Sebenzile Nkambule recently sat down with Kinola Pather on SAfm’s The Weekend View to discuss the impact of loyalty programmes in South Africa. They explored how these programmes have been a helping hand for many during tough economic times, providing much-needed financial relief. Kinola also shared some advice on things to watch out for and tips on how to maximise the benefits of these loyalty programmes.
This interview was originally aired on SAfm 104-107, 13 April 2024.
Sebenzile Nkambule: In these challenging economic times where consumers are struggling to make ends meet, loyalty programmes have emerged as a lifeline. The attraction of these programmes lies in their ability to offer tangible benefits such as cashback, rewards, discounts, or points that can be redeemed for essential items. While these incentives empower consumers to make their income go further, it is crucial to understand the role of these programmes and what to watch out for to avoid pitfalls. We are now joined on the line by Kinola Pather, CEO of Randgo. Kinola, thank you for joining us this morning on The Weekend View. Let's discuss the landscape of loyalty programmes. In the country currently, there are many, from pharmacy goods to petrol. Many people rely on the benefits of these programmes. Are they thriving?
Kinola Pather: Yes, there is an immense place for loyalty programmes in South Africa. Currently, we have over 80 active loyalty programmes, and on average, a consumer is affiliated with 9.4 programmes, but active in about four. You can see that loyalty programmes have a significant role in people's lives. However, what often does not translate is the education needed to drive high engagement and awareness around how consumers can leverage these programmes to save money. There's a high membership base, but engagement is low, with over 50 percent of members inactive.
Sebenzile Nkambule: What is the cost of that inactivity? If you are signed up, these programmes have your information. How do they benefit, and how do you lose out as a consumer if you are not active or using the programme?
Kinola Pather: Loyalty programmes are designed to attract, retain, and engage members. If you are not engaging with your members to drive active usage of your programme, you are not driving customer lifetime value and the stickiness of your brand with your member. You then lose the opportunity to engage with your member and for them to choose your brand first. The impact on loyalty programme owners is significant; they need to explore multiple touchpoints to reach their consumer and drive active usage of their programme.
Sebenzile Nkambule: It often requires quite a bit of activity to feel the benefits of these programmes, right? You have to be purchasing significantly before you see benefits like cashback because you've spent a substantial amount over a month. Do you feel this is why consumers might disengage?
Kinola Pather: You are right. The 2023/4 Truth & BrandMapp Loyalty Whitepaper revealed that this is why people are not engaged with loyalty programmes—they are not able to reach those milestones to earn enough. However, it also acts as a motivator for members to do more so they can reach those tiers. There is also the aspect of poor education and technology issues. When customers experience problems, you have a very small window to address that issue before they completely disengage with your programme.
Sebenzile Nkambule: We understand that now, even as salaries aren’t rising as often as they should, people are not earning as much as they would like. This is a good way to make your limited income go a bit further by using rewards from these programmes.
Kinola Pather: It takes time and effort to understand the loyalty programmes you are enrolled in and how you can maximise their benefits. For example, with coupon propositions, members can save up to R1250 per month. However, there is a lack of education by loyalty programme owners to show members the tangible value they can receive. Engagement is needed; you also need to survey your customers to understand the pitfalls of your programme and implement necessary changes to drive active usage.
Lending from the 2023/4 Truth & BrandMapp Loyalty Whitepaper, it was found that wealthier consumers are more engaged with loyalty programmes, engaging with an average of 9.4 loyalty programmes as opposed to those in the lower LSM brackets, and those earning less than R10,000 per month. When looking at different segments in the consumer market, economically active, wealthier consumers tend to spend more and are more driven by cashback, whereas those in lower LSM brackets are more driven by airtime and data, with cashback being secondary.
Sebenzile Nkambule: Fascinating indeed. We will have to leave it there this morning. Kinola, thank you for your time. Kinola Pather, CEO of Randgo, discussing the pros and cons of loyalty programmes.
Loyalty programmes stand as a pivotal bridge between consumers and businesses, offering mutual benefits and fostering deeper connections. If you would like to explore how loyalty programmes can transform your business, please contact us at engage@randgo.com.
