[ TERMINOLOGY ]
In fact, partnerships are key to kulula.com’s
loyalty and rewards strategy. The airline partnered
with global travel-rewards programme Avios
earlier this year. This means kulula.com customers
who join Avios can collect Avios points when they
book flights with the airline. They can also collect
Avios points when booking accommodation in local
and international hotel chains, purchasing fuel or
car rental, and when buying everyday products
through other partners. These points can then be
redeemed for further flights and accommodation.
DESPITE SIMILARITIES
IN THE DEFINITIONS,
MARKETERS
THESE DAYS TEND
TO TALK ABOUT
LOYALTY RATHER
THAN REWARDS.
choice of the type of programme they want to
develop. These include:
• Data: Are you looking for real-time insights into
buying behaviour? This is why a supermarket
would want a loyalty programme, because the
more they understand about their shoppers, the
more effectively they’re able to market to them
and maximise share of the basket. Importantly,
supermarkets can offer access to the data they
get to their suppliers, so a loyalty programme can
become very valuable.
• Category: Depending on which category
you compete in, you’d be looking at what
kind of behaviour you want to incentivise.
Supermarkets, hotels and airlines are in
categories where there is choice, and where
customers are not locked into relationships as
they are with banks or cellphone networks.
The data you get from shoppers on your loyalty
database helps you as a marketer to send them
offers that they are more likely to act upon.
• Costs: Rewards can become really expensive
and eat into profit margins – is there a way
to offer something that will be valued by the
customer, but doesn’t necessarily have a hard
cost attached to it?
“Based on these factors and also the size of your
business, you would design the type of programme
that fits best and that your customers will find
valuable,” Dr Britten concludes. ■
UNDERSTAND BY EXAMPLE
HOW SHOULD A COMPANY
CHOOSE ITS APPROACH?
Nonetheless, Dr Britten says there are various
factors that should inf luence an organisation’s
64 R E WA R D S & L O YA LT Y S A
EMPLOYEE INCENTIVES MOTIVATE
EXTERNAL CUSTOMERS
Loyalty programmes are all about improving
external customers’ buying behaviour and
experience – except when they’re about
incentivising internal staff’s experience and
behaviour. Maud Botten is the sales director of
Uwin Iwin Incentives, which designs and manages
recognition, reward, loyalty and incentive
programmes for internal workforces and
channel partners.
“The fundamental difference with employee
or channel-incentive programmes is that the
reward is not tied directly to a purchase; they
are primarily tied to performance, that is, staff
making targets or achieving above target,” says
Botten. “The most successful schemes are
normally those where the client understands that
incentives cannot work in isolation, but should
form part of a bigger strategic plan and work in
synergy with the company’s marketing strategy.”
While the most popular schemes involve cash
incentives, incentive travel is also extremely
popular and effective, though Botten notes
there are a multitude of hybrid programmes
that can be tailored to clients’ needs. However,
an employee-incentive programme must
influence the behaviour of external customers,
otherwise there is no “value” in it in terms of
the bottom line. “Engaged, happy staff members
are loyal, and a loyal staff lives the values of the
business and has the client’s best interest at
heart,” Botten notes.
According to a case study by the Incentive
Research Foundation of a Fortune 500 company,
up to 30% of decision-making can be influenced
at the point of sale – and that usually means
that it is influenced by a staff member, who is
motivated to engage with customers to improve
sales as well as their own performance targets.
TSYHUN/SHUTTERSTOCK.COM
One of the simplest ways to illustrate the perceived
distinction between loyalty and rewards is by
example. According to Dr Britten, the UCount
Rewards programme from Standard Bank is, as
the name suggests, a reward programme. “You
earn points that allow you to redeem rewards –
the relationship between your behaviour and the
incentive is fairly linear,” she says.
On the other hand, she lists Smart Shopper
and the Clicks ClubCard as loyalty programmes.
“They have an element of rewards in the form
of a cashback, which you can only spend at their
stores, but they also offer other incentives such as
discounts or a free magazine. Importantly, both
programmes use insights generated by data to
offer you tailored deals.”
What it boils down to, Dr Britten says, is that
both loyalty and rewards programmes seek
to change consumer or customer behaviour to
increase profitability.
Despite similarities in the definitions, Dr Britten
says that marketers these days tend to talk about
loyalty rather than rewards. “A sophisticated
loyalty programme aims to be about more than
rewards,” she says. “Relevance and relationships
should matter just as much. The ideal customer
should not need a reward in order to spend money
with you – which means that there is an inherent
contradiction in the term ‘loyalty programme’.”