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CRM programmes miss a trick

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CRM programmes miss a trick

South African consumers are demonstrating an appetite for customer loyalty programmes – but shun the programmes that are on offer.
The 2016 Truth Loyalty white paper shows that 26% of economically active South Africans use customer loyalty programmes more than they were a year ago, did a year ago, demonstrating a rising appetite. But South African brands are not adequately differentiating their loyalty programmes and most of the 100 or so on offer still lack focus in execution, communication and differentiation – leading to non-engagement.
In fact, one-third of the economically active respondents surveyed do not use loyalty programmes at all. This represents a considerable, untapped pool of consumers that brands should be trying to engage with.
Loyalty programmes enable brands to gather immense insights about customer behaviours, attitudes and preferences; and brands that properly analyse customer data to understand how customer insights can drive their business strategy will undoubtedly have the upper hand.
“Business owners need to take into account how factors such as age, income and gender influence how they should be building their loyalty strategies. There are still countless exciting opportunities in the loyalty space and if harnessed correctly, can enable key differentiation in a competitive marketplace,” says Amanda Cromhout, CEO of Truth.
According to a US study conducted in 2014 by Blackhawk Engagement Solutions, income is the biggest influencer of customer loyalty – even more than age, gender or geography. This trend is mirrored in South Africa.
The highest users of programmes are customers who earn between R50 000 and R100 000 per month at 78%, indicating they use loyalty programmes the same or more compared to the previous year. Interestingly however, the Truth white paper reveals that as the salary increases the loyalty “non-usage” goes up from 14% (in the R50 000 to R100 000 bracket) to 21% (in the R100 000 + bracket) and reversely for the lower income groups, “non-usage” increases from 24% (in the R20 000 – R50 000 bracket) to 39% (in the under R20 000 bracket).
Cromhout explains: “The research shows that as salaries increase to over R100 000 per month, customers potentially don’t see any more value from loyalty programmes. Reversely, the lower income groups may not see enough benefit in participating in programmes as most of those offered in South Africa are based on a “spend and get” principle. With retail rewards as little as 1% of spend, your lower income customers simply won’t see any material benefits quickly enough.”
South Africa appears to be slow in adopting strategies that reward non-transactional behaviour within loyalty programmes and Cromhout believes this may be due to a misconception that the process is too resource-intensive. With a desperate need for differentiation within many South African programmes, rewarding for activities other than spend could be the answer for brands looking to innovate and potentially engage new customers, she says.
“South African brands need to give customers the chance to earn points in different ways by going beyond just earning for transactional behaviour. Globally, this has taken off but South Africa is still behind the curve. By rewarding customers for social media engagement, for updating their details, referring a friend or making bond repayments on time, brands have a great opportunity to get innovative and add some fun to their loyalty programme,” Cromhout says.