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South Africans show more love for rewards programmes than ever before

02 June 2021 Fay-Elizabeth Foster, Executive Head: Loyalty and Rewards at Standard Bank South Africa

These days, South Africans can earn rewards for spending on just about anything – from buying plants at the nursery to getting beauty treatments or having tyres replaced. Over the last decade or so, the South African rewards landscape has exploded with more companies now offering benefit programmes and more economically active individuals are taking advantage of them more so than ever before.

While consumers may have used the points, they accumulated to spoil themselves in the past, Covid-19 radically changed this behaviour. With the hard lockdown impacting spending patterns as outlets closed and people lost their ability to earn an income, consumers suddenly shifted to using rewards points to purchase absolute necessities.

The latest Truth & BrandMapp Loyalty Landscape Whitepaper tells us that around three quarters of the working population belong to rewards programmes. On average, South Africans are members of at least five or six rewards programmes, which is slightly lower than international standards. Those programmes that attract the most popularity is typically those that reward for everyday spend or unlock substantial benefits for consumers.

It is interesting to note who is making use of rewards offerings and their reasons for doing so. In the past, females were predominantly actively involved in rewards programmes, but this has evolved to capture the attention of males and all income earners across the spectrum.

Younger cohorts wake up to the value of engaging with rewards

In times past, there was little usage among the younger consumer but now, more under 25’s are using rewards programmes, however it is still significantly less than older consumers.

That said, the type of demographic that a rewards programme attracts is linked to the nature of the company; a funky brand may interest younger age groups whereas middle-aged to elderly consumers may trend more towards traditional or legacy brands. This is not to say that some programmes are limited to attract a specific demographic. Across the board, there has been a trend of younger consumers coming into the fold and programmes need to tailor their offerings to meet their needs.

However, the highest utilisation of rewards programmes comes down to those who fall within higher income brackets. This certainly makes sense, as these households typically have more disposable income to play with and would garner greater benefits from programmes. While income earners in the R10-R20k bracket, which speaks mostly to the youth market, may not be using benefits as extensively as their higher income counterparts, the volumes are showing a definite increase.

Top rewards programmes link to lifestyle

Generally, retail rewards programmes always come out tops from a popularity perspective. This is because consumers shop at the various retailers regularly, which forms part of their everyday lifestyle activities, and there are very low barriers to entry to retail programmes, allowing consumers to start benefiting immediately. Whereas financial services programmes, while very popular, often have higher barriers to entry to start earning on a programme.

Financial services, by its nature, is a more complex environment to partake in but the benefit is the ability to earn more than your average retail programme. While we are living in an era where a large portion of the working population is multi-banked, there is an advantage to focus on one rewards programme in financial services because people try to understand and take advantage of the broad benefits such as redeeming points to improve their financial situation, support a charity or to build their home office.

When crafting a rewards programme, the key element is to stay away from an out-of-the ordinary offering that may create work for consumers. The more popular programmes are those that are simple to use and understand and allow customers to benefit from the things that they do in their everyday lives.

In tough economic times, rewards come to the fore

In the pandemic environment, particularly in the initial phases, South Africans used whatever rewards they had left to supplement their income. These points helped many cash-strapped individuals with a little bit extra to make it through to month-end. The ability to buy a week’s worth of groceries or airtime and data offered relief to those members who really needed it at the time.

There was a substantial shift in the focus of purchasing following the onset of the pandemic, with a huge increase in the purchase of essential items such as grocery and pharmacy items while travel and luxury goods fell off the radar completely. The pandemic also initiated a huge swing to purchasing and redeeming points online and this behavioural shift is likely to have a lasting impact.

As millions of people lost access to their normal disposable income, many used points to get access to cash and to redeem into their loan accounts. Although this has tapered off now, during the tough times, people used some or all their points available to meet loan repayments.

Financial services companies and various retailers eased the burden of consumers during this time by tweaking some of rules of their programmes to make it easier for their members to benefit. For example, Standard Bank offered vouchers for groceries and continue to do so, and reduced hurdles so that customers could redeem their Rewards Points into their savings account which was really needed at the time.

The Solidarity Fund was added as an option for members across many programmes to redeem their points to contribute to the humanitarian relief efforts in response to the coronavirus pandemic.

Perception is not always reality – how to identify value

The companies that make the most noise about their rewards programmes are often those that customers perceive to offer the most value. This is not always the case. There are programmes offered by smaller companies and larger corporates that offer a real benefit, but because they are not marketed consistently, possibly due to not having the budgets or other means to do so, the perception is that they do not offer value.

In all honesty, majority of us are guilty of not doing our homework. We end up hearing through colleagues or friends of certain benefits. Thus, it is important for consumers to do some digging and get up to speed on what a rewards programme offers; look closely at the rules, what benefits are offered, the requirements to be able to start receiving the rewards and the steps needed to sign up.

There are those rewards junkies who understand everything about every single programme who are up to speed because they scratched below the surface to ensure they know how to optimise and get the full value out of their rewards programmes. What is great is, all the information is available to consumers via websites and apps so customers to decide which programmes work best for them and suit their lifestyles is really easy. Once signed up, it’s in the customers hands to engage with the information they receive to understand the programme and reap the rewards to the highest level.

This is especially critical in the current tough economic climate where consumers are cash strapped. There are so many quick wins through these rewards programmes that can help ease your financial burden by enabling you to pay off debt, convert to savings and used points/reward to purchase vouchers for necessities or use to pay for much needed things like petrol, toiletries, groceries and many other essentials, which ultimately helps with liquidity on a day-to-day basis.

Quick Polls

QUESTION

Healthcare brokers have long complained about inflation-plus medical scheme contribution increases; but pandemic may have changed things. What will pandemic-induced changes in hospital utilisation do to medical scheme contribution increase patterns?

ANSWER

Below inflation increase for 2022, then back to inflation-plus
Long-term trend of below inflation increases
Inflation-linked hikes for 2022, then back to inflation-plus
This is a 2-year hiccup, inflation-plus increase trend remains in place
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