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.
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Your doorway to exciting bene ts Join the Benefit Programme today and earn rands to spend, partner rewards and get instant discounts when shopping at Dis-Chem or Baby City. As a member of the Benefit Programme, you will earn rands to spend with each qualifying purchase either in-store, online or via Dis-Chem DeliverD in our App. Additional benefits include instant discounts, free quarterly magazines, personalised newsletters and automatic entry into competitions. By shopping at Dis-Chem and Baby City and swiping your Benefit Card, not only do we reward you, but we also donate a percentage of all eligible purchases to the Dis-Chem Foundation to assist with worthy causes. Sign up for your Dis-Chem or Baby City Benefit Card today in-store, online or via the Dis-Chem App or by simply dialling *120*1085#. Get more. Save more. Give more. Accelerate your rewards with our partners:
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PARTNERSHIP LOYALTY/REWARD PROGRAMMES
Partnerships provide extra value
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Multiparty hybrid programmes, which are primarily concerned with serving the brand’s own customers but provide extra value via loyalty partners, are common in SA
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ntering into corporate partnerships has long been a successful strategy to enhance the customer experience and create more value,” explains Eighty20 CEO, Steve Burnstone. “The ability to earn and redeem rewards outside the owner brand creates value that the owner brand couldn’t offer on its own. Done well, this increases loyalty to the brand or programme, attracts new customers and engages existing customers.” Many successful partnerships have evolved and grown over the years, with customers coming to expect brands to align and improve their customer propositions, he says. “Loyalty programmes are an excellent vehicle to create these relationships and enhanced propositions. These partnerships can create significant value both for customers and the collaborating brands.” In the South African loyalty landscape, most loyalty partnerships occur in proprietary programmes, says Burnstone. In these instances, the programme and its rewards currency are owned and managed
by a single brand, for example Standard Bank’s UCount or FNB’s eBucks. Partners are included so that customers can earn or redeem rewards outside the owner brand. Discovery Vitality, on the other hand, has created an ecosystem of high-margin redemption partners which gives members the opportunity to boost the value of their Discovery Miles at certain redemption partners. The Dis-Chem Benefit has been a multi-partner programme for several years, with a host of partnerships associated to it, providing members with exceptional value and ensuring that it is substantially more rewarding than other loyalty programmes in SA, says Lynne Blignaut, head of Loyalty & Customer Rewards at Dis-Chem. The programme classifies its partners into three groups: banking, medical aid and lifestyle partners. The Dis-Chem Benefit programme,
which ranked as the third most used loyalty programme in SA by the Truth & BrandMapp South African Loyalty Whitepaper in 2021, is quite diverse in terms of its offering, says Blignaut. “Just by swiping the Benefit card at any Dis-Chem or Baby City store, customers earn cash back on their card to redeem on future purchases, and they qualify for instant discounts, immediate entry into competitions, receive additional benefits from partners and contribute to the Dis-Chem Foundation, which is supported by the Benefit Programme.” Every time a Benefit Programme member shops at Dis-Chem and Baby City, a percentage of all eligible purchases is donated to the Dis-Chem Foundation, which supports a variety of worthy causes across SA. One of the recent Dis-Chem Foundation initiatives was to donate over 5,300 blankets, providing warmth during the cold winter months to
those who need it most. Selecting and establishing winning loyalty partnerships is no mean feat, concedes Burnstone, adding that it requires careful consideration to understand customers’ needs, marketability, the partnership’s business model, an understanding of payment systems and other platforms to create a seamless customer experience that makes it easy for customers to change behaviour. Done well, effective partnerships can sustain customer behaviour up to fourfold when the partnership makes sense, the proposition is clear and enough work is put into making it sustainable and financially attractive for all stakeholders, reports Burnstone, adding that for a partnership to work it has to benefit all the parties concerned. While banks are natural leaders in partner-led loyalty programmes, fuel retailers have also joined the industry, primarily as partners. “Loyalty programmes have helped create an inflection point in fuel retailers’ customer base,” says Burnstone.
