Are loyalty programmes effective in South Africa?

Why/why not? What more can be done in the loyalty space that will:

(a) Improve the customer’s experience?

(b) Extract the maximum value for the retailer?

BY FRANCOIS LOOTS, Managing Director, Infinity. It is estimated that there are more than 100 loyalty programmes in operation in South Africa. Not all of them are effective as they either fail to attract the attention and loyalty of the consumer and/or they are not adding sufficient value for the retailer.

Consumers will only participate in a loyalty programme if they see added value. It is very important that the programme is simple, easy to understand and provides immediate gratification. The customer experience is also improved by a seamless process of registration, collection and redemption of rewards. Good customer service backed by sound technology will help to smooth this process

An effective programme offers value to both the consumer and the retailer.  The recently launched OK Foods Count On Card is an example: the consumer receives CashBack on every transaction, delivering instant rewards as well as a savings mechanism for future purchases, while simultaneously giving the retailer insight into its customers shopping habits and improving ability to communicate with the consumer.

A good Business Intelligence Reporting Module, analysing customer transactions in a meaningful and useful manner also enables the retailer to extract further value from the programme.  Automated campaign management and competition functionalities empower the retailer to conduct and analyse campaigns and run competitions while growing and owning his own database.

It is important for retailers to distinguish between a technology platform and a loyalty programme. Often retailers invest money in the technology, but are left completely in the dark about the programme, its design, and the tools to help him understand and grow his business. Too many programmes are geared towards the consumer only, and often “abuse” the retailer to create loyalty to another brand. Loyalty is not the solution for a poorly managed store, but where store owners are involved in their businesses and take ownership of their programs the results are more often than not very positive.

Loyalty members on average spend substantially more than non-loyalty members.