Can a Loyalty Rewards Program be Successfully Built Around a “Free” Product?

In today’s fiercely competitive world, every brand worth its salt, goes to great lengths, to retain its customers on an on-going basis, thereby building loyalty and an assurance of regular patronage. This is more easily said than done and takes consistent efforts and investment over time.

Loyalty Rewards Programs have been successfully built and run by many a brand. Airlines and credit/debit card brands in particular, woo their customers through attractive rewards and incentives, for spends made. The more a customer spends on a brand, the more he earns.

But what about a Loyalty Rewards Program on something that is obtained free, with no purchase required? Does it even make sense to have such a program? Isn’t the Free tag, incentive enough to build loyalty? Why spend money and efforts on rewards for something the customer gets free?

There is a free to download mobile app called LuckyStars, through which one can win gifts for free, by playing the lucky draws held regularly. There is no purchase required and no participation fee either. Everything is free! A couple of weeks ago, LuckyStars rolled out a Loyalty Rewards Program called Stars, for its users. The obvious question is: Why?

The answer clearly lies in the construct and goals of the program. From the little, inside information siphoned out, the Stars program is designed to heighten brand engagement and frequency of interaction with the app.

Having downloaded the app for free, users can participate in all lucky draws for free. Although there is a simple skill question to be answered to qualify entry into a draw, the element of luck ultimately decides if you will come out a winner. Like all lucky draws, there will only be a few winners and the challenge therefore is to keep the large majority of non-winners constantly motivated to keep playing.

Even though there exists the attraction of the big gifts that can be won for free – Google Pixel Smartphone, 2-wheelers, LED TVs, Digital cameras, Smart watches etc. The propensity to gradually lose interest cannot be overlooked. This is probably the main reason to introduce a Loyalty program.

With over 600,000 app downloads and nearly 100,000 Daily Active Users, LuckyStars is looking to consolidate and further build a strong base. The Loyalty program will reward users with Stars for every small action they take on the app: playing the draws, watching ads, participating in online surveys, referring new users, etc. Stars so earned can then be redeemed for gift vouchers and products, through the app itself. So, even if you are not among the winners in the lucky draws, you are still winning through the Loyalty program, without having to spend a single rupee.

In conclusion, the Stars Loyalty Rewards Program is clearly focused on driving increased and sustained usage, so as to build a strong case when it comes to monetizing the app. The program is indeed unique, in the sense that users get a “Free-On-Free” offer, with a chance to actually win gifts for free too!

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