PARTNERSHIP LOYALTY/REWARD PROGRAMMES Compiled by Lynette Dicey
Reaping the rewards of being loyal
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he loyalty market is a growing industry in SA and a fundamental part of the consumer experience. A loyalty programme is no longer a “nice-to-have” for a business but is literally now a hygiene factor, says Brandon de Kock, director of consumer insights consultancy, WhyFive, which owns the BrandMapp data set responsible for producing the annual SA Loyalty Landscape Whitepaper. At a very basic level, loyalty programmes were introduced by businesses operating in a commoditised market to give their customers a reason to shop with them rather than at their competitors. Retail programmes typically reward customer spend — the more the customer spends, the more they are rewarded, often with cashback. As programmes have become more sophisticated they’re also being used to collect customer data, which is incredibly valuable to businesses. It’s not only the programmes that have become more sophisticated. So too have consumers, says De Kock, adding that now more than ever, consumers understand which programmes are working for them and which are not. The challenge for programmes in the retail space is cross-over, with most consumers signed up to multiple programmes, he reveals. “The simple truism is that people use loyalty programmes to save money. They want real and obvious value for supporting your brand. Effective programmes understand their customers well enough to know not to send them a discount voucher for a product they don’t want.” Consumer loyalty behaviour has changed since the onset of the Covid-19 pandemic, with more South Africans belonging to loyalty programmes than ever before, according to the 2021 SA Loyalty Landscape Whitepaper produced by Truth and BrandMapp. In 2014, economically active South
Picture: 123RF.COM/RASTUDIO
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Loyalty programmes are becoming increasingly beneficial to both provider and consumer
Africans belonged to an average 3.6 programmes. Consistent year-on-year growth has taken place since then. The BrandMapp survey found that economically active South Africans belonged to 8.7 loyalty programmes in 2021, a 55% increase from 2019. Membership is one thing, but how much do South Africans actually use the loyalty programmes they are signed up to? According to the BrandMapp survey, loyalty usage was up 2% in 2021 compared to 2019, with 74% of economically active South Africans using loyalty programmes. The retail sector dominates the loyalty programme space with the survey ranking Pick n Pay Smart Shopper as the most used programme (80%), with Clicks ClubCard (79%) in second place. Dis-Chem Benefit was in third place (62%) and Checkers Xtra Savings in fourth position (60%). The only loyalty brand outside retailing to feature in the top 10 is FNB eBucks, which has consistently been the most used non-retail loyalty brand in the history of the BrandMapp survey. Other loyalty brands which are well used in their respective sectors are the Spur Family Card in the restaurant sector, Legacy Lifestyle in the travel sector, and MySchool MyVillage MyPlanet. Although the retail category dominates loyalty usage, the loyalty programmes that survey respondents said they can’t live without and are indispensable to their members are all in the financial services category. The top seven are FNB eBucks, Discovery Vitality, Standard Bank UCount, Investec Rewards, Absa Rewards, Nedbank Greenbacks and Momentum Multiply. Pick n Pay Smart Shopper is in eighth position, followed by Clicks ClubCard. The favourite benefits are cashback and discount vouchers. The survey reveals that the main reasons consumers don’t use loyalty programmes is they don’t spend enough 18 LifeStyle
to earn decent rewards (22%), they’re not interested (18%) and they’re too hard to understand (12%). The problem, says Abigail Boikhutso, CEO of Consulta, is that satisfaction levels in certain categories of rewards programmes are waning due to a perceived lack of value, which is ultimately influenced by the tangible savings being received by the loyalty participant, for example the return on petrol spend in correlation to the cost of fuel. “Successfully integrated loyalty programmes definitely drive behaviour change when multiple benefits across significant consumer touch points are met for the rewards participant,” she says. “For example, interlinked health and life insurance products change behaviour if the correct behaviour nudges and
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“Rewarding customers directly and offering them the option to use their rewards to benefit others is a development that keeps resurfacing. Linking both builds communities around brands.” Abigail Boikhutso, CEO of Consulta, above
Sunday Times
participation steps are in place, which is mutually beneficial for both the brand by reducing the risk profile, and costs of the client — while extending the customer lifetime value.” However, standalone rewards simply for “transacting” without a tangible financial impact drives a superficial loyalty layer with that brand, which in most cases does not create the stickiness brands need in order to retain their client base, she maintains. Boikhutso says the attributes of a successful loyalty programme are recognition, including longevity of relationship with the brand, lifetime value, and brand influencers; esteem, in the form of status of differentiators; ease of use — critically, members should not be expected to jump through hoops or make it overly complex; value creation and perception of rewards; and usability. “Loyalty programmes designed to simply gather consumer data and secure secondary purchases need to have a very low effort score for the customer, and need to keep expectations low,” she explains. “For example, purchasing nine cups of coffee to get the 10th free. The biggest attribute is convenience and a low cost reward for the repeat purchase.” To ensure they remain relevant, loyalty programmes need to link both intrinsic and extrinsic motivators, she adds. “Rewarding customers directly and offering them the option to use their rewards to benefit others is a development that keeps resurfacing. Linking both builds communities around brands.” She also advises removing pure points programmes and rather linking them to financial or tangible rewards, as well as planning rewards for specific timeframes such as banking products or savings to “Januworry”, or school-linked rewards programmes for airtime or data purchases. “Addressing a long-term pain point throughout the year creates incredible stickiness,” says Boikhutso.