Why Indian Startups Are Moving Beyond Cashback to Win Customer Loyalty

In the fast-changing world of Indian startups , customer loyalty tactics are shifting. It’s not just about cashbacks anymore; discount coupons no longer retain customers. Startups now focus on personalisation , community building , sustainability, and advanced technology.

The Limitations of Cashback-Centric Loyalty

Although cashback will always be a popular incentive, it is increasingly seen as declining in effectiveness. Cashback offers create a short-term spike in purchases but do not lead to long-term engagement. Once customers have used the reward, they often lose their bond with the brand, continuing the cycle of high acquisition and low retention.

This shift has prompted Indian startups to think beyond transactional rewards, focusing instead on emotional connections and value-based loyalty. As Durvesh Yadav explains, “Startups today realise that loyalty is about more than incentives—it’s about meaningful engagement that keeps customers coming back.”

Personalisation: The New Loyalty Currency

A new wave of startups is using data analytics and artificial intelligence to create delightfully personalised customer experiences. Companies can analyse user behaviour, preferences, and purchase patterns to provide recommendations, targeted communication, and unique offers that resonate on a personal level.

For example, AI-powered insights help fashion and lifestyle companies suggest products that fit a particular customer’s style. This increases the chance of repeat visits and strengthens brand connection.

Community-Centric Engagement

Another innovative approach is community building. Rather than seeing clients as mere purchasers, startups like SleepyCat and Wow Skin Science encourage customers to engage in communities where products and services are brand-driven.

These platforms allow customers to share reviews, tips, and experiences, giving them a sense of belonging. Communities transform customers into brand ambassadors, fostering loyalty through engagement rather than rewards.

Sustainability as a Loyalty Driver

Sustainability is emerging as a key factor in customer retention. Startups such as Milkwilla are adopting environmentally friendly practices, offering plastic-free packaging and focusing on ethical sourcing.

Consumers today, particularly environmentally conscious millennials and Gen Z, prefer brands that reflect their values. By aligning with these principles, startups attract like-minded customers while building trust and long-term loyalty.

Technology Empowering Loyalty Programs

Technology is further enhancing loyalty programmes. Bengaluru-based Monet, for instance, enables brands to create interoperable and versatile loyalty programmes using AI and blockchain technology.

These platforms allow customers to earn and redeem loyalty points across preferred brands, removing past programme limitations. Interoperability provides greater freedom and utility, significantly improving the overall loyalty experience.

The Road Ahead

There is a paradigm shift in how loyalty is conceived and executed among customers in the Indian startup ecosystem. Simple cashback strategies are being replaced with efforts to build meaningful, long-term relationships based on personalised experiences, community engagement, sustainability, and technology-driven solutions.

As more businesses adopt these strategies, cashback and discounts may soon become outdated. The future of customer loyalty will be defined by shared values, personal interaction, and seamless technology that keeps brands relevant and customers connected.