Loyalty programmes… adding value?
In the current business environment, most managers focus only on the impact of macro-economic factors on their businesses. A major business risk that is closely linked to these factors but is often overlooked is the impact of employees’ poor financial wellness on their physical and mental health and on a business.
While more research is required to fully understand the relationship between macro-economic prospects and health, anecdotal evidence shows an increase in disability and health-related claims during times of business uncertainty. Another factor in an individual’s overall financial wellness that has an impact on macro-economic prospects is saving for retirement. Many employees save very little or feel they cannot afford to save enough or any money towards their retirement.
Motivational tactics
In both the financial services and healthcare industries, loyalty programmes that offer members discounts at supporting partners and other forms of ‘cash back’ arrangements have been around for many years. Loyalty programmes, especially those of banks, are based on customers’ spend and are aimed at motivating members to spend more money on their credit cards. In the healthcare industry, medical schemes’ loyalty programmes focus on members’ physical health. Motivating members to be healthier, at the heart of these loyalty programmes is reducing health risks for medical schemes.
My family has achieved top level status on various loyalty programmes and as such we have received significant discounts on gym memberships, international flights, internet shopping etcetera. One of the most valuable benefits that I have come across resulting from my family’s favourable status on a specific loyalty programme is the 60% discount I received following an insurance policy that I took out for my wife. For a while now, this loyalty programme has linked with a medical scheme and a life insurer. Valuable indeed, but as many South African insurers who either own or link to medical scheme administrators can link their loyalty programmes to something similar, it is not a significantly new or different benefit.
Added value
However, a very new and unique benefit that I have only recently started benefiting from is a loyalty programme that rewards members with cash back into their employee benefits (employer pension fund and/or medical scheme savings account). While discounts on flights, internet and grocery shopping continue to be valuable, longer term benefits such as additional contributions into a pension fund and/or medical scheme savings account add a new and much more meaningful dimension to loyalty programme benefits.
By increasing the amount I am saving towards my retirement, I am contributing directly and positively to my future financial wellness. The additional contributions into my pension fund or medical scheme savings account attract additional daily investment returns, while the additional financial wellness value created grows exponentially every year the contributions remain invested.
A holistic approach
By now, we should all be familiar with the positive impact of compound interest, which Albert Einstein called “the most powerful force in the universe”. When applied to money that a client has not contributed himself or herself into his or her investment vehicle or medical scheme savings account, it is a dream come true.
From the above, it is clear that loyalty programmes need a much more holistic approach. Individuals’ total financial and physical wellness should contribute to them achieving higher status, while benefits should include an option to pay cash back into employee benefits such as pension funds and/or medical scheme savings accounts. This will go a long way towards assisting individuals in becoming more financially and physically well, translating into a positive impact on business.
