreword Praneet Singhal Abhishek Maiti Director, Industrial Goods & Services Director, 1Alpha and Technology & Internet Loyalty programs have become an essential tool for businesses across sectors to foster customer engagement and retention. From retail to financial services, adopting these programs is increasingly critical in maintaining long-term relationships with customers. As more Indian companies seek to differentiate themselves, the landscape of loyalty programs has evolved from traditional points-based systems to more innovative and hybrid models. Businesses are now leveraging partnerships, such as co-branded cards, to offer cross-sector benefits that enhance customer value. For instance, financial services frequently collaborate with retail and travel brands, enabling customers to enjoy additional rewards and discounts during everyday transactions. Interestingly, even sectors like automotive, and media & entertainment are launching loyalty programs, catering to the specific needs of their customer bases. Automakers are focusing on long-term customer loyalty by offering exclusive membership benefits for vehicle services and purchases, while media companies are enhancing engagement by rewarding content consumption and interactions on their platforms. This report by 1Lattice aims to illuminate the key trends shaping the loyalty landscape across Indian industries. We believe this analysis offers valuable insights that can spark productive dialogue with partners across various sectors. As the loyalty program ecosystem continues to evolve, we look forward to actively engaging in discussions, exchanging perspectives, and delving deeper into these developments. Executive summary • Brands implement loyalty programs to retain customers, encourage word-of-mouth referrals, and gather data for personalized marketing • Commonly used types of loyalty models are point-based, tiered, partnership-based, subscription-based, gamification and value-based programs • Loyalty programs are present across multiple sectors, including retail, hospitality, financial services, automotive, digital platforms, and entertainment - Sectors like automotive, and entertainment & media are launching loyalty programs, catering to the specific needs of their customer bases • Incidence rates are high in consumer & retail goods, followed by hospitality & travel and financial services - High incidence of tier-based & points-based loyalty programs in hospitality & travel and financial services respectively - Financial services partner with retail and travel brands for their loyalty programs frequently • Points-based programs are preferred due to their simplicity and flexibility in encouraging repeat purchases Product in Spotlight: 1nsights Powered by 1nsights, our latest report, "Decoding India's Loyalty Programs," offers a comprehensive overview of the current landscape of loyalty initiatives in India. It categorizes various programs and provides an in-depth analysis of industry trends, competitive landscape, and consumer engagement metrics. 1nsights, our cutting-edge intelligence product that drives data-driven decisions offers unparalleled access to comprehensive data, analysis, and forecasts that will guide your strategy in the industrial automation sector. Discover how 1nsights not only informs but transforms your understanding of the market landscape, providing you with the knowledge to stay ahead of the curve AGENDA Introducing loyalty programs 01 Sector-wise adoption of loyalty programs 02 Types of loyalty programs Types of loyalty programs (1/2) Tier-based Point-based Partnership-based • Tiered loyalty programs offer different rewards based on milestones • Customers earn points • Offers shared rewards that members cross with each in-store or across multiple online purchase businesses to boost user • These milestones are according to the retention and measured in monetary purchase amount engagement terms; the more a member spends, higher • Points can be redeemed • Pooling resources allows the tier they enter for rewards such as partners to provide more discounts or vouchers valuable incentives • Myntra Insider assigns tiers ( Select, Elite, Icon ) based • Customers can earn • Zillion lets customers earn on purchase history Flipkart's Super Coins by and redeem points for placing orders, writing • Based on tier, benefits rewards across partner reviews, and giving include points, free brands referrals shipping, early sale access, • Points can be redeemed and fashion advice • Points can be redeemed for rewards like discounts, for discounts on products vouchers, etc. Other brands and for free gifts First CitizenClub Other brands Other brands EDGE REWARDS 02 01 03 Note(s): The list of companies is illustrative © 1Lattice Source(s): Press releases, industry reports, company websites, 1Lattice analysis | 06 Types of loyalty programs Types of loyalty programs (2/2) Gamification Subscription-based Value-based • Allows users to play various games to earn • Charges customers a • Emphasizes on aligning points, vouchers, recurring fee for access with customers' values discounts , and more to exclusive benefits and rather than offering • Helps to attract rewards explicit rewards customers and increase • Benefits may include • With this program, an engagement discounts, early access organization pledges to to sales, special donate a portion of its products, and proceeds to one or more personalized services charities • Google Pay (GPay) has an in-built cricket game in • Zepto Pass membership • Shiksha by P&G improves their app where a user costs ~INR 99 per month education in India by can earn discount building and supporting vouchers for partner • It offers free delivery on schools brands on hitting