Financial services

Financial 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 ARE INSURERS MISSING THE MARK? crisis on consumer spending and confi dence.

While insurance loyalty programmes GLENNEIS KRIEL explores whether or not insurance loyalty have grown tremendously in scope over the past few years, offering a variety of health, travel, entertainment, retail, fi nancial, and programmes are doing enough to ensure customer satisfaction – and how they can do better lifestyle benefi ts, the South African Customer Satisfaction Index’s evaluation of Momentum Multiply, Discovery Vitality and Sanlam A shifting mind-set as travel and entertainment in an attempt to save Reality found that the Consulta’s COVID-19 tracker revealed a money,” Prinsloo says. increased scope and considerable shift in consumers’ psyches This necessitates a rethink for insurance digital transformation with regards to basic needs such as companies on their reward offerings, to fi x the of programmes health, safety, and income. “We found incongruence between these and evolving are not necessarily that consumers expect to divert more of customer needs. “Insurance loyalty programmes leading to greater their disposable income to home-cooked should rethink the investment by expanding to offer consumer satisfaction. meals, utilities, and internet connectivity access to tangible, basic benefi ts that consumers’ Prinsloo points to the parity in the rewards in Ineke Prinsloo and online income generation, while downscaling on non-essentials such post-COVID income and priorities would have cut from their household budgets,” says Prinsloo. terms of standard and lifestyle benefi ts, except that Sanlam offered data services (1GB) not included in the other programmes. Clients, “Budget-conscious consumers will scrutinise every expense against however, had to fork out an additional the lens of value for money.” – 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, Rewarding good financial choices from R221 to R258 for Momentum and R239 to R280 for Discovery. “Our evaluation found that customer satisfaction with these schemes is lagging behind those of the other fi nancial services categories,” says Prinsloo. “Budget-conscious O ld Mutual’s budgeting app, 22seven, was founded in 2012 to help South Africans better manage their money. The app, which now has more than 350 000 users who classify spending and share insights so users can see exactly where their money is going,” Joseph says. As a result, Joseph says 22seven users are 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 nancial 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 Joseph, managing Jikku Joseph Joseph. “The truth is that a director of 22seven, says budget is a plan to spend DID YOU KNOW? The industry index score for price to quality trade-off for insurance loyalty programmes is 70.2 points, which is signifi cantly lower than for other fi nancial services scores except for medical schemes. South Africa does not have a strong saving culture: “Most people spend before they save instead of the other way around, because our banks typically help us spend our money, not manage it.” People in general also tend to underestimate the amount of money they spend on non-essentials. “The app more on the things that really matter to you and less on the things that don’t.” 22Seven users are able to earn Old Mutual Rewards for making sound financial decisions, with every 10

Source: South African Customer Satisfaction Index 2018/2019 addresses this by using machine learning to points earned translating into R1.