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The ins and outs of successful rewards and loyalty programmes

3 - Loyalty Marketing-01

Research has shown middle-income South Africans are members of at least nine loyalty plans, while membership is set to grow as smartphones penetrate more of the market. JUSTIN BROWN finds out more about what makes a rewards programme successful, and where opportunities lie.

Over 24 million South Africans are members of rewards and loyalty programmes, of which there are more than 100 in existence.

The most popular schemes are those offered by grocery, health and beauty retailers.

Steve Burnstone, CEO of Eighty20, a Cape Town-based consultancy, says his company’s research found that middle-income South Africans were members of, on average, nine loyalty plans.

Burnstone believes rewards plan memberships will rise significantly as smartphone penetration increases in South Africa.

A key consideration in South Africa is how to provide loyalty offerings to low-income consumers, he says. If a customer does not spend much, then it is hard to reward them, but Burnstone believes it is possible to reward all types of customers.

But rewards programmes are crucial, no matter what the economic circumstances.

“In good times they help grow the business beyond what would normally be possible; in more difficult economic times they should help to defend existing profitability,” he says.

One of the key benefits of any loyalty plan is data analysis and the segmentation opportunities that arise.

For a grocery retailer, a rewards member will swipe their card more than 80% of the time when they shop, giving a detailed view of how that customer is spending their money, Burnstone explains.

A loyalty scheme can provide a lot more information about customers (e.g. birthday, lifestyle preferences, life stage, etc.), he adds.

eBucks Rewards CEO, Johan Moolman, explains eBucks’ segmented rewards plan in which different sub-segments have been developed using specific criteria.

It is worth noting that eBucks, the loyalty programme for First National Bank (FNB) and Rand Merchant Bank (RMB) Private Bank, started almost 20 years ago in the year 2000.

“There are 6.5 million customers that have got eBucks accounts of which between 2.7 million and 2.8 million members are active,” he says.

eBucks pays out close to R2.5 billion in rewards each year, and since its inception, has paid R13 billion to its members, Moolman says.

Yumna Frizlar-Wyngaard, Kauai marketing manager, outlines how the company’s loyalty plan allows for segmentation by geographical region, by demographics and by behaviour. Kauai, which has 162 stores, has over 100 000 people signed up to its scheme.

Rachel Wrigglesworth, Clicks chief commercial officer, says the data gathered from the Clicks ClubCard members allows the company to enhance its customer experience. To put ClubCard in perspective, Wrigglesworth says that at the end of August last year, the offering had eight million active members.

Clicks introduced ClubCard to the Western Cape in 1995, and in 1996 it was launched nationally.


Extra revenue

A rewards programme can generate extra revenue, through advertising for example, but eBucks and Kauai haven’t gone this route.

Moolman says: “eBucks is there to gain new customers, entrench customers and cross-sell [for FNB and RMB]. eBucks is not there to make money.”

Given the insights that loyalty plans provide, there is an opportunity for a company to cut costs or hike revenue by bringing about change to clients’ behaviour, he explains.

“There are massive cost savings to be had by getting a customer to take up a product digitally rather than going into a branch,” he says.

A big plus for the retailer offering a rewards scheme is the ability to move stock or products quickly by special offers aimed at loyal customers. Burnstone agrees that this is a benefit but warns that these offers need to be relevant, otherwise customers will feel spammed and will disengage.

Kauai rewards programme offers its loyal customers specific promotions, says Frizlar-Wyngaard. The power of a loyalty plan is that it enables the owner of the plan to communicate swiftly with members. Kauai has the ability to reach its customers through its app, via texts and e-mail. “This allows us to be agile and keep customers informed,” she adds.


The personalisation touch

Another opportunity offered by a rewards plan is personalisation for each member, a key trend in the rewards industry. Mobile convenience is another important trend, says Wrigglesworth.

“Loyalty programmes must be accessible on mobile. This requirement will become increasingly important, especially with the advent of mobile payment,” she adds.

It is vital that rewards and incentives are individualised and relevant to the consumer. A report by US market research company Forrester, released in January this year, says that personalisation implemented by rewards schemes are usually too obsessed with the purchases that members make.

Loyalty schemes must ensure that marketing personalisation delivers relevance, builds resonance, and shows resilience to get the attention of customers, according to Forrester.

The best place to improve personalisation is with a rewards schemes’ best customers, the report adds.

Burnstone says he has seen an increase in attempts at personalisation by loyalty plans.

“App-based programmes have an advantage here as they can be used by businesses to set targets or challenges for customers with a range of relevant rewards available,” he says.

Frizlar-Wyngaard says that Kauai includes personalisation in its loyalty scheme. These campaigns include compensating customers when they move up to the next loyalty tier and rewarding them on their birthday. “Customers are seeking personalised messages more than ever,” she adds.


The bottom line

Rewards schemes build loyalty within a company’s customer base, and this has a positive impact on a company’s bottom line.

