Published 10 April 2018
By Sonja Fourie, Head of Absa Rewards and VAS.
South Africa’s loyalty and rewards landscape has grown at an impressive rate over the past ten years.
The 2016 Truth Loyalty White Paper shows that there are more than 100 loyalty programmes in South Africa which, in turn, partner with thousands of companies to offer millions of customers rewards.
The White Paper, prepared by the Truth Customer Academy, a renowned local loyalty and CRM consultancy, unpacks how companies or brands should re-think their approach to customer loyalty programmes.
The report highlights the fact that this environment is becoming more cluttered, as customers are faced with much more choice than ever. Equally, businesses with loyalty programmes are facing increased competition as they try to differentiate their programmes to retain current customers and attract new ones.
South Africa’s upward trend mirrors what is happening globally, with some very successful loyalty programmes in our country contributing significantly to their companies’ shareholder value.
However, Colloquy’s Loyalty Census shows that companies often miss the mark on creating relevant and personal experiences and that loyalty programmes lack clarity, ignoring what customers truly value. Colloquy is a leading publisher of global research on customer loyalty and experience practices.
The ultimate objective of any rewards programme is to create customer loyalty. To drive customer loyalty, companies must understand what loyalty is, how it is developed and to what extent it drives shareholder value. Winning loyalty programmes allows for personalisation, understanding that every customer is an individual and that loyalty is developed through relationships routed in customer experience and relevant value creation.
Rewards design elements resulting in customer loyalty differ across industries, which means trying to imitate other loyalty programmes may lead to ineffective and costly programmes. Monetary rewards need to be augmented with rewards that create an emotional bond with the customer and attitudinal loyalty which drives association with the brand.
Loyalty is made up of two components: behavioural loyalty (functional) and attitudinal loyalty (emotional).
Behavioural loyalty is linked to the conduct of a consumer. When someone is behaviourally loyal, they continue to buy a product or shop at an outlet devoid of emotion. Someone who displays behavioural loyalty, for example, might choose to shop at a supermarket because it is closer or cheaper.
The second form of loyalty is attitudinal. This relates to the way in which the consumer attaches to a brand emotionally. The decision to associate with a brand or to buy a product is driven by feelings rather than necessity or habit and rational decision making.
Studies show that attitudinal loyalty can drive future long-term behaviour among consumers, which means that customers are more likely to stay loyal to your brand because of the strong affinity which has been created and are not as easily swayed by short-term discounts or promotions by competitors.
Consumers who are attitudinally loyal are, therefore, also less price sensitive and, as a result, showing resistance to counter offers; they are less likely to chase bargains to the detriment of your brand.
The best way to create attitudinal loyalty, and long-term affinity, is to connect with a customer at an emotional level, with a strong emphasis on the value created for the customer.
For loyalty programmes to create effective brand affinities, they must first align with the brand strategy and then help drive that strategy through rewards and marketing campaigns.
At Absa, we have taken the decision to engineer our loyalty programme in a way that mirrors the bank’s values and strategic intent.
Absa is committed to the prosperity of our country and connecting with our customers in their socio-economic context, and we know that our success depends on the success of the communities we serve. We are dedicated to making a difference in, and enhancing the lives of our customers.
As a result, our rewards programme is focussed on changing people’s lives substantively. Our motivation and our reason for existence is to amplify and bring to life the bank’s overall strategy and positioning.
Many loyalty programmes are engineered with an overriding goal to drive deals with partners. What we need to see is a shift, to where loyalty programmes are engineered to drive value for customers and provide them with choice of where and when rewards can be used.
Reward programmes that limit the use of points to certain partners to the detriment of the customer do not necessarily have a customer focus.
Customers need to be empowered to use their rewards where they feel they add the most value to their lives. This position motivated our move to cash-back rewards.
Absa has introduced non-monetary rewards such as social rewards; which allow customers to donate rewards to a variety of charity funds, and exploratory rewards; where we make available information and resources that enrich our customers’ lives.
We want to recognise not just transactional behaviour, but also our customers’ contribution to and association with the Absa brand.
True loyalty isn’t achieved through a few loyalty points and prizes. True loyalty is achieved through entrenched relationships and the facilitation of unique experiences which drive value for customers.