Full Page.indd 1
2020/10/20 12:31 PM
Full Page.indd 2
2020/10/20 12:32 PM
Full Page.indd 1
2020/09/28 1:10 PM
Full Page.indd 2
2020/09/28 1:10 PM
Full Page.indd 1
2020/09/23 11:53 AM
F ROM T HE EDI T OR PUBLISHED BY
Picasso Headline, a proud division of Arena Holdings (Pty) Ltd Hill on Empire, 16 Empire Road (cnr Hillside Road), Parktown, Johannesburg, 2193 Postal Address: PO Box 12500, Mill Street, Cape Town, 8010 www.businessmediamags.co.za EDITORIAL Editor: Anthony Sharpe Content Manager: Raina Julies rainaj@picasso.co.za Contributors: Beth Amato, Samantha Barnes, Glenneis Kriel, Levi Letsoko, Kim Maxwell, Puseletso Mompei, Thando Pato, Lisa Witepski Copy Editor: Nicci Collier Content Co-ordinator: Vanessa Payne Digital Editor: Stacey Visser vissers@businessmediamags.co.za DESIGN Head of Design: Jayne Macé-Ferguson Senior Designer: Mfundo Archie Ndzo Advert Designer: Bulelwa Sotashe Cover Image Credit: istock.com/ Prostock-Studio SALES Project Manager: Gavin Payne gavinp@picasso.co.za | +27 21 469 2477 +27 74 031 9774 Sales: David Johnson, Brian McKelvie, Mariechen Gootsch, Andre Potgieter
Simple and meaningful
T
here’s rarely been a more testing year than this one for consumers, businesses or the relationship between the two. By now we’re almost used to reading or hearing about the impact of COVID-19 on our economy, but the figures remain appalling. A United Nations Development Programme study projected GDP decline of between 5.1 and 7.9 per cent, with 34 per cent of households expected to move from middle class to economically vulnerable, and that recovery would take five years. Some predictions have been even less optimistic. While it may be tempting to focus only on essentials at a time like this, for businesses, customer loyalty has never been more important than now. Because every cent those customers spend is important to them, they need to have a pretty good reason to keep going back to a particular business – be that discounts, special offers, the promise of meaningful rewards down the line, or even just the occasional moment of surprise and delight to brighten their day. In this issue of Loyalty and Rewards, we examine the real value of different types of programmes (page 8), and chat to
Copyright: Picasso Headline. No portion of this magazine may be reproduced in any form without written consent of the publisher. The publisher is not responsible for unsolicited material. Loyalty and Rewards is published by Picasso Headline. The opinions expressed are not necessarily those of Picasso Headline. All advertisements/advertorials have been paid for and therefore do not carry any endorsement by the publisher.
Anthony Sharpe
CONTENTS
PRODUCTION Production Editor: Shamiela Brenner Advertising Co-ordinator: Johan Labuschagne Subscriptions and Distribution: Fatima Dramat, fatimad@picasso.co.za MANAGEMENT Management Accountant: Deidre Musha Business Manager: Lodewyk van der Walt General Manager, Magazines: Jocelyne Bayer
a cross-section of people to find out what they like and dislike about those they belong to (page 24). We look at South Africa’s oldest loyalty schemes and how they’ve evolved (page 13), and how the smart application of new technologies can improve them in future (page 14). We ask if insurance schemes are missing the mark in how they reward loyalty, and what the alternatives are (page 27). The hospitality and airlines industries have suffered hugely under COVID-19, so we probe how they can retain consumer loyalty and leverage this to get back on their feet (page 23 and page 20 respectively). As people return to work, business is improving for the taxi industry, which now has its own loyalty programme (page 19). We also look at the success of the recently launched Checkers Xtra Savings and Wimpy Rewards schemes, which demonstrate the power of simple, meaningful rewards (page 28). Ultimately, perhaps, that’s what it boils down to in trying times like these: keep it simple, keep it meaningful.
14
19
8
Real value Five different kinds of loyalty programmes, five ways to offer members real value
20
Travel What is the role of airline rewards in the time of COVID-19?
13
Long-standing programmes The venerable Clicks ClubCard and FNB eBucks schemes have stood the test of time and evolved along the way
23
Hospitality How loyalty schemes can help the struggling hotel and restaurant sectors get back on their feet
14
Technology Geolocation, digital objects, augmented reality, and convergence of payment and loyalty cards
24
Real rewards Consumers tell us what works – and what doesn’t – in the loyalty programmes to which they belong
16
Consumer behaviour What is the real impact of rewards programmes on the way people spend?
27
19
Automotive SA Taxi Rewards aims to uplift taxi drivers, owners and associations, plus our rundown of local fuel rewards programmes
Financial services Insurance schemes need to adapt to changing needs, plus a loyalty programme that incentivises good financial behaviour
28
New programmes Checkers and Wimpy come flying off the starting blocks
L O YA LT Y & R E W A R D S
3_eds_1.indd 5
5
2020/11/19 1:17 PM
Full Page.indd 1
2020/11/18 10:28 AM
Full Page.indd 2
2020/11/18 10:29 AM
What’s the real value of joining a
loyalty programme? BETH AMATO sizes up five different schemes to understand how they benefit their respective members
W
ith the global social and economic upheavals brought about by the COVID-19 pandemic, brands need to retain and attract returning customers, but is a loyalty and rewards programme based on simple perks enough? Do cash-conscious South Africans rely on brands to woo them with innovative incentives that stand out from the rest in terms of added value? Do customers prefer gamified reward systems or being linked to a charitable mission? According to the Truth & BrandMapp Loyalty Landscape Whitepaper 2019/2020, “cashback” is the most-enjoyed benefit, with 63 per cent of respondents indicating this.
8
Discount vouchers rank second, with 45 per cent of respondents stating that vouchers are their most enjoyed loyalty benefit. Essentially, monetary-related benefits are usually more appealing to consumers, particularly in South Africa. While monetary-related loyalty programmes are the most popular with South Africans, it doesn’t really matter what shape or form the programmes come in, says Kerry Thomas, the head of customer experience at IQbusiness. “South Africans simply love a good loyalty programme.
Around 72 per cent of economically active people use them; they’re seen as ways to save money and this is especially useful in these times.” Loyalty and reward programmes incentivise repeat business and can be a tool to drive a change in a customer’s purchasing behaviour, adds Thomas. This is because they build trust, customer satisfaction, and perceived value – the three factors required Kerry to create loyal customers. Thomas In what ways are South African loyalty and rewards programmes aiming to ensure long-term customer retention?
L O YA LT Y & R E W A R D S
L&R_RealValue_2.indd 8
2020/11/19 1:31 PM
RE A L VA L UE
MTN Gamified, spend-based, and a few surprises in the revamped rewards programme
Lynette Saltzman
Dis-Chem Spend and redeem at multiple partner locations, and give back There are 5.7 million Dis-Chem Loyalty Benefit members in South Africa, and the programme is both a money-reward programme as well as mission-driven. A shopper earns loyalty points on purchases (including those at partner stores if they are registered on this partner’s loyalty programme) and can redeem these points at the till against the total bill at checkout. Points are earned in real time, meaning that the customer can pay with their points there and then, and the points don’t expire either. “The programme has a strong social responsibility component, with a portion of eligible purchases being donated to the Dis-Chem Foundation,” says Dis-Chem co-founder Lynette Saltzman. The spirit of giving back to alleviate poverty and inequality means that customers connect more deeply with a brand, and trust it to build a better future. Dis-Chem, for example, runs community clinics, wellness buses, and clean-water campaigns.
