[ ACQU ISITION ]
DATA CAN ALSO HELP
BUSINESSES TO WIN
BACK PROFITABLE
CUSTOMERS WHO
HAVE DEFECTED.
The new benefits include discounts of up to
30% on life-cover premiums and 100% on asset
management fees, and a shopping card called Money
Saver, which pays rebates of up to 10% at Pick n Pay,
Engen, Dis-Chem, Clicks, Edgars and other retailers.
“In addition to category favourites such as gym, air
travel and movie discounts, the programme has some
more unusual benefits like heavily discounted Uber
airport transfers, free Wi-Fi and music streaming
and even the first movie refreshment discount,”
says Larisma. “Members can get a Nu Metro ticket,
popcorn and a beverage for just R35.”
IMPROVED CUSTOMER ACQUISITION
Drawing from The Loyalty Guide, published by
The Wise Marketer, co-author Peter Clark notes
that although customer acquisition should not
be the core focus of loyalty programmes, these
programmes can be used to target customer
acquisition more accurately.
“The quality of new customers acquired can
be raised by careful use of the existing data
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R E WA R D S & L O YA LT Y S A
from a loyalty programme, which can be used
to establish the demographic profiles of existing
‘best customers’, and then to target prospective
customers with similar demographic profiles in
acquisition campaigns,” Clark advises.
Loyalty programmes can also yield valuable
data for selecting new store locations. “The loyalty
card enables you to profile the demographics of
best customers and – because it is often likely that
the best prospective customers will have similar
demographics – choose new locations much more
accurately,” writes Clark.
He makes the case that loyalty programme data
can also help businesses to win back profitable
customers who have defected, using information
like their purchase history, contact details and their
preferred communication channels.
“Customer win-back expert Michael Lowenstein
says the success rate in approaching ‘lost’ customers
can be three to four times as high as it is when
prospecting for new customers,” notes Clark. “For
example, the rate for converting prospects might
typically be 5%, while that for reactivating inactive
customers might be as high as 15% to 20%.” ■
GROWING SMEs THROUGH LOYALTY AND REWARDS
Smaller companies can also benefit from
implementing rewards or loyalty programmes.
This was confirmed by a 2014 report entitled
“Achieving Big Customer Loyalty in a Small
Business World”. The study found that 64% of
surveyed small and medium companies with
loyalty programmes reported that the
initiatives make more money than they cost
to maintain.
Customer loyalty programmes, says the
research, are effective for small and medium
businesses because they help increase repeat
purchases, help the businesses elevate their
profiles above those of their competitors
and do not necessarily cost a fortune. The key
is to focus on the primary objectives.
“The purpose of all loyalty and rewards
programmes should be only two things – client
acquisition and client retention (therefore
ensuring an increased lifetime value of the
client to the company),” says Harry Welby-
Cooke, business coach and co-master franchisor
for ActionCOACH in Southern Africa.
According to Nedbank’s Dharmesh Bhana,
the key to a successful programme is that the
client benefit or incentive must be attractive
enough to entice behavioural change, but the
cost of the incentive must be less than the
benefit received from the change in behaviour.
“This is a tough balancing act, but get it
right and you are well on your way to success,”
he says. The good news is that technology
is helping make loyalty and rewards programmes
easier and less expensive to launch and maintain.
The traditional “10th car wash free” option
is an easy-to-implement loyalty offering for
smaller businesses, but Welby-Cooke says
these types of offers should carry tight time
deadlines to ensure the client is being loyal over
a shortened period and using your business
more than he or she normally would.
Other easy options suggested by Welby-Cooke
include promotional codes for discounts, which
are only available to people who sign up for your
newsletter, or “refer a friend and get X off your
next purchase with a minimum of Y” offers.
IMAGES/SHUTTERSTOCK.COM
“Multiply is the only programme in South Africa
that rewards clients across health, pension, group
ris k, life insurance and short-term insurance.”
André Larisma, chief executive for Sanlam
Reality, has a similar view: “I think that in the main,
clients will look at the fundamentals of the product
solution they need, and we have always been clear
that those need to be best of breed without Sanlam
Reality. Having said that, in spaces where it is harder
to differentiate, one would be at a disadvantage
without a competitive rewards programme.”
He notes that Sanlam clients who participate in
Sanlam Reality are far more loyal than clients who
don’t – they stay longer, hold larger portfolios and
are growing their relationship across the Sanlam
Group at a higher rate.
Sanlam began a major overhaul of its rewards
programme late last year. The idea, says Larisma,
is to continue to advance the offer with several
options tailored to different tastes and pockets.
“In addition to member choices, we have focused
on designing great user experiences. Most benefits
can be redeemed on the programme’s new website
on your mobile or desktop,” he explains. “The
programme rules are simple and transparent, while
status tiers have been designed so that members get
rewards from day one.”