The devil is in the detail
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loyalty programme fails when the value of the behaviour change it is generating does not offset the costs of running it, says Steve Burnstone, CEO at Eighty20, a Cape Townbased customer analytics and research consultancy specialising in customer engagement. Pointing out that every sector has its own constraints in terms of what it can and can’t do, he says that given the tight profit margins in FMCG retail, for example, it’s very difficult to give a meaningfully high percentage of value back to customers on their spend — unless there is significant manufacturer funding. While retailers’ programmes might not seem very exciting compared to more complex programmes, ultimately every successful programme needs to be washing its face — at the very least covering its own costs, says
Burnstone. This can be measured by understanding the customer behaviour change that the programme generates, be it increased spend, improved retention or better customer acquisition. He adds that loyalty programmes can fail if they are too complicated, if customers don’t understand how they work, or if it takes too much effort to earn or use rewards — in which case they will simply not engage. “Often the simpler programmes are, and the easier they are to access, the more effective they are in driving behaviour change that has a positive impact on business performance,” says Burnstone. “We’ve seen very simple programmes that drive as much as a 10% improvement in performance.” However, as customers expect more sophistication, these simple programmes 20 LifeStyle
are not generating as positive a customer experience as they used to. Increasingly, consumers are expecting good corporate partnerships, clever apps that work well with the programme, and a network of earning and spending opportunities. “As consumers expect more digitalisation and personalisation than ever before, programmes that don’t innovate or evolve are more likely to fail,” he says. The other side of the customer perception is the business’s approach to the programme. Burnstone says successful programmes are those that are seen as central to the brand, are aligned with the business’s key performance indicators and have executive support. “Discovery Vitality and FNB eBucks are good examples of loyalty programmes that are central 10•04•2022
Sunday Times
“The simpler and easier the programmes are to access, the more effective in driving behaviour change that has a positive impact on business performance.” Steve Burnstone, CEO at Eighty20, left
to the brand and the customer value proposition, and that enjoy support across the business. One rarely sees marketing material from either of these companies that doesn’t also promote their loyalty programme because they are central to their brand and are a key part of their offering.” The devil is in the detail when it comes to a loyalty programme’s success or failure, he says, adding that poor execution and a lack of staff buy-in can really hurt a programme, as can poor use of data, and poor measurement and tracking. Similarly, a loyalty programme can’t be a substitute for a poor product or bad service quality. “A loyalty programme can enhance the customer experience, but if it isn’t supported by a great product and excellent customer service there’s only so much a business can hope to gain from it.”
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PARTNERSHIP LOYALTY/REWARD PROGRAMMES
Are loyalty programmes worth the investment? A number of loyalty programmes have become household names in SA, delivering tangible benefits to customers. But are they worth the investment for businesses?
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the Shoprite Xtra Savings programme in 2020, which has already signed up 15 million members and received the Best Newcomer Loyalty Award at the SA Loyalty Awards. A spokesperson for the Shoprite Group reveals that the data that has been unlocked through Xtra Savings has had a profound impact on the orientation of the whole business, unlocking customer insights and enabling precision retailing, which is a key strategic driver of growth for the Group. For the broader group the investment into a rewards programme is about becoming more customer-led and globally competitive, enabling more efficient promotions and marketing focused on consumer’s individual needs, amplifying its number one priority: to become a truly customer-first business. Not only is the customer now being used as a core metric for the performance of the business, but the learnings along the way have been endless, says the Group. This better understanding of the Checkers customer has resulted in record market share and impressive growth in sales and profits for Checkers. According to the retailer’s results released earlier this year, sales increased by 10%. A commitment to frictionless value to customers saw the integration of Xtra Savings on the Checkers Sixty60 app so that members can now get deals delivered in 60 minutes. The Group’s spokesperson says that smart personalisation at scale is key to unlocking better customer experiences, and better value for the business to keep Checkers ahead of the pack. Its personalisation ambitions, however, are only just getting started. As the quality of data improves, so too will its ability to provide tailored offerings to members, including personalised communication across all channels.