TOP 5 LOYALTY PROGRAMMES IN SOUTH AFRICA
As part of its #Remake2020 campaign, MTN upgraded its old rewards system (411) to YelloBucks, where for every R1 spent on bundles or a subscription, one YelloBuck is earned, which once accumulated can be spent on airtime, data bundles, social bundles, and video- and Mapula Bodibe music-streaming services, or saved and redeemed for retail products. When customers download the MTN app, they are automatically awarded 200 YelloBucks and one for every day they’re active on the network. Moreover, prizes are won when YelloBucks are redeemed: customers can access the play store and redeem anything contained in the rewards redemption catalogue. “2020 has been a horrible year, with many people losing so much,” explains MTN SA chief consumer officer Mapula Bodibe. “Very little was as it should have been. In an effort to lift spirits as we head into summer, we’re offering South Africans a reason to end off a tough year on a high note. “Through our refreshed MyMTN rewards programme and new loyalty points currency, YelloBucks, we are unlocking incredible and much-needed value, discounts and rewards offers for our customers at a time when they need them the most. This will hopefully give them a reason to enjoy the last few months of the year, and perhaps remake celebrations they may have missed out on in the course of the year.”
Zapper Points-based and spend-based programmes work for merchants “Having tried many implementations and iterations, we believe points-based and spend-based programmes provide provide merchants with the most meaningful results in growing their business and engendering customer loyalty, while providing Brett consumers with real value and benefit,” says Brett White, CEO of White mobile-payments platform Zapper. White explains that the primary objective of Zapper’s loyaltybased programme is to incentivise and encourage increased repeat visits and repeat product purchases for points-based programmes, and increased basket spend for spend-based programmes. “In the period between 6 February and 6 March 2020, we saw an 8 per cent increase in basket spend. In this month, we also saw 102 584 loyalty cards assigned, and 12 687 loyalty cards completed, with 14 per cent increased spend frequency. It shows how critical it is to incentivise customers,” he adds. ›
The Truth & BrandMapp Loyalty Landscape Whitepaper 2019/2020 revealed the top six loyalty and rewards programmes in South Africa this year. 1
Clicks ClubCard
2
Pick n Pay Smart Shopper
3
Dis-Chem Loyalty Benefit
4
Woolworths WRewards
5
FNB eBucks
How Zapper’s reward system works for customers
L O YA LT Y & R E W A R D S
L&R_RealValue_2.indd 9
9
2020/11/19 1:32 PM
RE A L VA L UE
PPS A loyalty programme with a long-term investment view
Nando’s For corporates to award employees with meal vouchers Nando’s has supplied vouchers to companies that use them as part of employment benefit Avis Drivesafe programmes, loyalty programmes, and call-centre agent incentives. Meanwhile, the company has partnered with Discovery Business Insurance and the Avis SafeDrive programme to award clients for good driving. “Companies and large institutions are now able to work with Nando’s to subsidise delicious Nando’s meals for their employees on their terms, wherever their workforce is currently working from,” says Jaegar Torrente, head of partner marketing and strategic partnerships at Nando’s South Africa. “Although we offer standard vouchers, we also offer a coupon system for corporates that want to reward their employees within specific parameters. If, for example, they want to offer employees a subsidised meal a day from Monday to Friday on a particular Nando’s menu item, then we can create a unique coupon that caters to this specific request,” adds Torrente. Torrente believes this is not a restaurant trend, but rather a corporate one. “Few restaurants are in the position we are to offer this service. We have the footprint and meal options to deliver healthy office lunches no matter where a person is working. As central workspaces in a single location become less prominent, businesses are encouraging and promoting healthier lifestyle choices for their employees. It’s an exciting new era for us when the business-to-business restaurateur is on the rise, and Nando’s is readily positioned to meet this Jaegar Torrente growing need.”
10
GLOBAL TRENDS According to TripSavvy, airlines in the United States are moving from points-based to spend-based loyalty programmes, mainly to entice wealthier customers and their repeat business. Travellers who spend more, earn more – even if they pay more for fewer flights. These flyers will work their way up the airline’s rewards tiers faster and unlock special perks like lounge access, early boarding or additional checked-baggage allowances. South Africans flying with Emirates airlines, and who belong to the loyalty programme Emirates Skywards, will earn double points for any flight booked by 10 December, for travel until 31 March 2021. Moreover, Emirates Skywards has honed in on the trend of personalising loyalty and reward programmes, where qualifying members can redeem points at dining and recreation centres in 160 destinations, book taxis in over 100 cities, and earn miles when shopping across the United Arab Emirates. Starbucks, meanwhile, has changed its transaction or points-based loyalty and rewards system to a spend-based system. This was fairer to the customers who bought the largest size latte versus the smallest size Americano. Under the new spend-based programme, customers earn two stars for every US dollar spent.
WHY LOYALTY PROGRAMMES MATTER Forrester Research Inc recently released its market predictions for 2021. The report noted that the world will experience a harsh economic climate in 2021, which will overwhelm floundering marketing technology, systems and processes that have survived for too long behind a strong economy. Says the report: “The circumstances of 2020 exposed the quagmire that has been developing for marketing leaders over the last five years: chief marketing officers need to drive customer obsession at their firms, rather than just guiding ad buying and promotions.”
IMAGES: SUPPLIED
PPS, which provides financial and insurance services for graduates and professionals such as lawyers, engineers and doctors, has introduced the rewards programme Profit-Share as a way for members who have purchased qualifying products to boost retirement savings. Quintin Augustine, executive of member value proposition at PPS, explains that the pooled money of all Profit-Share Accounts is invested in a high-equity investment mandate, with members benefiting from compound interest based on the performance of the markets. After the age of 55, members have the option to select the investment strategy of the PPS Profit-Share Account. Options include to either remain in a multi-asset high-equity portfolio, move to a multi-asset medium or low-equity portfolio, or move to a fixed-interest portfolio. This gives members the opportunity to choose how accumulated profits are invested, aligning with investment and retirement strategies. Funds in the Profit-Share Account are vested and payable tax-free at retirement age. Quintin “There are 6 804 PPS members with more than R1-million Augustine in their Profit-Share Accounts,” says Augustine, “proving that through its mutual model, PPS gives more to its members.”
Starbucks rewards
L O YA LT Y & R E W A R D S
L&R_RealValue_2.indd 10
2020/11/19 1:32 PM
Full Page.indd 1
2020/09/28 12:35 PM
Full Page.indd 1
2020/11/10 1:35 PM
L ONG-S TA NDING PROGR A MMES
C
licks ClubCard, now a quarter of a century old, has been rated the most-used loyalty programme in South Africa – for the third year in a row. The Truth and BrandMapp South African Loyalty Landscape Whitepaper 2019/2020 reports that 71 per cent of South African consumers use the Clicks ClubCard. Rachel Wrigglesworth, Clicks chief commercial officer, provides the specifics of the rewards offered. “Clicks ClubCard delivers two per cent discount on purchases and the opportunity to earn more cashback through double-points programmes and partners, plus unique relevant promotions such as My ClubCard deals.” However, Wrigglesworth adds that brands understand the need to evolve. “Customers are more aware today than ever of the range of loyalty programmes in the market – what benefits are offered, which programmes offer real value and which programmes don’t,” says Wrigglesworth.
