Blending loyalty programs & business intelligence
Ever since the retail industry took off in India, companies in this vertical started focusing on how to get consumers to keep coming back. Loyalty programs were initiated, promising redeemable points for goods purchased. Taking this further are banks that are also linking customer spend to points that can be redeemed at different places — airline tickets, movies, restaurants, etc. Spending habits coupled with the card holder’s information provides a great deal of insight for companies who plan to launch targeted promotions. CXOtoday spoke to Bijaei Jayaraj, CEO, Loylty Rewardz Management Pvt. Ltd. about how business intelligence plays a part in such loyalty programs.
Loylty Rewardz is working with the State Bank Group on a loyalty program; what is the level of support provided to the bank?
We run ‘Freedom Rewards’ for State Bank Group customers in its entirety — from designing, conceptualizing, launching the program for the State Bank Group to managing the operations, creating partnerships, managing customer service, creating and managing the website where customers log in to redeem points. All of this is managed by Loylty Rewardz.
How many debit card holders does this program reach out to?
This is probably one of the largest programs in the world and definitely the largest debit card loyalty program in the world. Run for State Bank-approved debit card customers, the Freedom Rewards debit card loyalty program has 73 million consumers. When we started a year back, we started doing approximately 45,000 transactions. In a year’s time, this number more than doubled. Everyday we process about a 100,000 transactions.
This level of processing must give a lot of information about consumer behavior.
Yes, we get a deep insight into the consumer behavior of State Bank customers. It lets us figure out the transaction trends across the country, compare these trends across cities, etc. We can tell which consumers more than Rs 5,000 three times a month, and maybe he needs a holiday, so there are cross sell opportunities. Depending on the region, season, festival times, we can introduce offers for specific products so as to ensure that it gets picked up the consumer.
How is so much information being processed to give the analysis you want?
You always refer to the historical analysis on performance and which promotion was better. Today the change is using the intelligence that you have to influence the future. Usually promotions have a set of rules. LIDSys, which is rule-based, is the platform that we used to run this loyalty program.
The biggest challenge often is not configuring it but rolling it out because data tends to runs into terabytes. It may break, making things difficult. And that’s where this configuration comes handy. LIDSys allows me to configure campaigns, go back in time and find out how many people qualify for the promotion, etc. You can then take a snapshot of how the campaign performed after it is over and compare it with past campaigns. We are beginning to craft and configure promotional offers based on actual intelligence that we develop.
Given the large database of customers, how does one deal with data management and ensuring that the customer data not replicated?
When you are dealing with 73 million consumers, it is not easy. One of the biggest challenges that we face is duplication. When the numbers go to this level, you will come across customers who will have uncannily similar personal details. Whenever we make algorithms, combinations, etc. — they consist of first five digits of the first name, last five digits of the last name, the PIN, and the DOB. We run these algorithms and see that it can still repeat. This is a challenge and it helps that we have very sound on technology capabilities.
An example, in terms of integration for Freedom Awards, the loyalty program we run for State Bank, one of the things about the program is that it allows you redeem points immediately, across more than 100 cities in India. It does not involve any long drawn out procedure to redeem points. All a consumer needs to do is login to the Freedom Rewards site to redeem points.
As a strategy we have worked with the best database management companies in the country, taken help from DBAs who are very experienced in their field of work. The good part of this is that they are also eager to work with us because of the sheer size of the database.
How does Loylty Rewardz guarantee information security of such a large database?
From the beginning we started working with banks like Deutsche Bank, Citibank, State Bank of India. Our passing has been a trial by fire. State Bank of India, for example, as a PSU are paranoid — they do not take unnecessary chances, which is a good thing. With this kind of consumer data, they are very careful with their approach. They have continuous, random audits, which include penetration testing to the website, database. They gave us regular reports and we have to fine tune based on these. Deutsche Bank, to be able to have integration with their banking systems, it needed challenging security methods like encryption, VPN, secure FTP, and various security verifications.
Can LIDSys be used only as a loyalty program for banks?
LIDSys is a loyalty ERP application with multiple modules — program management module, partnership management, points management, analytics module, communication engine tool. It has an accounting module. It is structured on the service oriented architecture (SOA).
It is versatile enough to function as a pure play airline frequent flier program, or retail loyalty program, or bank transaction-based debit card credit card loyalty card program. It can also run a mixed program. For example, the Deutsche Bank’s credit card, it was combined it with a frequent flier program, like World Miles.
It also allows you to run a coalition program. This means it is pure play coalition. The program is not owned by anybody. Different companies come and join this program. They can then use the coalition program. This involves engaging with different corporates with their own individual rules — each one will assign different points for purchases made by customers.
If this is a common pool, what about the sanctity of consumer information?
The common pool gives a 360 view of the customer. It lets one track buying habits of a customer. Typically, you will not have two banks in the same coalition program. Secondly, even when different kinds of companies join, data is stored in a third-party middle location with all security features enabled. Data given by each company is not shared with the other. But together, the data allows for development of intelligence.
Do advancements in technology help BI capabilities too? For example, virtualization, better hardware?
Yes, without the kind of advancements we have witnessed in the last 2-3 years, we would not have been able to do what we are doing. When I handled the Jet Privilege loyalty program earlier, it had started with only 340,000 members and it ran on a FoxPro database. At that time it was the biggest program, even though the number seems small now.
How do you see loyalty programs in the country evolving in the future?
Loyalty programs are relatively new in the industry and data intelligence is just one part of our industry. CRM, data analytics, intelligence, it all comes under consumer loyalty. It is all about creating a relationship and loyalty with the customer. In India, loyalty programs are not yet well established and this is the challenge. At the same time, we are relatively new but still have an early mover advantage. In mature markets, consumer loyalty management is a very advanced and matured industry. There are multi-billion dollar companies, specializing in customer loyalty. Analytics, intelligence, points, etc. India is in the early stages but the country usually leapfrogs to the maturity phase much faster.
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