Loyalty program launches gaining momentum in the Indian market in 2023

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The last 12 months have been an accelerated growth period for the global loyalty and rewards program industry. Rising inflation and the subsequent decline in consumers' disposable income have driven the adoption of loyalty programs worldwide. From retailers to airline carriers and hospitality firms, all have invested significantly in revamping and launching new loyalty programs over the last 12 months.

In India as well, the trend is gaining increasing momentum, as businesses across industry verticals are looking to leverage loyalty programs to boost customer engagement and drive sales and revenue growth during the uncertain economic period.

• Flipkart, for instance, announced that the firm had entered into a strategic partnership with Hang in June 2023. As part of the collaboration with Hang, which is a customer relationship-building platform, Flipkart is launching an NFT-powered loyalty program for its shoppers. The e-commerce platform is introducing FireDrops 2.0 on the Polygon Blockchain.

Flipkart's FireDrops 2.0 loyalty program takes inspiration from the previous pilot program's success. Through actions, users were able to earn digital collectibles and membership passes in the FireDrops loyalty program. By harnessing the power of blockchain technology, Flipkart aspires to create an even more immersive and enriching experience for its esteemed users. The NFT rewards will ease the ownership process as well as redemption while creating a new revenue stream for the online shopping platform.

Globally, many brands including Starbucks have launched NFT-powered loyalty programs over the last few quarters. Going forward, PayNXT360 expects more Indian businesses to leverage the technology and create innovative loyalty programs for their customers. In addition to Flipkart, other businesses in different industry verticals are also planning to experiment with loyalty programs to drive customer engagement and business growth from the short to medium-term perspective.

• Indigo, for instance, announced that the firm is planning to launch a loyalty program for its customers. The largest airline carrier in terms of market share, the plan to launch a loyalty program comes at a time of growing competition in the segment. The firm is expecting tough competition from Air India Group, now that Air India and Vistara are merging. Asaka Air, the new entrant in the market, is also seeking to raise US$75 million to US$100 million by offering fresh shares to expand its business in India.

Amid this growing competition, the loyalty program can boost the popularity of Indigo among flyers in the country. Notably, the 6E Rewards program by Indigo has not seen much success over the years. Only 300,000 signed up for the program, which is not exciting for the largest airline carrier in India. Consequently, the firm is betting on the customer loyalty program, as competition intensifies in the space.

In the quick-service industry space as well, the demand for loyalty programs has been growing consistently. To tap into the growing trend, many homegrown businesses are projected to launch their loyalty program in the segment.

• JumboKing, for instance, launched the JK Burger Rewards program in March 2023. The program aims to strengthen the connection with the customers in India. As the popularity of the loyalty program continues to grow among customers, JumboKing is seeking to have one million members by August 2024.

Alongside new programs, firms are also rebranding their existing ones to better accommodate the needs of their members. BharatPe, for instance, revealed that the firm is rebranding its existing PAYBACK India loyalty program to Zillion. The renewed branding aims to attract shoppers from all groups while allowing members to redeem the points at a range of different partners. Going forward, BharatPe is expected to invest significantly in marketing campaigns for Zillion to drive customer awareness and engagement. Over the years, PAYBACK India has emerged as a strong player in the loyalty program market, with over 130 million users in total.

From the short to medium-term perspective, more and more businesses across industry verticals are expected to launch new programs and revamp the existing ones to better suit the demand of their members. This will not only drive the competitive landscape but will also lead to greater innovation in the segment. Overall, the industry is poised for an accelerated growth trajectory over the next five years. In 2023, the loyalty market in India is expected to grow by 14.2% on an annual basis to reach US$4.79 billion in 2023, according to PayNXT360 estimates. By 2027, the market is projected to reach US$8.10 billion at a compound annual growth rate of 14% between 2023 – 2027.

To know more and gain a deeper understanding of the loyalty program market in India, click here.