PARTNERSHIPS eBucks Rewards has revealed that FNB and RMB Private Bank customers have earned in excess of R850-million in eBucks Rewards since level 5 of the national lockdown was introduced earlier this year. Chief executive of FNB Retail and Private Banking Raj Makanjee says, “We are proud to be providing real help to customers to better manage the impact of a global pandemic on their finances. Due to reliance on ecommerce,
IMAGES: SUPPLIED
AFFINITY PARTNERSHIPS Loyalty points now come to the party creatively via affinity partnerships. As one of South Africa’s oldest and most-used loyalty programmes, Clicks celebrated 25 years of the ClubCard in 2020. With more than 8.4 million members (February 2020), it’s had to adapt to retain customer loyalty. Reducing the qualifying threshold for customer cashback was one element implemented. Clicks chief commercial officer Rachel Wrigglesworth says ClubCard continues to provide benefits by enabling easy ways to boost points earnings on its Double Points Days or Seniors Days. Increased earning opportunities are now also possible with partners such as Europcar and City Lodge. In its loyalty affinity partnership, ClubCard members can earn both ClubCard points and eBucks if they are members of both programmes and shop at Clicks or fill up at Engen.
ADAPT OR DIE Long-standing loyalty and rewards programmes have needed to evolve to keep competitive with new entrants to the market. SAMANTHA BARNES finds out just what the legacy programmes are doing to retain loyalty
increased grocery shopping and home-delivery requirements, our partnerships with Shoprite and Checkers, Takealot and Mr D Food have provided even more value to customers in the last six months. “The ability to earn and spend eBucks with a range of partners in these difficult times has been a major highlight in our efforts to help customers manage their money.” Rewards programmes are refined over time to deliver optimal value. Makanjee says this helps “customers get even more value through instant rewards, rebates, and tips on how to earn and spend eBucks”. This includes adding partners to give customers wider choice and more value.
Constant and ever-changing As with anything that works well, some aspects of loyalty programmes remain integral. “Clicks ClubCard remains a free programme to join, and remains easy to use while providing rich rewards,” says Wrigglesworth. “What has changed is the convenience of technologyenabled innovations. “Technology enables quicker, more relevant communication on launches and unique special offers via more communication channels including emails, SMSes and in-app notifications.” eBucks Rewards has welcomed valuable partners including Clicks, Kauai, Takealot, KFC, Mr D Food, The Entertainer app (with more than 300 000 registered FNB and RMB Private Bank customers), Wimpy, and TaxTim, among other partners. “Partners such as Engen – our ‘earn and spend’ eBucks partner – offer significant value, where customers can earn up to R8 back in eBucks per litre of fuel,” says Makanjee. “On grocery spend, Shoprite and Checkers attract the greatest share of FNB and RMB Private Bank customer spend. Customers also earn up to 15 per cent back in eBucks when shopping at Shoprite/Checkers stores and on their Sixty60 app.” Johan Moolman, eBucks Rewards CEO, reports, “During national lockdown, we’ve seen customers rely heavily on eBucks to cover day-to-day expenses while saving money to boost disposable income. The spend-to-earn ratio was consistently over 90 per cent, and exceeded 100 per cent over three months. “As the country increases economic activity, customers will have the opportunity to earn and spend their eBucks with more than 30 eBucks partners across South Africa.”
“The ability to earn and spend eBucks with a range of partners in these difficult times has been a major highlight in our efforts to help customers manage their money.” – Raj Makanjee L O YA LT Y & R E W A R D S
L&R_Legacyvalue.indd 13
13
2020/11/19 1:18 PM
Getting
smarter about tech How are new technologies being leveraged to improve customer experiences and drive greater loyalty? By ANTHONY SHARPE
W
e’re almost into the third decade of the third millennium AD. While our distant ancestors may once have kept track of their loyalty points using shells or particularly attractive pebbles, these days everyone seems to have an app. “Most loyalty programmes are looking to enhance the digital transformation of their programmes,” says Steve Burnstone, CEO of customer strategy consultancy Eighty20. “On the one end, a smartphone app can be a simple way to register and receive a digital card to be used at point of sale, or the app can be a channel to enable further engagement through gamification, redemption, and a host of valueadded features including vouchering, payments, locating your nearest store and so forth.” Burnstone notes that although digital is the new normal and should thus be a part of any loyalty programme’s future roadmap, in South Africa physical cards actually remain the easiest way to get customers to engage with traditional brick-and-mortar stores. “If you are in the store and the sales agent offers you a card and free membership to receive a certain percentage back, then it is an easy acquisition. Once a customer has a card and membership, it’s a lot easier to migrate them to a digital card or app. However, plastic can be expensive – especially if it needs a chip and pin – and difficult to distribute to all stores.”
Location is everything Geolocation and location-sensitive notifications are increasingly being used by brands to engage with customers in real time at key moments. “Most large property companies are looking at how the free WiFi services in their malls can be used to create a loyalty relationship with customers that includes location-based targeting for tenants,” says Burnstone. “Furthermore, beacon technology allows brands to pinpoint where a customer is at any given moment, and then send them push notifications with coupons, promotions or other targeted offers.” Burnstone gives the example of a clothing retailer store that may send a promotion to a consumer near their location or while the individual is visiting a competitor. “A US study conducted by beacon platform Swirl found that 73 per cent of shoppers who received a beacon-triggered message on their smartphone said it increased their likelihood of making a purchase during a store visit, while 61 per cent said the message would prompt them to visit the store more often.” Burnstone notes, however, that while there is value in informing a customer of nearby promotions, “there is greater value in understanding customer behaviour and using geolocation together with other information to offer relevant and timely offers or promotions to customers”.
“The app can be a channel to enable further engagement through gamification, redemption, and a host of value-added features.” – Steve Burnstone
te all
14
MASTERCARD GOES AUGMENTED Mastercard recently launched an app that uses augmented reality (AR) to help clients better understand the benefits of World or World Elite cards – their premium cards for affluent consumers and frequent travellers. Scanning their Mastercard with the app creates three portals: Experiences, Everyday Value and Peace of Mind, which are illustrated into 360-degree AR. “Loyalty programmes are a key driver of card use and preference, particularly among affluent consumers,” says Mastercard spokesperson Raja Rajamannar. “According to Javelin Advisory Services, for affluent consumers, rewards trump interest rates as the top reason a card is chosen. Our data shows that cardholders who redeem rewards or take advantage of a card-linked offer use their card more often and spend more using their card than cardholders who don’t. “AR delivers an interesting way of illustrating rewards by engaging cardholders with content that’s more immersive than other static environments. In a world where it is increasingly difficult to reach and entertain consumers, AR enables us to take things like our own priceless experiences and benefits live in unique and engaging ways. This helps to inform and empower cardholders to maximise the full potential of their card benefits.”
