The impact of loyalty programmes on consumers’ financial wellbeing

The impact of loyalty programmes on consumers’ financial wellbeing

Under the theme "Boosting Financial Wellness: The Impact of Loyalty Programs," Kinola Pather and Pat Cash connected this week on YOU FM. They explored how loyalty programs aren't just about rewards; they're about building strong customer relationships that improve a business's bottom line. This conversation focuses on how loyalty programmes can help businesses achieve sustainable growth while also making a positive impact on customers' wallets.

This interview was originally aired on You 89.9 FM, 9 April 2024.

Pat Cash: If most South Africans were to give you permission to look through their wallets and purses, you are most likely going to find more than one loyalty or reward card. At home, as soon as I say I'm going to fill up with fuel, I'm always presented with three cards, and sometimes you feel like your marriage depends on it because if you come back and say you didn't swipe a particular one, the mood in the house changes.

Pat Cash: It's like you lose points, so to speak. Retailers are in fierce competition in that space, and with the economy being what it is, where salaries are defeated by the cost of living, these loyalty programmes are coming out as a lifeline for many of us. I'll tell you about some of my experiences when going to a supermarket, and a family member has to redeem coupons, and how embarrassed I would be. But to talk to us about this issue...

Pat Cash: Your company, Randgo, actually designs these programmes. Is it fair to say that the retail sector is copying what airlines have been doing for years with frequent flyer miles?

Kinola Pather: The airline industry spearheaded the concept of loyalty programmes. However, as the consumer market and consumers' needs evolve over time, and with disposable incomes becoming more pressured, there's a dire need for corporates in South Africa to attract, retain, and engage their customers in a meaningful way. They're constantly looking at what value they can add to create that emotional connection with their customers.

Pat Cash: For us as consumers, we see specials and discounts, but how useful are these programmes for retailers? What sort of data are they able to draw from me swiping my card after a purchase?

Kinola Pather: That's a very interesting question. It's all dependent on the type of systems that the loyalty programme owners invest in. For example, Netflix allows for customer profiling, which is really what loyalty programme owners are after. They want to understand you better, not just through your transactional spend but also to get psychographic and behavioural insights into who you are as a customer. This allows them to personalise and tailor offers that would drive that brand connection between themselves and you.

Pat Cash: I always thought my family was odd in terms of collecting these programmes. Even when we didn't need them, I now have a strong feeling that the use of these loyalty programmes is more widespread in the population.

Kinola Pather: Absolutely. The White Paper South African loyalty report released a few weeks ago reflected that 76% of South Africans are more engaged in loyalty programmes. The wealthier consumers have an average of 9.4 loyalty programmes, and the mass market, those earning less than R10,000 per month, are affiliated with just over four. There is a disparity between the segments in terms of income bracket, but that is reflective of the amount of education required and the understanding that goes into loyalty programmes. The report indicated that 30% more South Africans are engaged in loyalty programmes, showing a growing need for loyalty programmes to drive stickiness with your members.

Pat Cash: Are we able to tell which reward programmes are more popular when comparing groceries and fuel?

Kinola Pather: Yes, the report indicated that in the economically active base, those earning more than R25,000, the loyalty programme that tops the range is Checkers Extra Savings, with Clicks following closely. Checkers stands out with a very differentiated proposition in the market with the instant gratification of discounts. In the lower LSM market, those earning less than R10,000, there's Shoprite Extra Savings followed by Capitec Live Better, a fairly new programme in the market but one that has gained ground quite quickly. The fuel loyalty programmes also have a huge influence on where consumers spend their grocery and fuel budget.

Pat Cash: I always get confused between loyalty points and coupons. Can a consumer generate a discount coupon from their loyalty programmes? How does it work?

Kinola Pather: It depends if the loyalty programme owner includes the coupon proposition as an offering to their members. People often forget about coupon propositions, but there is still a place for it in today's market, driving a stretching of disposable income. When considering minimum wage, at Randgo, we're driven by the concept of shifting from minimum wage to living wage. Coupon discounts allow members to stretch their disposable income to do more with their income by saving through coupons.

Pat Cash: Seeing that every retailer has loyalty programmes now, my question is two-pronged: one, is that a good or bad thing, and secondly, is it proven that a consumer would choose to shop with a particular brand purely based on their loyalty programme being better?

Kinola Pather: To answer the first question, it's absolutely beneficial. The objective of loyalty programme owners is to understand their customer. By creating a persona and understanding your profile, buying patterns, and frequency, they're able to target you selectively and personalise offerings to make you feel more valued. The connection with a brand and loyalty towards it differs among individuals. Programmes like Discovery Vitality are ones that the economically active market cannot live without, quickly giving a perception of the brand connection they are driving with their consumers. There's always a place for loyalty programmes. The challenge for programme owners is to find a differentiating mechanism that sets them apart not just from competitors but across industries. It's about becoming more creative, leveraging gamification, rewarding non-transactional behaviour, and providing surprises and delights to drive that emotional connection with the consumer.

Pat Cash: Kinola, I used to be embarrassed when a family member held up a queue at a supermarket because they're redeeming coupons. But I understand more now; these things really help stretch your budget further.

Kinola Pather: With the shift towards digitalisation, we've made the coupon proposition more seamless, so there's no need to be embarrassed at the till point. It's as simple as getting an SMS, and whether you're redeeming it at Checkers, Shoprite, Pick n Pay, or Discount, you get the SMS. It's one code for redemption at Pick n Pay and Discount, and then you get four codes across different denominational values to be redeemed at Shoprite and Checkers. On 50 coupons per month, which is the starting point for what we offer to our clients, members can save up to R1,250 per month because one coupon can be redeemed five times in the month. So for instance, if you've got a R3 on KOO Baked Beans coupon, you can use that five times in the month, giving you a saving of R15.

Pat Cash: And you can use that R15 to buy milk, bread, or an essential item that could come in handy for those really stretched on disposable income.

Kinola Pather: The concept of loyalty programmes is really about investing time in understanding it and working the programme to your benefit.

Pat Cash: Let me thank you for your time and wish you and your company all the best. So, Kinola Pather, she's the CEO of Randgo. They design these programmes, and it's hard to find anyone who doesn't have at least one or two of these programmes, be it for fuel or other discounts in the retail space.

Loyalty programs stand as a pivotal bridge between consumers and businesses, offering mutual benefits and fostering deeper connections. If you would like to explore how loyalty programs can transform your business, please contact us at

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