Factors driving the growing popularity of reward points The enhanced flexibility of redeeming loyalty points through multiple channels marks a significant shift from the scenario a few years back. The Indian payments landscape has traditionally been heavily dominated by paper-based transactions, particularly in the semi-urban and rural markets. Home to nearly two-thirds of the country's populace, these areas also faced significant disparity in income and education levels when compared to urban geographies. The adoption of digital payment tools in these markets was therefore quite low, which in turn affected the reach of loyalty points. The adoption of loyalty points amongst the masses wasn't helped by the fact that the entire process of point accumulation and redemption was very slow. Just a few years back, loyalty programs involved traditional plastic cards and gave users points and rewards after every purchase. These points could later be redeemed by physically visiting partner retail outlets and restaurants. This changed with the 2016 demonetisation initiative. The shift towards digital payments, which only 2-8% of the population previously leveraged, accelerated. As digital payments become more popular in India, the adoption rates of both credit and debit payments have been growing significantly. The dawn of advanced loyalty programs is further adding to the growth of electronic payment methods and vice versa. Today, loyalty programs are sophisticated and multichannel, with the option of redemption available across different industries, unlike the traditional spend-and-get model. Brands are adopting these omni -channel loyalty programs to connect their customers to multiple touch points seamlessly and provide them with the opportunity to be truly rewarded. For instance, a customer can earn the points at a multi-brand store and redeem the same in a restaurant. On e-commerce websites, loyalty programs are even more instantaneous; consumers can buy products and get instant cash back. As a result, brand marketers are able to capture omni -channel data for driving personalised communications and better customer experiences. Loyalty programs of today have also evolved from being a mere mobile number database to identifying customers, as well as charting their shopping behaviour, demographics, and behavioural profiles, through analytics-based insights. Brands, banks, and companies are issuing them to delight and hold on to their customers. The new-age customer treats the points as personally earned and expects to use them as cash that can be redeemed wherever desired. Online-to-offline gifting platforms are already disrupting the space by allowing consumers to convert their points into their desired brand currency and use them. This is clearly transforming the essence of loyalty, where the customer remains the King.

1. 1
THE GROWING POPULARITY AND THE FUTURE OF LOYALTY
PROGRAMS WITH REFERENCE TO INDIAN SCENARIO
VARUN KESAVAN, RESEARCH SCHOLAR, E- M AIL ID – varunkesavan@yahoo.com
Factors driving the growing popularity of reward points
The enhanced flexibility of redeeming loyalty points through multiple channels
marks a significant shift from the scenario a few years back. The Indian
payments landscape has traditionally been heavily dominated by paper-based
transactions, particularly in the semi-urban and rural markets. Home to nearly
two-thirds of the country's populace, these areas also faced significant disparity
in income and education levels when compared to urban geographies.
The adoption of digital payment tools in these markets was therefore quite low,
which in turn affected the reach of loyalty points.
The adoption of loyalty points amongst the masses wasn't helped by the fact that
the entire process of point accumulation and redemption was very slow. Just a
few years back, loyalty programs involved traditional plastic cards and gave
users points and rewards after every purchase. These points could later be
redeemed by physically visiting partner retail outlets and restaurants.

2. 2
This changed with the 2016 demonetisation initiative. The shift towards digital
payments, which only 2-8% of the population previously leveraged, accelerated.
As digital payments become more popular in India, the adoption rates of both
credit and debit payments have been growing significantly. The dawn of
advanced loyalty programs is further adding to the growth of electronic payment
methods and vice versa.
Today, loyalty programs are sophisticated and multichannel, with the option of
redemption available across different industries, unlike the traditional spend-and-
get model. Brands are adopting these omni -channel loyalty programs to connect
their customers to multiple touch points seamlessly and provide them with the
opportunity to be truly rewarded.
For instance, a customer can earn the points at a multi-brand store and redeem
the same in a restaurant. On e-commerce websites, loyalty programs are even
more instantaneous; consumers can buy products and get instant cash back. As
a result, brand marketers are able to capture omni -channel data for driving
personalised communications and better customer experiences.

3. 3
Loyalty programs of today have also evolved from being a mere mobile number
database to identifying customers, as well as charting their shopping behaviour,
demographics, and behavioural profiles, through analytics-based insights.
Brands, banks, and companies are issuing them to delight and hold on to their
customers.
The new-age customer treats the points as personally earned and expects to use
them as cash that can be redeemed wherever desired. Online-to-offline gifting
platforms are already disrupting the space by allowing consumers to convert their
points into their desired brand currency and use them. This is clearly
transforming the essence of loyalty, where the customer remains the King.
The future of loyalty programs
Loyalty programs are an indication of a customer's willingness to stay with a
brand. Such a feeling of loyalty stems from continuously positive customer
experiences, high levels of satisfaction, and a sense of value derived from the
products or services of a certain brand.
A loyalty program usually gives customers access to free merchandise, rewards,
coupons, and even exclusive previews of released products but all of these
elements may not suffice for a business to retain 'loyal' consumers after a certain
point of time.

4. 4
As businesses are now under constant pressure to meet customer expectations
with exceptional experiences, they are required to look beyond the complex
rewards systems and continue evolving their loyalty programs, strategies and
technologies to offer tangible value which is something truly unique to customers.