L O YA LT Y & R E W A R D S
L&R_tech.indd 14
2020/11/19 1:18 PM
T ECHNOL OGY
Digital objects, real rewards
S
urprise and delight have long been understood to be key drivers of customer loyalty. And while these don’t necessarily have to be achieved through big, expensive rewards, they do need to be carefully thought out. That’s the view of Jon Knight, head of partnerships at BLOCKv, a company that creates virtual goods on blockchains. Knight believes micro-rewards can offer strong incentives at little cost. He gives the example of credit cards: “Imagine if, rather than competing on interest rates or dry points, every third time you paid using your card, the card company sent you a gift box on your phone. If you tap to open it, you get a reward.” The gift box is represented by something called a Vatom – a digital object that can be dropped on a map, captured in augmented or virtual reality, stored or transferred, and redeemed for anything from theatre tickets to a cup of coffee. “Micro-rewards like this create those surprise and delight moments, the breadcrumbs that build a stronger psychological relationship with a brand,” says Knight. Knight says that partnerships are key. “Imagine a coffee shop is looking for new customers and they partner with a major card provider, which for a nominal fee provides every customer who uses their card within a mile of the coffee shop with a digital sampler they can redeem in-store.” The goal, Knight says, is to create an ecosystem where big brands can monetise their customer base and build new loyalty, customers can get rewards they actually enjoy, and smaller companies can get market exposure. “It’s win, win, win.”
IMAGES: SUPPLIED, ISTOCK.COM/YAKOBCHUKOLENA
APP-ATHY While getting users to register for an app is seen as a natural evolution for loyalty programmes, Jon Knight of BLOCKv cautions that consumers are tired of downloading loads of apps they never use. “Web browsers have become so advanced that you can emulate most of the features of an app – with the advantage that the consumer doesn’t need to download the app, reducing friction.” Knight suggests brands opts for a tiered system. “Offer a competent, fully featured web experience, then if you want them to download the app later, incentivise it.”
Can tech make
loyalty more rewarding?
O
ne of the key ways in which technology can help consumers maximise the benefits of their rewards programmes and make redemption easier is through the convergence of payment methods and loyalty. The Truth and BrandMapp South African Loyalty Landscape Whitepaper 2019/2020 found that ease of redemption was one of the key pain points for consumers: 21 per cent of respondents reported that redeeming points or rewards was too complicated. “If we look at the evolution of payment, loyalty programmes have also evolved in parallel to this,” says Amanda Cromhout, CEO of loyalty consultancy Truth. “We used to pay with cash, then via credit card, then we moved on to tap-and-go, mobile payments, invisible payments – and now Sweden is trialling payments via microchips embedded in one’s skin. There is no reason why loyalty should be different to this, fully embedded in a cellphone app, so you can have invisible loyalty earning.”
Convergence point “From the customer perspective, there is a need for consolidation of programmes, but I don’t think brands and programme owners are necessarily ready to give up the control of their brands or rewards currency which is necessary to provide that kind of service,” says Steve Burnstone, CEO of Eighty20. He says some start-ups have tried to get this model working among the big brands, but that while they understand the value, they’ll only participate if others do too. “You need a few key programme owners to get involved to create critical mass for others then to join, or you will need a platform disruptor like an Amazon or Apple entering this space and forcing a response from programmes.” Should this take off, Burnstone says there are two immediate possibilities. “You could have a basic aggregator app with limited functionality that shows how much you’ve earned, enabling points exchange or redemption with a click through to the owner website to interact further. On the other hand, a set of strategic alliances between programmes or a coalition could create something with much richer integration and an enhanced value proposition for the customer.” Burnstone says the most likely aggregation space is in payments and banking. He gives the example of mobile payment, customer loyalty and rewards platform Zapper, which has included a number of SME merchants that have loyalty programmes on the Zapper app. When you use Zapper, you automatically get a reward, providing a frictionless experience for the consumer.
L O YA LT Y & R E W A R D S
L&R_tech.indd 15
15
2020/11/19 1:18 PM
CONSUMER BEH AV IOUR
LOYALTY PROGRAMMES AND SPENDING HABITS
According to Rioma Cominelli of First Loyalty Plus, it’s safe to say that South African consumers have saved “many millions” through loyalty programmes – although it’s difficult to provide a precise figure, not least because many loyalty programmes won’t release this information. “Suffice to say that with 72 per cent of South Africans belonging to at least one loyalty programme, a lot of money is being saved.”
L
oyalty undoubtedly has a positive effect on consumer spend. But should programme owners be looking for their members to make more frequent purchases, or is it volume that counts? And how can they achieve the desired results? According to a white paper by Genex Insights, Gartner research shows that just 20 per cent of a company’s customer base can be counted on to generate 80 per cent of its revenues. Small wonder, then, that companies are eager to find avenues for mining loyalty. This is borne out by an observation by Brett White, CEO of Zapper: “South Africa’s 2 000-odd malls and thousands of entertainment venues were already battling a sluggish economy before the pandemic hit. Ensuring a strong comeback must be top of mind for venue owners, property managers and property investment funds across the country.” Loyalty programmes definitely have a role to play here, he maintains, pointing to spending patterns during the coronavirus pandemic as evidence. Although the overall basket size shrank during lockdown, merchants with a loyalty card experienced only a small decline, he reveals. Some even saw a positive impact.
TARGETTED PROGRAMMES Rioma Cominelli of First Loyalty Plus isn’t surprised. She explains that although consumer spend doesn’t necessarily increase when a loyalty programme is in place, programmes almost always lead to an increase in the
16
L O YA LT Y & R E W A R D S
L&R_Customer spend_1.indd 16
“People get excited about being able to save on something they really want, like a trip to Las Vegas.” – RIOMA COMINELLI
frequency of spend. But the benefits of the programme go beyond this, helping the merchant to capture information that can be used to deepen their understanding of the consumer. This, in turn, can be used to create promotions that target consumers more precisely. For example, says Cominelli, a restaurant might learn that its patrons are particularly price sensitive. In this case, it will tailor its loyalty programme to push more frequent visits. On the other hand, if price is not an issue, the programme may be designed to encourage greater usage. “Unlike price-sensitive customers who use the rewards so that they can visit the restaurant, these customers may be encouraged to spend more by the offer of discounts on certain meals,” she says.
Simplicity drives use She adds that the programmes which attract the greatest spend are those which are straightforward and easy to use – simply because no-one wants to engage with a programme they can’t understand. But it’s also equally important for the programme to offer the customer real value: if the offering is unrelated to something that the customer wants
or needs, there’s no reason for them to use it. “In other words, they should target experiences that are already a part of the customer’s life, like going to the movies or eating at a restaurant,” Cominelli says. That said, programmes that revolve around an experience people would like to have are just as successful. Cominelli indicates that this aspirational element is critical. She gives the example of overseas travel: “People get excited about being able to save on something they really want, like a trip to Las Vegas. They’ll buy into a programme specifically because it makes it possible for them to afford something they otherwise could only dream of. But, again, it is essential that this is tagged onto daily usage. A programme linked to a product or service that is used infrequently is pointless.” Added to this, there must be an emotional component which ties everything together. After all, Cominelli concludes, customers must enjoy using the programme – otherwise those loyalty cards will sit, forgotten, in their wallets.
IMAGES: ISTOCK.COM/TARIKVISION, ISTOCK.COM/NICOELNINO
LISA WITEPSKI reports on how much impact loyalty programmes really have on purchasing decisions
Rioma Cominelli of First Loyalty Plus reports that the biggest savings are in sectors related to lifestyle, such as travel and hospitality, especially restaurants and hotels. “Sectors that are purely functional, such as insurance, aren’t quite as alluring. People want to feel good about their lives; they like a little glamour.”
16
2020/11/19 1:19 PM
INTRODUCING THE V+ LOYALTY CARD REGISTER
EARN
SPEND
V+ IN UNDER 3 MINUTES!