commercial results. A recent addition to the local loyalty space is the Checkers Xtra Savings rewards programme, which launched in October 2019 around a campaign premise of “No smoke or mirrors, just cash savings, instantly”. Offering cash savings on specially marked products and personalised offers, the programme has seen rapid growth with nine million members signed up. It was voted the Best Retail Loyalty programme in the 2021 SA Loyalty Awards, an impressive achievement given that it is still a relatively new player in this space. Building on the success of Checkers Xtra Savings, the group quickly launched
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he 2021 South African Loyalty Landscape Whitepaper by Truth and BrandMapp points out that a loyalty programme alone cannot secure customers’ lifelong loyalty to a brand and that, on its own, a loyalty programme is merely the mechanic. A winning loyalty formula comes from a focus on customers, by relooking at all aspects of the marketing mix to maximise the value they deliver to customers — product, price, promotion and place as well as people, processes and physical evidence. In this way, investing in loyalty progammes can amplify the resources a brand has and deliver meaningful
Picture: 123RF.COM/KRUGLI
Not only is the customer now being used as a core metric for the performance of the business, but the learnings along the way have been endless SHOPRITE GROUP
Youth have a different attitude — brands must offer desirable products
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he SA Loyalty Landscape Whitepaper by Truth and BrandMapp reveals that consumers under the age of 25 behave differently towards loyalty programmes than the broader South African population: not only do they belong to fewer programmes than the average 8.7 programmes of older consumers, but they also don’t use loyalty programmes as much as the national average. The whitepaper attributes this to a correlation between age and earning capability. However, the loyalty programmes of three brands buck this trend and are supported by younger consumers,
according to the survey. They are myTFGrewards, Shoprite Xtra Savings and Cotton On Perks. Shani Naidoo, TFG group director, says that TFG’s stable of leading brands, which includes Sportscene, Markham and The Fix, attracts younger customers. “This, combined with desirable products and instant rewards, makes it even more accessible for our customers.” Naidoo says that knowing and understanding the needs of customers is critical. “To drive usage of a loyalty programme, we, the brand, must be able to offer desirable products and a good price value proposition, which includes rewards.” 22 LifeStyle
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The myTFGrewards programme has been a lever for strategic growth within the group, adds Naidoo. “TFG’s multi-brand structure allows myTFGrewards to engage customers across touchpoints, listen to the customer and thus enable TFG’s brands to deliver value to millions of shoppers. By combining a deep understanding of customers with advanced analytics, it allows the business to deliver targeted customer communication through personalised content and products and offers a means to promote cross-brand and cross-channel shopping within TFG’s ecosystem.” Sunday Times
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*Best retail loyalty programme and best use of data in the 2021 SA Loyalty Awards.
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A shift in expectations Personal engagement and recognition are becoming increasingly important
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here has been a definite shift in what clients expect from loyalty rewards programmes, says Momentum Multiply’s executive head, Johan Kleu. “Engaging with clients on a more personal level is becoming increasingly important, with programme members wanting to understand what is in it for them.” Clients now expect their product or service providers to offer a loyalty programme, he says, adding that they have become an integral part of their financial and shopping behaviour and are perceived as beneficial and valuable. Once clients have bought into a loyalty programme it does impact their purchasing behaviour and improves retention, he maintains. “In 2021, the number of Momentum products held by Momentum Multiply members increased by 7.6%, while the average duration of Momentum products held increased by 6.4%. What this reveals is that Multiply members choose Momentum for more of their financial services needs and remain as clients for longer.” Loyalty programmes tend to differ in how they engage with their members depending on their sector. The biggest differentiator is in the frequency of engagement. While retailers engage with customers on a weekly, if not daily, basis, financial services companies like Momentum have a long-term relationship with their clients, which means the rewards can build over time to become larger, offering aspirational rewards such as flights and holiday packages. Kleu says Multiply also offers benefits at retailers that are instantaneous to ensure its longerterm relationship with clients is more real
LOYALTY/REWARD PROGRAMMES
and tangible in the short term. Momentum Multiply’s partners include everyday retail partners as well as less frequent purchase partners such as airlines and fitness devices. Members also get product rewards with up to R3,000 in HealthReturns per family per month to pay for day-to-day healthcare