sixes orders over INR 99 and • Customers support by discounts based on order buying specific P&G value products, with a portion of Other brands sales going to the cause Other brands Other brands 05 04 06 Note(s): The list of companies is illustrative Source(s): Press releases, industry reports, company websites, 1Lattice analysis © 1Lattice | 07 Why customer loyalty programs? Why do brands introduce customer loyalty programs? Advantages of customer loyalty programs Customer Retention Data collection and analysis • Incentivize customers to return and make • Brands collect key purchase behavior repeat purchases to earn rewards data through loyalty programs • Help maintain a stable customer base • This is analyzed to tailor marketing and increase revenue from existing strategies customers Word-of-mouth marketing Cost efficiency • Satisfied loyalty program members are • Acquiring new customers can cost 4-5 likely to recommend the brand to others times more than retaining existing ones Increase in revenue • Loyalty program users usually spend more per transaction • Also help to increase total number of transactions Source(s): 1Lattice analysis © 1Lattice | 08 AGENDA Introducing loyalty programs 01 Sector-wise adoption of loyalty programs 02 Loyalty programs across sectors Brands across sectors have introduced loyalty programs to attract and retain users Digital Rewards | Services Entertainment Movie Media and Media Theatres Companies Restaurants Dining / cafes Food & Food & grocery Beverage delivery Travel Hospitality aggregators and Travel Hotels and Airlines resorts Tele Mobile and Mobile and internet communication internet services service providers Manufacturers Automotive Auto service providers Credit card Payment services Financial services Banks Insurance Online Marketplace Retail & FMCG & Consumer Stationery brands Supermarkets & First CitizenClub Department stores Fitness / wellnes centres Health & Health care providers Wellness Pharmacy Note(s): The list of companies is illustrative Source(s): Company websites, 1Lattice analysis © 1Lattice | 10 Top loyalty programs across sectors High incidence of tier-based and points-based loyalty programs in hospitality & travel and financial services respectively (1/2) Points Tier Subscription Gamification Partnership Type of loyalty program Department/ speciality stores Consumer Supermarkets & Retail goods (CR) Online marketplace Airlines Hotels & resorts Hospitality & travel Booking sites Travel aggregators Credit card Payment services Financial services Banks Insurance companies Restaurants/ cafes Food & Food & grocery beverage delivery Dining Health & Pharmacy & wellness fitness/wellness centers Digital services Media Entertainment companies & media Movie theatres Manufacturers Automotive & auto service providers Low High Note(s): For the purpose of this report, we did not consider value-based programs Source(s) : Company apps and websites, 1Lattice analysis © 1Lattice | 11 Reasons to prefer a particular loyalty program Easy setup of point-based rewards makes it the preferred mode of loyalty programs (2/2) Why some loyalty programs have higher prevalence in certain sectors? Point-based • High prevalence across sectors due to easy setup and enrolment • Effective for broad audience due to its simple interface Tier-based • Predominantly utilized by hospitality, travel, and credit card companies • Tailored services based on customers’ income and spending • Aids in retaining power users Subscription-based • Primarily found in food, beverage, health, and wellness companies • Helps boost revenue per user and create differentiation among competitors Partnership-based • Utilized across various sectors, with specific use cases in financial services • Financial companies often partner with brands to market their services Gamification-based • Commonly used in payment and entertainment sectors • Helps attract and retain user interest Note(s): For the purpose of this report, we did not consider value-based programs Source(s): Company apps and websites, 1Lattice analysis © 1Lattice | 12 Case study: Flipkart Plus Flipkart Plus program is a point and tier-based rewards ecosystem with 20M+ users Founded Headquarters No. of employees Valuation Revenue (FY23) 2007 Bengaluru 22K+ ~ US$ 6.8B ~ US$ 36B (Mar 2024) Flipkart Plus Aug 2018 Aug 2021 Aug 2023 Flipkart Plus 20M+ Plus Premium Flipkart Plus is the point and tier-based launched users launched multi-brand rewards ecosystem that enhances the loyalty program for Flipkart users What is the Flipkart Plus What impact does the program program? have on the company? Benefits offered • Allows one to earn additional SuperCoins on every purchase • Early access during sale events Enrolment process 20 million+ 30% of MAU* are • Flipkart Plus program has 2 tiers – users (Aug plus members a) Plus – Eligible by completing four 2021) (Aug 2021) transactions in the past 365 days b) Premium – Eligible by completing eight transactions in the past 365 days Earning SuperCoins criteria • By shopping on the Flipkart app. • Purchases on partner apps such as Myntra, Beneficial for Plus users transact 5X Cleartrip, and Shopsy are also eligible non-credit card more and spend 7X • Coins are valid for one year and COD customers more (Aug 2021) Spend options • Can be used to place orders, buy gift vouchers, redeem entertainment subscriptions, pay for bill payments, etc. • Super coin balance is combined with preferred payment method for purchases on Flipkart and other partner brands 58% users hail SuperCoins can be Other benefits from T2 & T3 cities spent across (June 2022) partner brands • Free shipping on select products • Other benefits as available on partner brands Source(s) : Media reports, company