EARN INSTANT CASH REWARDS ON FUEL AND ON SELECTED PRODUCTS IN-STORE.
CASH REWARDS AT THE PUMP AND NOW ALSO IN-STORE.
SOUTH AFRICA’S MOST SIMPLE AND STRAIGHT FORWARD FUEL REWARDS PROGRAMME. THE PROGRAMME WHERE YOU: • Know exactly what you earn (we donʼt hide behind complicated points or tiered earning systems). • Pay no joining fees, no card fees or monthly membership fee. • Where you earn more (Earn 15c per litre of fuel and earn 0.5% on selected products in-store). • Where you can spend your cash rewards on anything your heart desires at the pump and in-store.
GET YOUR V+ CARD TODAY. Available at participating Shell Select and Shell Shop stores. Terms and conditions apply, visit www.v-plus.co.za/ for more details.
EXCLUSIVE TO 3
3998 SHELL V+ Loyalty PRINT ADS v6.indd 1 ToCheckA_fcp.indd 3
2020/11/02 16:33 2020/11/02 4:55 PM
Full Page.indd 1
2020/10/20 2:09 PM
AU T OMO T I V E Cashback rewards for fuel purchases
Hailing rewards for drivers What impact will rewards programmes have on the informal taxi industry? LEVI LETSOKO reports SA Taxi
M
ultiple industries in South Africa have adopted loyalty and rewards schemes to secure ongoing transactional relationships with their customers. The taxi industry is no different, and is currently mapping out a working formula for formalising the sector, while looking to embrace customer relations programmes.
The SA Taxi Rewards programme is the brainchild of SA Taxi – an organisation that has tagged the South African National Taxi Council (SANTACO) as one of its major stakeholders. The programme was conceptualised to uplift the industry. It is a systematic rewards scheme that aims to pull in key players in the sector including drivers, associations and the staff that manage passengerrelated duties, says Maroba Maduma, SA Taxi’s group communications executive. “SA Taxi Rewards has teamed up with BP, Shell, Total, Autozone, Supa Quick and Autoboys to alleviate financial pressure on taxi operators resulting from COVID-19 and the lockdown period,” says Maduma. “The programme is not limited to SA Taxi clients only;
“A programme like this makes my day-to-day operations seamless, while expanding my BUSINESS.” – Simphiwe Shinga
Fuel rewards to keep you on the road FNB eBucks and Engen
IMAGES: SUPPLIED
I
f you are a vehicle owner and a member of a medical aid scheme with habitual grocery shopping tendencies or a frequent visitor at the pharmacy, you have definitely been targeted as a potential beneficiary for a fuel rewards scheme. The trend of connecting fuel companies and multiple lifestyle and banking groups to create fuel rewards programmes has grown over the last decade. Here are the top three collaborations:
Drivers earn up to R8 back per litre when making fuel purchases at Engen outlets with an FNB or RMB Private Bank Card.
Sasol and ABSA Rewards Absa account holders can get up to 30 per cent cash back when they fill up at Sasol or purchase goods. This is applicable to every amount of R3 000 swiped.
BP and Shell with Discovery Insure By filling up at BP or Shell, drivers can get up to 50 per cent cash back. Sources: FNB eBucks; ABSA; Discovery Insure
it is a programme that any taxi operator can register to be a part of and earn rewards.” As an informal sector, the taxi industry circulates billions of rands per annum through expenditure and acquisitions. This rewards programme means that Maroba operators can now qualify Maduma for discount deals with assigned suppliers. Simphiwe Shinga is a business owner in the sector and a member of the Lindelani Taxi Association. He joined SA Taxi Rewards in March 2020 after it was recommended to him by a fellow operator. “I’m able to earn points on a daily basis, says Shinga. “I receive cashback benefits with every fuel purchase. COVID-19 abruptly forced us to adapt to the new lockdown measures. This rewards programme has put money back into my pocket with every fuel spend. A programme like this makes my day-to-day operations seamless, while expanding my business at the same time.” In an attempt to provide innovative solutions to the processes that uphold the feasibility of the sector, SA Taxi has negotiated deals with some of its biggest service providers. “We are constantly engaging with the industry to understand better what it is they want more access to. Through these engagements, we are able to target the right partners that best suit the operators’ needs,” says Maduma. The initiative has, however, been met by numerous pushbacks from various corners. The industry itself is very traditional in its approach to solutions that are meant for its upliftment. Nevertheless, beneficiaries are excited about what the future holds. “SA Taxi did well by introducing this programme to the industry, especially during these trying times. The more fellow taxi operators and associations that join this programme, the more successful the taxi business owners will be,” affirms Shinga.
L O YA LT Y & R E W A R D S
L&R_transport.indd 19
19
2020/11/19 1:22 PM
T R AV EL
Rewards in a new era of travel COVID-19 has had a huge impact on travel worldwide. PUSELETSO MOMPEI looks at rewards programmes in the industry
A
ir miles have long been a favourite reward for airlines to offer to customers as an incentive and to drive loyalty. However, with S&P Global estimating a massive 60 to 70 per cent drop in global air passenger traffic in 2020 compared with 2019, what is happening with rewards in the aviation space? John Friel, chief integration officer at Travelstart, says that with South African Airways and Comair – which operates the British Airways and the kulula.com brands in South Africa – being in business rescue for most of this year, the key players currently in the market do not have frequent flyer schemes, therefore there are no programmes to refer to domestically at this time. Friel explains that while the majority of airlines have protected both their members’ mileage balance and membership tier status, they fully recognise that in the current environment frequent travel has been impacted by the COVID-19 pandemic across all of their markets. Airlines own their respective loyalty programmes, says Friel, and so are free to add additional benefits as they see fit to stimulate demand and offer additional rewards to enhance a loyalty programme. That being said, people’s reasons to travel have changed at this time, so they are not necessarily being tempted by such value offerings. “I applaud all major airlines,” says Friel. “They are all doing what is needed to protect their frequent flyers in what can only be described as very difficult times for the entire airline industry globally.”
Pre-festive season revival Travel loyalty programmes are starting to open up again. At the end of September, Vitality announced that its travel platform would reopen for hotel and car hire bookings. The programme indicated that when domestic flight bookings open, Vitality members will be rewarded with upfront discounts of up to 75 per cent, as well as 72 hours’ early access for flight bookings.
20
REWARDS FOR NOT FLYING In a seemingly counterintuitive move, Thailand’s national carrier, Thai Airways, launched a campaign during the pandemic handing out up to 3 million free miles to its members. The caveat was that members had to stay home to cash in on them. The campaign, created by Wunderman Thompson, wants to encourage the airline members to stay at home during the coronavirus pandemic. At the same time, the airline hopes they will take the downtime to plan for their travel beyond COVID-19. Source: Wunderman Thompson
L O YA LT Y & R E W A R D S
L&R_travel.indd 20
2020/11/19 1:22 PM
T R AV EL
Post-lockdown trends emerging
“Micro-rewards can incentivise people to travel.” – JON KNIGHT
In terms of shifting consumer behaviour, a key trend is that people are buying tickets very close to departure. Friel says that currently 25 per cent of all Travelstart bookings are being made within 24 hours before departure. A further 17 per cent of travellers book for travel within three to seven days of that booking, and 13 per cent book between eight and 14 days before departure. A total of 55 per cent of all bookings are thus currently being booked for travel within two weeks. “We expect this trend to continue, meaning a lot of late festive season bookings happening.”