Burnstone says that his company’s research showed that members of rewards plans acknowledged that specific programmes helped changed their behaviour.

For effective schemes there was often as much as five to 10% increase in turnover from members while some plans see around 10% uplift, he adds.

“We believe this then makes an incredibly compelling case for loyalty programmes,” Burnstone says.

Wrigglesworth believes a benefit of loyalty is that Clicks ClubCard customers shop more frequently and will spend on average more on each trip to the shop than an ordinary Clicks customer.

What had proved successful for loyalty programmes was the fact that they deliver transparent financial rewards, she says.

Turning to what has been successful, Moolman says digital enablement of rewards had worked well for eBucks.


POPIA and privacy

Part of running a loyalty programme is complying with the Protection of Personal Information Act (POPIA).

Burnstone says that he has found that South African corporates tend to be very eager to comply.

In addition, most of Eighty20’s clients look to the European Union’s General Data Protection Regulation as a guideline about how to treat customer information.

Moolman says that eBucks takes all laws seriously. “The security of that data is of the utmost importance to us.”

Kauai consulted with a POPIA specialist when setting up its app, and ensured that the terms and conditions clearly state how the company will use customers’ data, Frizlar-Wyngaard says.

Kauai does not sell customer data or share it with third parties, while Clicks ClubCard continues to follow stringent guidelines relating to customer data.

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Distance Learning with IMM Graduate School

Have you asked yourself where you want to be in five years’ time? That’s a question we ask ourselves throughout our lives.  Probably the most common answer is to secure your future and have a well-paid job, or in many instances, running your own business.

Of course, the trigger here would be to have graduated with a degree, certificate or diploma. But you might be in the situation where you  either can’t afford to attend university full-time or you are dependent on a job to support yourself or your family.  The solution would be to consider part-time distance/online study.

Fortunately, in this country, we have access to many private and public colleges or universities that offer these programmes. Some of the private institutions are the IMM Graduate School, Vega, Boston College, Damelin or Oxbridge. Then there are the large public institutions such as the University of Johannesburg (UJ), the University of Cape Town (UCT) and UNISA, the list goes on. Whichever institution you choose, you will earn the same qualification online as you would in a classroom.

Your first decision would be to decide how and where you want to study – at a large university such as UNISA or the smaller private institutions like the IMM Graduate School which tend to be more hands-on. It’s really a question of what makes you feel more comfortable.

The advantage of the IMM Graduate School, is that there are Student Support Centres around the country, with a team of administrative staff ready to assist with queries. You’ll also be in touch with your lecturer online every week.  The great thing is that you’ll get the chance to meet fellow students to share similar interests and challenges, and after all, we tend to be social beings, so you’ll never feel alone.

Student Pacers can help you pace your studies to make sure that you cover the entire module in preparation for your exams.  Should you miss one of the online live tutorials, not to worry, as you’ll be able to pick up the recorded version at a later stage.  Most important is that the IMM Graduate School is, by the way, one of the best private distance learning providers if you’re interested in an international qualification. So, you can study local and work global.

One of the great things about studying online is that you can do it in your own time and from just about anywhere.

Before you take the plunge, here are a few things you should know about distance learning:

The word ‘distance/online’ can be misleading because it could conjure up the idea that it means a ‘passive’ method of learning. Not true.

It can be said that distance learning requires a lot more discipline. You will need to schedule in your study time between work and other life commitments. Besides the education you will be gaining from your course, you will also gain much needed organizational and time management skills. Studying through distance learning is a proud achievement. IMM graduates stand out because when they qualify, they have so much more to offer and have ‘work ready’ skills, many of which were acquired through the process of distance learning.

While you are working your way through your programme, remember that you can be much more productive with a structured approach. According to guidelines set out by the Massachusetts Institute of Technology in the USA, a 10-minute study break every 50 minutes is ideal.  At the start, plan smaller study sessions and as you become more confident, add a larger break of 30 minutes or more every couple of hours. These will not only be great goalposts to work towards, but they’ll help you feel refreshed and rejuvenated for your next study session.

Here are some suggestions for achieving great marks with the IMM Graduate School and getting on the good side of your lecturers, after all they are integral to your success.

  • Follow the guidelines provided in each modules study guide and get to understand the e-Learn system. Always make sure that your email is working and that you check your inbox regularly for any updates or announcements from your lecturers.
  • Communicate regularly with your lecturers and show an interest in and in your course module(s) and your fellow students. Ask questions if you don’t understand something and be courteous. This does wonders in establishing a positive relationship and builds trust between you and your lecturers.
  • Respond promptly to assignment deadlines and start preparation for your exams early.
  • Be disciplined and show that you can organise your life to meet the rigors of an online class.
    The most common form of plagiarism is where entire paragraphs or sentences are copied and pasted without acknowledging the source. Ignorance is no excuse.

Good luck and enjoy your studies.