LOYALTY PROGRAMMES ON THE RISE IN SA

Wealthier consumers are using almost double the number of loyalty programmes as mass market consumers

Loyalty programme use in South Africa continues to grow, particularly among wealthier consumers. The South African Loyalty Landscape white paper by Truth & BrandMapp says 76% of South Africans are using loyalty programmes, up from 67% in 2015. This is relatively consistent across income levels and, for the first time in nearly a decade of tracking how consumers use loyalty programmes, male and female use of loyalty programmes is the same. The only demographic which skews away from this trend is the younger generation, with only 55% of economically active under 25s using loyalty programmes. However, among less wealthy consumers, 72% of under-25s use and rely on loyalty programmes.

In a tough economic climate, consumers are using loyalty programmes more than they did in 2023. The report points out that it doesn’t really pay dividends as a consumer to be too promiscuous in programme choice. The more a consumer invests in the programme which they really benefit from, the greater their reward potential. On the other hand, if a consumer spreads themselves too thin across a broad range of loyalty brands, they are unlikely to reap maximum benefits from any of their loyalty choices, says the report.

The research found a notable difference between economically active consumers (defined as consumers living in homes with a monthly household income of R10,000 or more per month) and massmarket consumers (defined as consumers with a household income of less than R10,000 a month) in the number of programmes used. Wealthier consumers use almost double the number of loyalty programmes as mass-market consumers. The white paper says the “low repertoire of programmes used by mass-market consumers does open up an opportunity for more brands serving this market segment to offer loyalty benefits in some shape or form”.

Respondents who said they don’t use loyalty programmes said the main reasons are that they don’t spend enough to earn decent rewards; it takes too long to earn rewards; they are concerned about personal data security; and they’re too hard to understand. The white paper says there are simple, effective ways to counteract the sentiment that it takes too long to earn rewards by, for example, rewarding non-transactional behaviours to make consumers feel appreciated and encourage engagement in the loyalty programme.

The three biggest motivations for economically active consumers to engage with loyalty programmes are to be instantly rewarded (45%), to build up points for big rewards (41%), and to spend more to earn more rewards (35%).

In the mass market, the three biggest motivators are to earn more rewards (61%), to build up points for big rewards (48%), and to avoid points expiring before they can be used (33%).

The research reveals that cashback remains the preferred benefit of economically active consumers. Massmarket consumers also value cashback but prefer airtime or data. Local consumers are not alone in their preference for cashback rewards, with a recent poll by Annex Cloud revealing that 46% of its global followers preferred cashback incentives and 36% preferred points-based programmes.

Some consumers prefer to build up rewards and others prefer instant gratification. But the report says this group isn’t mutually exclusive, with 47% of consumers preferring to do both. These are the most savvy and demanding loyalty members.

The biggest gripe from all consumers is points expiring before they can use them. “If there is one way to upset any loyalty member it is to expire their points before they wish to use them. In fact, 59% of loyalty-mature consumers who like to build up points and receive instant discounts really hate it when points expire vs the average of 32% for economically active consumers ... programme managers need to understand who their customers are before introducing an expiry rule which could seriously upset their most loyal customers,” says white paper author

Amanda Cromhout, founder and CEO of Truth, a Cape Town-based loyalty consultancy.

Truth recommends allowing active members to build up points should they wish to, or redeem them immediately as long as they are active. “Active can be defined as any period of time that makes sense for the loyalty brand. Typically, retailers look at a 12-month period (but this can vary from a grocery retailer with a higher frequency and a furniture or general merchandise retailer with a lower frequency),” says Cromhout.

Interestingly, programme tiers don’t feature significantly on anyone’s motivations towards loyalty programmes.

Among economically active users, loyalty programmes influence where they buy groceries (78%), fuel (55%), bank services (48%), health products and pharmaceuticals (35%) and clothes (33%), as well as which restaurants and coffee shops they use (27%).

Among mass-market consumers, loyalty programmes influence where they get their groceries (71%), bank services (51%), clothes (35%) and health products and pharmaceuticals (29%), as well as which restaurants and coffee shops they visit (18%).

The Truth & BrandMapp Loyalty white paper offers one of the most insightful studies into the local loyalty industry. The annual BrandMapp consumer landscape study surveys 35,000 respondents and represents the needs, perceptions and behaviour of about 13-million South African consumers with a monthly household income of R10,000 per month. The MoyaApp research reaches 11,500 consumers with a household income of less than R10,000 per month.

Programme managers need to understand who their customers are before introducing an expiry rule which could seriously upset their most loyal customers AMANDA CROMHOUT CEO of Truth