FAST FACT
Hilton became the first of the major hotel loyalty programmes to announce elite status extensions for all elite members. Expiring points have been paused for all members through December 31, 2021. Source: hilton.com
IMAGES: SUPPLIED, ISTOCK.COM/ LYNDON STRATFORD, ISTOCK.COM/ DEN-BELITSKY
REWARD ME PLEASE “Airline loyalty schemes are meaningless to infrequent travellers because they don’t accrue enough miles to get higher status,” says Jon Knight of BLOCKv, which creates digital objects on blockchains. “Most people who don’t travel often book according to cost or schedule, which is a missed opportunity for airlines. “Rather than signing me up for a membership scheme that doesn’t really benefit me, why not give me something small? Picture a puzzle piece as a digital object. Every time I fly, I get one, and when I have four, you give me once-off lounge access. To the airline, it’s inconsequential, but it’s surprising and delightful to me. Micro-rewards can incentivise people to travel.”
TIPS TO GET THE BEST TRAVEL DEALS Due to COVID-19, what worked in previous years no longer works and we will have to find new ways to navigate this new way of seeing the world, says Zee Shumane, the founder of African Odyzzee, a platform that showcases different travel destinations to aspiring travel enthusiasts. Some tried-and-trusted options are no longer available. “With large organisations such as STA Travel, which allowed for monthly payment plans for travel, closing their doors this year, travellers will have to be savvier and budget smarter,” Shumane explains. All the major banks have some form of loyalty programme that rewards users based on their spending patterns with air miles and hotel discounts. The benefit of air miles is that they can allow one to fly abroad at a cheaper rate or
with a possible upgrade from economy to business class. The more you use your card for other purchases, the more points you earn. Credit cards have higher redeemable points than debit cards, plus travel-specific benefits.
Zee Shumane
BOOK SMART Booking apps have features that you can use to ensure you always book during the best time at the best available rate. “Set notifications with your desired price for flights or accommodation and be more flexible with your travel dates,” advises Zee Shumane of African Odyzzee. “Research when off-peak seasons are for the places you want to visit. During off-peak season, flights, accommodations and activities are always cheaper.”
KEEP IT LOCAL Zee Shumane of African Odyzzee says that until there is a COVID-19 vaccine, most people will be travelling locally. Since the largest expense when travelling locally is accommodation, she says that, “When travelling within South Africa, it’s important to bear in mind that the majority of prices listed on apps and hotel websites don’t necessarily reflect the price for locals. By directly contacting the accommodation establishments, you can reduce the price by 10 to 40 per cent, especially for high-range lodges.” According to a study by Airbnb, as uncertainty continues, local travel will continue to be very popular in 2021, and this is demonstrated by 62 per cent of the people surveyed who expressed that they want to take trips close to their homes.
L O YA LT Y & R E W A R D S
L&R_travel.indd 21
21
2020/11/19 1:23 PM
Full Page.indd 1
2020/11/18 12:46 PM
Restaurant loyalty programmes go high tech GLENNEIS KRIEL explores how restaurant and hospitality loyalty schemes are adapting and can help businesses recover after COVID-19
D
igital transformation has led to an exponential growth in the number of loyalty schemes in the restaurant sector, with more apps now typically being used to reward loyalty in the restaurant sector than any other sector, according to Amanda Cromhout, CEO of Truth, a consultancy specialising in customer centricity and loyalty programme design. Loyalty programmes in the sector have matured from simple stickers on cards to apps that go beyond rewards and birthday gifts, to include service functionalities that, among others, allow users to view menus and specials, order food, keep track of and use points, make in-app purchases and even give vouchers to friends – whether they use these apps or not. Of these reward programmes, Spur’s Family Card is considered the most successful, being the only restaurant loyalty programme to have made it to the Truth and BrandMapp South African Loyalty Landscape Whitepaper 2019/20 top 10 in 2020, and for the past five years. Kauai took second place in the Restaurant and Quick Service Restaurant (QSR) division,
Hotel Loyalty Schemes need a rethink
T IMAGES: SUPPLIED
IMAGES: SUPPLIED
HO SPI TA L I T Y
he ban on international travel, coupled with the economic downturn caused by the COVID-19 pandemic, has brought the global hotel industry to its knees, with many hotels internationally still not opening their doors or operating at full capacity, according to Nils Heckscher, head of Africa at hotel consultancy PKF Hotelexperts. Hotel loyalty schemes, as such, might help to encourage people to travel and use hotels again, but they will not be enough to resurrect the sector. “Things are not going to get better until the economy has recovered, international travel has opened again and people have overcome the newly developed fear of travel,” says Heckscher. Heckscher says that hotel loyalty schemes have become more sophisticated over time, using artificial intelligence to match hotels
but also won the best loyalty programme of the year award in the Restaurant and QSR division of the 2019 South African Loyalty Awards.
Understanding preferences The Truth and Brandmapp Whitepaper revealed that consumers over the age of 40 generally prefer programmes offered by Spur and the Cape Town Fish Market, whereas those under 40 prefer those by Bootleggers and Burger King. While in-app purchases are offered by most of these programmes, the whitepaper found that 73 per cent of South African consumers still prefer using a physical loyalty card, whereas 25 per cent prefer using a mobile number, as with the Seattle Rewards programme, for identification purposes and 23 per cent of respondents favoured scanning an app over swiping a card. Cromhout foresees that this will change due to the COVID-19 crisis causing an increased
The Capital Hotels and Apartments offer customers instant discounts on booking
with client preferences better and also to identify ways to enhance the experience. This is particularly useful when targeting millennials.
Instant gratification Marc Wachsberger, managing director of The Capital Hotels and Apartments, however, feels that loyalty schemes in their traditional form are dead: “Everyone and their dog has a scheme, but there is always a catch that makes it tricky for the guest to use or redeem it. However, guests are getting smarter and are now seeing through empty marketing promises.”
demand in contactless payment solutions. Cromhout says that the most successful programmes are the ones that strengthen the brand experience and turn themselves into an indispensable part of the hearts and minds of their Amanda clients. “Such programmes Cromhout are likely to help restaurants recover from the impact of COVID-19, by allowing restaurants to promote specials to their existing members instead of chasing down new customers.”
DID YOU KNOW?
The number of South Africans using loyalty programmes declined from 79 per cent in 2017 to 72 per cent in 2019, according to the Truth and Brandmapp South African Loyalty Landscape Whitepaper 2019/20.
The Capital Hotels and Apartments loyalty programme, La Famiglia, overcomes this by giving guests an instant discount of up to 20 per cent when making a booking. “Instant gratification is essential. No-one likes to wait, especially not millennials,” Wachsberger says. Another key innovation of La Famiglia is that their website price is dynamically calculated based on the best rate of the day. And how can customers leverage benefits for meaningful value? Wachsberger advises that they know the rules and how to play the game when signing up for a scheme: “If you don’t take the time to understand the programme, you are unlikely to reap all the benefits. The industry could, however, come to the party by making things simpler for everyone.”
