To succeed, loyalty programmes need to deliver value

by Lynette Dicey
As the rising cost of living starts to limit consumer spend, loyalty programmes are playing an important role in retaining customers.

South Africa boasts a mature loyalty market. Its oldest loyalty programme is the Clicks ClubCard, which was launched 27 years ago. Its longevity is matched by mature consumer behaviour and high programme usage, in contrast with consumers in more developed markets such as the US.

According to Amanda Cromhout, CEO of loyalty consultancy Truth, SA leads in certain areas of the loyalty market, including the way financial services programmes are structured. She says that while most retail banks reward customers for credit card usage only, in SA most of the big banks reward people based on their total banking behaviour.

In South Africa financial services programmes are among the most loved ones - defined as those that consumers say they can’t live without -according to the Truth & BrandMapp loyalty report. This, says Cromhout, indicates the real value these programmes provide for their members.

The report shines a spotlight on the way South Africans are using loyalty programmes and what their preferences and motivations are in relation to them.

Brandon de Kock, director of storytelling at consumer insights consultancy WhyFive - the company responsible for conducting the BrandMapp study - says that in South Africa loyalty programmes have become ingrained in the lives of consumers. He doesn’t expect that trend to change any time soon.

“Brands that don’t have a loyalty programme, or are not connected to one in some way, are behind the curve, because increasingly a loyalty programme is one of the only ways an organisation can differentiate itself in a highly commoditised world.”

To remain relevant, he says, loyalty and reward programmes need to deliver on their primary mandate, which is to enable customers to save money. The challenge, however, is that there is a gap between what businesses want their loyalty programmes to deliver - increased customer loyalty and greater spend per customer - and the desire by customers to save money.

Interestingly, in the UK, some retail brands are using their loyalty programmes as a promotional paywall to offer members more immediate value. Sainsbury’s is the latest retail brand to offer its loyalty customers discounts of 50% or more on a number of items.

Cromhout says where many local programmes need to improve their offering is in the area of relevant experiences and providing regular communication with members.

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