Do customer rewards/loyalty programmes actually work?

Do customer rewards/loyalty programmes actually work?

by Terena Chetty. Do “rewards” programmes actually work? From a consumer perspective, their popularity is undeniable. According to The Truth & BrandMapp 2021 Whitepaper, 74% of economically active South Africans are using loyalty programmes. This is an increase of 7% from the 2015 figure of 67% loyalty usage, implying that customers do, in fact, find value in these programmes.

Brand rewards or loyalty programmes are aimed at attracting and retaining customers by offering some sort of benefit to consumers in exchange for using their products and services, particularly on a regular basis. Loyalty programmes are prevalent across most industries, including banking, insurance, retail and entertainment, offering a vast range of benefit structures from direct cash-back and discounts, to points that can be used for various products and services.

Most popular in the pack

Leading the charge are the Pick n Pay Smart Shopper and Clicks ClubCard programmes, with Pick n Pay’s offering taking the top spot by just 1% over Clicks. The Dis-chem Benefit offering takes the third spot, with newcomer Checkers Xtra Savings swooping in to secure 4th place. Impressive. The top 10 spaces are dominated by retail, with the only exception being FNB eBucks in the number eight spot overall, and the top spot in the financial services category. When asked which single loyalty programme they would keep if they had to choose just one overall, surveyed respondents picked FNB eBucks as their top choice.

As can be expected, the onset of the COVID-19 pandemic resulted in higher usage of loyalty programmes as the population in general experienced increased economic strain. People welcomed the discounts, rebates and other financial benefits offered by many rewards programmes. What is interesting though, is that 2021 stats showed more gender balance than previous usage data. Historically, there was a far wider gap between male and female usage, especially when it comes to retail loyalty programmes. However, 2021 shows more gender equity in this regard, possibly being driven by pandemic-based financial constrains as well.

Playing your cards right

Do loyalty programmes work for retailers and brands? The answer is a resounding yes. Research shows that loyalty programmes have a definite influence on consumer behaviour. In fact, 64% of consumers say that it influences where they shop; and 40% say it influences the products they buy.

For retailers to get it right, it is key to understand what customers want the most out of a loyalty programme. Understandably, “cash-back” is a leading incentive for rewards programme usage, with the next best thing being discounts. Women tend to focus more on retail or shopping-based benefits, with men placing more importance on status-based benefits, such as airport lounge access;  or “higher-tier-level” prestige, than their female counterparts. Men are also drawn to fuel and banking benefits to a higher extent than women.

In terms of methodology, particularly within the retail sphere, swiping a card is the overwhelming preferred method to claim benefits at a pay-point, with 76% of people preferring this option. It is followed at a distant second by scanning an app, which comes in at 27% of consumer votes.

Melissa Hanley, head of loyalty & strategic partnerships at Pick n Pay, succinctly expresses the value of understanding customers and the value it has resulted in for their brand: “Historically, Smart Shopper has seen a sales participation of approximately 63% ,and we increased this to 75% during our last fiscal. Smart Shopper had its most successful year ever last year and we believe we achieved this by giving our members what they really needed, when they needed it. The intentional strategy of Smart Prices drove massive demand amongst our members and we consider this a significant gain on our value proposition. In addition, we continue to invest in key partnerships which provide further opportunities for Smart Shoppers to earn points and boost their cashback even further – again helping them save even more money and realise the value of the Smart Shopper offer.”

As inflation and other financial burdens continue to rise, it will be interesting to see whether brands evolve their loyalty programmes in ways that benefit consumers to a larger extent. Based on the stats, it is safe to say that this will increase brand loyalty and purchasing behaviour in a measurable and tangible way.

 

 

 Main image credit: Pixabay.com.

 

 

 

Terena Chetty is head of strategy at 1Africa Consulting, and has extensive experience in public relations (PR), integrated brand strategy and consumer communications. She works closely with both pan-African and global brands, and holds a BA Degree in Communication Science (cum laude).

 

 

– Receive the Retailing Africa newsletter every week • Subscribe here.

 

Leave a Reply