“Guests are getting smarter and are now seeing through empty marketing promises.” – Marc Wachsberger
L O YA LT Y & R E W A R D S
L&R_Hospitality.indd 23
23
2020/11/19 1:23 PM
RE A L RE WA RD S
Real INSIGHT, real rewards
Nicita Allies
What do customers really want from a loyalty programme? THANDO PATO chats to some consumers to find out
Nicita Allies Senior account manager, Cape Town “I am a member of 13 loyalty programmes, and they definitely don’t all serve me. Cotton On, eBucks, and Checkers Xtra Savings card are my favourites. I don’t think it would hurt if H&M had a loyalty programme. The brand services my family’s needs as it has a kiddie, home, women and men’s section, and the prices are reasonable. With my ideal programme, I would like to get rewarded for my purchases immediately. I want a programme that doesn’t require me to spend an arm and a leg to get a discount, and considers things such as birthday vouchers. My worst loyalty programme is Foschini. They want you to spend R1 000 to get R50 off. What’s the point?”
Pusetso Mabetoa
Lesiba Langa
Pusetso Mabetoa
Lesiba Langa
Alexander Forrester-Strydom Account director, Cape Town “I find value in some of my loyalty programmes; they are useful and add value from a savings point of view. But I think that generally, across all loyalty programmes, you have to invest too much of your time and resources to see benefits, and I would like to see brands reward you more quickly, without so much effort required.”
WHAT MAKES A LOYALTY PROGRAMME WORK? Lauren Moore, junior consultant at Truth, which specialises in building loyalty programmes, says: “Truth has created a blueprint for loyalty success. New programmes can take this framework into consideration when designing their programme or existing loyalty programmes can use it to measure their success.” Moore says the five critical success factors for any loyalty programme are:
24
Alexan
1. 2. 3. 4. 5.
Alexander Forrester-Strydom
It must be simple to use and transparent. It must be visible to the consumer, so they are aware of it and how it works. There must be customer engagement with the programme. The consumer must have a seamless experience throughout the user journey. It must match the brand values – the values of the programme and those of the brand need to be aligned.
IMAGES: SUPPLIED
Senior manager, Pretoria “I am a member of several loyalty programmes such as Clicks, Pick n Pay Smart Shopper, eBucks, Woolworths, Cotton On, Factorie and Sorbet. My Clicks ClubCard only works for me when I swipe with it at Sorbet, which I go to often, so that’s where I get my points and then cashback rewards that I use to buy toiletries. I buy my nieces’ clothes at Cotton On. Their programme is not user-friendly. Woolworths can do more. It used to be that you could gather points, but now you don’t really get that much from them. eBucks is good because they give you tips on how to accumulate points and they have a lot of partners. I wish stores such as Big Blue had loyalty programmes. I spend a lot of money on local products – there needs to be a focus on 100 per cent South African brands.”
Entrepreneur, Johannesburg “I am a member of a few loyalty programmes, but I hardly use them. In retrospect, I think most of them are a scam because you must spend ridiculous amounts of money to get value from them. A loyalty programme that I think needs to be considered is one for petrol. If petrol brands like Engen or Shell had a loyalty programme where I could get discounts on petrol every time I went to fill up, I would definitely sign up.”
L O YA LT Y & R E W A R D S
L&R_What we want.indd 24
2020/11/19 1:23 PM
A DV ER T ORI A L
NEDBANK EXPANDS GREENBACKS MONEY MANAGEMENT PROGRAMME Following the launch of the new Greenbacks money management programme, membership on the award-winning programme has grown from strength to strength, underscoring its impact and ability to provide value and rewards for its clients
IMAGES: PROSTOCK-STUDIO/ISTOCK.COM
N
edbank is introducing the Responsible Borrower to encourage smarter lending choices while exposing customers to an even wider array of benefits through a growing partner network. “As consumers face mounting pressure, they are looking to become more financially astute,” says Dharmesh Bhana, Executive: Loyalty & Rewards at Nedbank. “As financial experts who do good, Nedbank continually develops tools and programmes that empower consumers to enhance their overall financial wellness, including their spending and borrowing habits.” The Responsible Borrower package enables customers to stay in control of their debt, fostering “good” borrowing behaviour by encouraging them to take up “good” debt. It helps them manage their credit record with prompts and reminders to keep them on track. With no membership fees or penalty fees, members are supported in using debt appropriately and enjoy exclusive partner deals, coupons, vouchers and discounts on the new Greenbacks app. Once a quarter, all customers on the package stand a chance to have the outstanding value of their loans settled by Nedbank. Through the comprehensive money management and rewards programme, Greenbacks members access personalised deals and special offers through Nedbank’s partner network. Using advanced data analytics, the bank can observe spending patterns, identify opportunities and encourage a positive, beneficial change in behaviour through
individual offers that provide better value for both members and partners. “Each member selects a package of their choice and gets tips, tools and support to make good money choices to enhance their financial wellbeing. Beyond being a financial services provider, Nedbank is committed to walking the path with consumers to financial wellness,” Bhana says.
“Our aim is to put cash back into our members’ pockets and reward them for adopting better money habits.” – Dharmesh Bhana, Executive: Loyalty & Rewards, Nedbank
MORE REWARDS WITH GREENBACKS AND BP As South Africans come to grips with the current challenging economic climate, Nedbank continuously seeks partnerships to secure value in their spending, recently adding fuel retailer BP to the range of partners and providers. Following extensive negotiations with BP, Nedbank has structured a simple, easy-touse fuel purchase cashback benefit for its Greenbacks members who have opted into the Card Swiper package. Members simply swipe their Greenbackslinked Nedbank card when paying for fuel at any of the 500 BP service stations across South Africa and they automatically receive 25c per litre back. “As lockdown and travel restrictions begin to ease, our aim is to put cash back into
our members’ pockets and reward them for adopting better money habits,” says Bhana. While clients enjoy an expanding range of benefits, Greenbacks also enables them to contribute through the four Nedbank Affinities Trusts including the Green Trust, the Nelson Mandela Children’s Fund, the Sports Trust and the Arts Trust. “Accessing the Greenbacks programme through the leading Nedbank Money app and the new Greenbacks app allows clients a more accessible and convenient way to manage their money better,” adds Bhana. “This also allows them to enjoy their rewards in the form of digital coupons, cash and vouchers, which are easily redeemed at numerous participating stores.” To access this reward, clients can opt into the Greenbacks Card Swiper package available to them on the Greenbacks app. To join Greenbacks, click “Join Greenbacks” on the rewards tab on the Nedbank Money app; follow the prompts to download the Greenbacks app; and register using your existing Nedbank ID. Once registered, opt into the Card Swiper package to earn Greenbacks for all eligible swipes as well as 25c back per litre for the fuel purchase at BP. For more information: 0860 555 111 Nedbank @Nedbank www.nedbank.co.za
L O YA LT Y & R E W A R D S
Nedbank_Advertorial.indd 25
25
2020/11/18 3:04 PM
Untitled-3 1
2020/11/18 5:20 PM
F IN A NCI A L SERV ICES
F
ARE INSURERS