expenses, for example. Successful loyalty programmes need to deliver genuine value for members rather than just frills and clever marketing, he says. “Cash is king among South Africans and savings have become even more crucial, particularly after the pandemic. Momentum Multiply provides cashbacks
that accumulate over time and create genuine value.” In a 2021 survey of financial advisers, the discounts on life insurance, HealthReturns to fund medical expenses and retail cashbacks were regarded as the biggest benefits of Momentum Multiply, reveals Kleu. The top three retail partner categories were groceries (Pick n Pay and Woolworths), healthcare (Dis-Chem and Clicks), and airlines (FlySafair and Airlink). Since the advent of Covid-19, 43% of survey respondents said they preferred online video streaming services to going to the cinema, which prompted Multiply to increase the maximum discount offered on these partners from 12% to 50%, he said. Other important elements of a successful programme are recognition and personalisation, he says. Momentum Multiply uses personal and behavioural data to reward members on their wellness journeys, including accomplishing weekly and monthly challenges through Multiply Wins. “The goals are personalised to each individual’s fitness journey with the challenges getting harder over time, which means members are getting fitter — which is worth rewarding,” says Kleu. Critically, loyalty programmes need to be simple and easy to understand. Kleu says clients shouldn’t have to jump through hoops to get rewarded, which is why Momentum Multiply rewards members for the things they already do every day, like looking after their health. In this way, members aren’t only rewarded for their loyalty, but also for living a better and healthier life.
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Clicks is onto a good thing
LOYALTY/REWARD PROGRAMMES
Easily redeemable benefits stands ClubCard in good stead
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asy to understand, convenient and with very clear benefits are the most important hallmarks of a successful loyalty and reward programme, says Vikash Singh, managing executive at Clicks. “Rewards qualification should commence from the moment members sign up, and be easily redeemable. Both spend and engagement should be rewarded with benefits extending beyond cashback and savings to more experiential benefits.” Clicks ClubCard, one of SA’s most established and successful loyalty programmes with over 9.5 million members, was voted the second most used loyalty programme in the country by the 2021 South African Loyalty Landscape Whitepaper by Truth and BrandMapp. Among the reasons for its continued growth and sustained longevity are easily redeemable benefits, its ability to provide personalised engagement and rewards for members, while remaining simple, free and easy to use, says Singh. In the past year alone, ClubCard has paid out R675m in cashback, redeemable both in store and online. Cashback is the most highly rated benefit of loyalty programmes among South Africans, according to the whitepaper. A range of affinity partners including Engen, SpecSavers and Execuspecs, Discovery Vitality, eBucks, Sorbet, ARC, Netflorist, City Lodge, Town Lodge & Courtyard
with members. “In addition to the personalised ClubCard deals on the Clicks app, over the past two years we have introduced various digital innovations including Tap ‘n Go card and QR payments for a more contactless shopping experience, and a
vertical digital card for better visibility on smartphones. We’ve also recently introduced a new digital enrolment channel for customers through the WhatsApp platform, alleviating the need to complete forms or for plastic cards,” he says.
“Personalisation is very important for the ClubCard Shopper who is wanting to access deals relevant to them, but is also pushed for time.” Vikash Singh, Managing executive at Clicks
Hotels and Europcar extend members’ cashback earning abilities. For many loyalty brands, including Clicks, personalisation is becoming a key trend. “Personalisation is very important for the ClubCard Shopper who is wanting to access deals relevant to them, but is also pushed for time,” reveals Singh. The BrandMapp survey argues that personalisation needs to be a loyalty brand’s top priority if it is to avoid offering “valueless noise”. Personalised communication and experiences, says the whitepaper, mean that communication, benefits and rewards must be relevant and must add value to the consumer with a positive personalisation cycle leading to longerterm customer loyalty. Singh explains that Clicks is using personalisation to allow ClubCard members to receive information and tailor messaging and deals relevant to them. This personalisation has also been extended to the Clicks website where customers see product offerings and messaging relevant to them and their shopping preferences. “For example, ClubCard members can choose their own savings and promotions from a list of deals in the ClubCard app and then load them onto their ClubCards. In addition, we have established a marketing preference centre which allows ClubCard customers to choose what communication they would prefer to receive and when,” says Singh. Digital convenience has remained a key focus for Clicks with both web and app enhancements planned to allow even more convenience and engagement
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