websites and application, 1Lattice analysis © 1Lattice | 13 Case study: Zepto Pass Zepto pass is a subscription-based loyalty program with 5M+ users Founded Headquarters No. of employees Valuation Revenue (FY23) 2021 Mumbai 1K+ ~ US$ 1.2B ~ US$ 3.6B(June 2024) Zepto Pass Zepto pass is their Subscription- based loyalty program that offers Feb 2024 Mar 2024 July 2024 additional benefits such as free Zepto pass 1M 5M+ deliveries and exclusive discounts, launched users users providing value to regular users What is the Zepto pass What impact does the program program? have on the company? Benefits offered • Free deliveries and discounts on high order values 1M+ users achieved in a week since launch (Mar 24) Enrolment process • By offering discounted introductory prices between INR 19-39 per month Membership validity 400% growth from March to July • Membership is currently set at one month • In pipeline to introduce multiple time-period constructs Target audience • Customers ordering regularly can benefit from free deliveries and discounts on 5M+ users (July 2024) high-order values Other benefits • Unlimited free deliveries for orders above INR 99 • Upto 20% discount on orders above INR 499 • 10% discount on fruits and vegetables Gradual increase in per-order value • 10% discount on Zepto Café by offering discounts above INR 499 Source(s) : Media reports, company websites and application, 1Lattice analysis © 1Lattice | 14 At 1Lattice, we address the problem statement and serve as the one-stop platform for all your knowledge and decision support requirements (1/2) Intelligence Input Validate Execute Measure & Insights • Market assessment, • PMF test / • Time motion • SOP / process TAM, SAM feasibility studies studies audits • GTM planning • B-plan validation • Brand health track studies • M&A landscape scan • Competitive landscape & scan • B2C Qualitative • Segmentation and • Campaign • Tracking panels research personas evaluation • NPS studies • B2C Quantitative • Customer journey • Customer research mapping retention and loyalty analyses • UI / UX testing • B2B Qualitative • Account potential • Customer • NPS health check research assessment retention analysis • Sales force • B2B Quantitative • Contract productivity research benchmarking • Retail store audits • Customer segment • Retail GTM Measurement Survey • Competitive • Benchmarking • Mystery shopping • Sentiment intelligence analysis • Listed • Channel tracks companiesscan • Brand tracks • Micro market • Concept Validation • Go to market • MM competitive assessment Approach intelligence • MM planning • Impact metrics • Funding GTM • Program • Impact tracking strategy management • Founder / • Reputation • Geo analysis • Leadership leadership diligence assessment assessment • Founder integrity DD • Employee NPS • IPO program • Industry and • Report key • IPO / QIP reports management company data messages • Claims data • Claim validation • Gap analysis • Certification / Attribution • ESG standards / • Stakeholder • Gap analysis • ESG assessment metrics feedback • Risk audits and tracking © 1Lattice | 15 At 1Lattice, we address the problem statement and serve as the one-stop platform for all your knowledge and decision support requirements (2/2) Input Validate Execute Measure Network • Expert interactions • Short-term • Expert access • Due diligence projects • Expert transcript • Fitment and library turnaround time • Enterprise surveys • Vendor/target search • 1Lattice panel • Cohort matching • Short-term • NPS health check powered by AI projects • Pre search QC • Sales force • Cohort based • Data scraping productivity outreach • Detailed QC • Retail store • B2B / B2C audits respondent • Retail Survey search and DIY (RMS) engagement • Capability • Globally valid • Compliance • Compliance assessment certification training academy certification • Skill matrix • Ongoing • Sales & soft skills • L&D feedback benchmarking engagement academy • Functional skills academy • Custom trainings • Coaches and mentoring network • Role transition support • Compliance • Engineering/ • Marketing / • Experts for mid management Technical Due creative hub term projects Diligence • Sales hub • Fractional CXOs • Analyst hub • Analysts on demand • Talent access • Outplacement • Leadership hiring • Reference checks Support • Fitment and • Mid-Level hiring turnaround time • Board placement • Internships • Cohort matching • Curated events • Roadshows • Cohort fitment • RSVP Management • Fundraising • Business - Channel campaigns generated appointments (distributors, franchisee, M&A targets, CXOs) • Associated reports' launch © 1Lattice | 16 We are here for you Let us know how we can meet your business requirement? Praneet Singhal Abhishek Maiti Director, Technology & Internet, Director, Industrial Goods & and 1Alpha Services E: praneet.singhal@1lattice.com E: abhishek.maiti@1lattice.com For media queries, Vaishnav Kumar Rai Manager – Corporate Communications please contact E: communications@1lattice.com M: +91 782 794 4925 www.1lattice.com Disclaimer: This material has been prepared by 1Lattice, which is the trade name of Lattice Technologies Private Limited (“1Lattice”, “we” or “our”) with the intent to showcase our capability and disseminate learnings to potential partners/clients. This material can be referred to by the readers on the internet but should be referenced to 1Lattice, if reused or adapted in any form, or medium and on any forum. The frameworks, approaches, tools, analysis and opinions are solely 1Lattice’s intellectual property and are a combination of the collection of the best data we could find publicly, and the 1Lattice team’s own experiences and observations. 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