Loyalty not dead in South Africa

The survey, targeted at banking South Africans, found that a massive 89% of respondents enjoyed being rewarded for their loyalty to a specific store or company, indicating that the loyalty programmes on offer in South Africa are successful for both consumer and retailer.

According to the findings, shoppers are most fond of quick, easily accessible programme information and rewards, which do not require cumbersome or labour-intensive activity. Point collection, discounts, instant reward systems and unexpected treats are generally appealing. In fact, the preference swayed to instant rewards where 82% agreed that they favour the discount there and then, instead of having to wait to accumulate points.

It was also found that 77% of respondents enjoy the benefits of linking loyalty programmes to payment card usage, since they already use credit or debit cards for most of their purchases.

Steve Eicker, vice-president marketing, MasterCard Southern Africa, says: "It is important that members of loyalty programmes are kept well informed of programme updates, special offers and discounts.

"However, marketers should be careful not to spam, over-sms, or provide unwanted and unnecessary information as it will be disregarded or discarded."

Endorsing these factors, MasterCard launched its loyalty programme, MasterCard4More, just over a year ago. Joining the programme is free and open to all MasterCard credit card holders. The initiative was developed to ensure that MasterCard not only interacts with its cardholders directly, but that it can offer them exciting incentives.

Despite the fact that loyalty programmes are so popular with South African consumers, the country still lags considerably behind the rest of the world.

In the US, for example, nearly 75% of shoppers belong to loyalty programmes. The US spent more than US$1.2-billion on customer loyalty last year and this amount is expected to increase in 2005.

In South Africa - according to a survey conducted by Razor's Edge Business Intelligence and World Wide Worx - just over 10% of the population retains membership of loyalty clubs of commercial organisations. These generally fall into the areas of financial services, air travel, retail and wellness.

Loyalty programmes are effective in helping businesses track shopping habits and promotions cost-effectively. They also help attract shoppers back to the store. MasterCard's research revealed that 86% of respondents feel that being a loyalty club member makes them feel like a valued customer.

Some businesses unwittingly undermine brands that have been built on quality and high service levels by basing their programmes primarily on discounts. While they have the ability to thrill customers, they can potentially erode value.

If customers are frequenting a business primarily because of rewards, a business may be at the risk of overlooking some fundamental customer satisfaction issues. However, loyalty programmes are perceived by the average shopper as meaningful, provided that rewards are not difficult to access.

"Despite the intricacies of balancing the loyalty equation, programmes can be a success and of great benefit to a business and its customers," says Eicker.

"Customers enjoy being rewarded for their loyalty to organizations that value them - well-conceived and executed programmes can be the key to turning 'invisible' shoppers into profitable customers."