inancial service providers with a focus on insurance need to rethink loyalty programmes to ensure these programmes meet client expectations and add value to their core products, says Ineke Prinsloo, head of customer insights at Consulta. This is particularly necessary now, due to the decimating impact of the COVID-19 crisis on consumer spending and confidence. While insurance loyalty programmes GLENNEIS KRIEL explores whether or not insurance loyalty have grown tremendously in scope over the programmes are doing enough to ensure customer satisfaction past few years, offering a variety of health, – and how they can do better travel, entertainment, retail, financial, and lifestyle benefits, the South African Customer Satisfaction Index’s evaluation of Momentum Multiply, Discovery Vitality and Sanlam as travel and entertainment in an attempt to save A shifting mind-set Reality found that the money,” Prinsloo says. Consulta’s COVID-19 tracker revealed a increased scope and This necessitates a rethink for insurance considerable shift in consumers’ psyches digital transformation companies on their reward offerings, to fix the with regards to basic needs such as of programmes incongruence between these and evolving health, safety, and income. “We found are not necessarily customer needs. “Insurance loyalty programmes that consumers expect to divert more of leading to greater should rethink the investment by expanding to offer their disposable income to home-cooked consumer satisfaction. access to tangible, basic benefits that consumers’ meals, utilities, and internet connectivity Prinsloo points to the post-COVID income and priorities would have cut and online income generation, while Ineke parity in the rewards in from their household budgets,” says Prinsloo. downscaling on non-essentials such Prinsloo terms of standard and lifestyle benefits, except that Sanlam offered data services (1GB) not included in the other programmes. Clients, however, had to fork out an additional – Ineke Prinsloo 41 per cent to participate in the Sanlam Reality programme over the past two years, with prices increasing from R195 to R257 over this time. Momentum Multiply and Discovery Vitality fees increased by roughly 17 per cent, from R221 to R258 for Momentum and R239 to R280 for Discovery. ld Mutual’s budgeting app, 22seven, classify spending and share insights so users “Our evaluation found that customer was founded in 2012 to help South can see exactly where their money is going,” satisfaction with these schemes is lagging Africans better manage their money. Joseph says. behind those of the other financial services The app, which now has more than As a result, Joseph says 22seven users are categories,” says Prinsloo. “Budget-conscious 350 000 users who more likely to grow their net consumers will scrutinise every expense have securely linked more worth and pay down their against the lens of value for money. than a million accounts, credit card debt than “The lower value-for-money perception is open to the public and non-users. Data accrued of loyalty programmes will therefore fail to totally free of charge. shows 22seven users on mitigate customer dissatisfaction with the In addition, 22seven average save 16 per cent of core product offering, which means that the users are able to earn Old their income in comparison companies’ investments in these programmes, Mutual Rewards for making with 0.1 per cent for the which average around 6 per cent of their sound financial decisions, general population. “People revenue, is not paying off.” with every 10 points earned often think that having a translating into R1. budget is restrictive,” says Jikku Jikku Joseph, managing Joseph. “The truth is that a Joseph director of 22seven, says budget is a plan to spend South Africa does not have more on the things that a strong saving culture: “Most people spend really matter to you and less on the things The industry index score for price to before they save instead of the other way that don’t.” quality trade-off for insurance loyalty around, because our banks typically help us programmes is 70.2 points, which spend our money, not manage it.” is significantly lower than for other People in general also tend to financial services scores except for underestimate the amount of money medical schemes. they spend on non-essentials. “The app Source: South African Customer Satisfaction addresses this by using machine learning to Index 2018/2019
MISSING THE MARK?
“Budget-conscious consumers will scrutinise every expense against the lens of value for money.”
Rewarding good financial choices
O
IMAGES: SUPPLIED
DID YOU KNOW?
22Seven users are able to earn Old Mutual Rewards for making sound financial decisions, with every 10 points earned translating into R1. L O YA LT Y & R E W A R D S
L&R_insurance.indd 27
27
2020/11/19 1:19 PM
NE W PROGR A MMES Checkers Xtra Savings programme
New kids on
the block South Africa’s loyalty and rewards industry has enjoyed exponential growth during the past decade. KIM MAXWELL finds out what the newest entrants to the market are doing to deliver more value
Wimpy Rewards Wimpy rolled out its Wimpy Rewards loyalty app this June. On the rewards programme, dining consumers can earn and burn points from in-store purchases, be rewarded for birthdays, receive only-on-app special offers, and settle their bill. Wimpy marketing executive Jacques Cronje emphasises that simplicity of app functionality is key. “Consumers lose interest with complicated reward programmes. The simpler, the better,” he says. Customised promotional offers and app-exclusive deals are the drawcard. “The user journey is intuitive and the rewards mechanic is simple: you get rewarded for choosing Wimpy.”
“Consumers lose interest with complicated reward programmes. The simpler, the better.” – Jacques Cronje
IT’S ALL ABOUT PERSONALISATION “You have to spend a fortune to earn good rewards” was the number one frustration (45 per cent) cited by respondents in the Truth and BrandMapp South African Loyalty Landscape Whitepaper 2019/20 survey, collating responses from nearly 29 000 economically active South Africans. And it correlates to the reason some consumers say they avoid loyalty programmes: “I don’t spend enough to earn decent rewards.” Meanwhile, 38 per cent of consumers find “offers that aren’t relevant to me” to be a major frustration. This highlights the importance of customer personalisation in loyalty programmes, which is something South Africa’s most-used loyalty programmes all say they offer. Source: Truth and Brandmapp South African Loyalty Landscape White Paper 2019/20
28
Wimpy Rewards
Cronje says brands need to be more human and authentic in their approach to consumers. Customers simply download the Wimpy Rewards app and start using it. “The app outperformed our expectations,” said Cronje. “One of our first promotional offers on the app was scheduled to run over two weeks. The promotion did so well that we sold out on day one.”
IS CARD STILL KING? Simplicity remains a deciding factor in using loyalty and rewards programmes. Despite the evolution towards using apps, research indicates that customers still favour the reassurance of a physical card in their wallets. The Truth and BrandMapp South African Loyalty Landscape Whitepaper 2019/2020 reported that 73 per cent of customers surveyed still prefer using a physical loyalty card. Fifteen per cent of loyalty programme non-users claim “they are too hard to understand” and 8 per cent claim “they are just too much hassle” – a warning retailers in a competitive environment should heed: keep things simple for loyal consumers.
IMAGES: SUPPLIED
O
ne of the most successful new entrants in the rewards industry is the Checkers Xtra Savings rewards programme. Launched in October 2019, it signed up more than five million customers in less than a year – a staggering one million joined the programme in 72 hours. The company says the programme “surpassed expectations” while putting back R1-billion in consumer pockets through savings and discounts. A Checkers spokesperson says Xtra Savings was developed in response to customer research highlighting their frustration with loyalty programmes with slow-earning points, complicated tiers, clumsy paper-based signups or small discounts on irrelevant products. “Consumers were ready for real rewards – without any smoke and mirrors – in the form of simple, transparent and meaningful savings.” Yes, ease of use is relevant for today’s loyalty customers. Xtra Savings relies on free member sign-ups in store, or paperless via digital registration. Offers are loaded directly on a card for redemption at tills. There are no points, tiers or levels, only “instant cash savings of up to 40 per cent on everyday grocery purchases”. Its omni-channel format means deals can also be viewed on WhatsApp, the Checkers app, the website, on leaflets or in-store. With more than 19.3 million shoppers, the Shoprite Group says it serves South Africa’s broadest customer demographic base.
The Xtra Savings rewards programme confirmed a need to offer “relevant and unique experiences to individuals” that were “beyond broad-based segmentation”. Household spending being under increased pressure may have been a contributing factor. The Checkers Xtra Savings customer base includes working professionals, parents and small business owners, from 18-year-olds to a centenarian. What do they have in common? They are “all looking to save more on the products that they love”.
L O YA LT Y & R E W A R D S
L&R_Newprograms.indd 28
2020/11/19 1:19 PM
Untitled-1 1
2020/11/10 9:09 AM
Untitled-1 1
2020/11/09 9:23 AM
