Business

How loyal are loyalty card users in SA?

In a tough economy, South Africans are on the tip to save as much money as possible. This also means making use of loyalty cards at almost every single store for extra points or cheaper prices.

The South African Consumer Experience Report answers the question if it is ’till death’ between consumers and brands, or if consumers value loyalty cards that give the best deals.

Charlie Stewart, CEO at Rogerwilco and co-author of the report, says an average South African has signed up for 9.4 loyalty programmes. This ranges from grocery store programmes, at a fuel station, and at fashion retailers.

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Consumers want the best deals

The report released in July 2024 shows that above all else, consumers value spending their money where they can find the best deals. “By becoming increasingly financially savvy – which tough economic times do to consumers – they’ll know which brands are offering what and when and change shopping patterns without a second thought,” says Stewart.

The report that surveyed 2,000 consumers showed that during difficult times, ’till death do us part’ is easily forgotten and multiple relationships take the place of a monogamous brand marriage. This is the same with most consumers and loyalty cards.

ALSO READ: How SA consumers are trying to survive cost-of-living crisis

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More loyalty to specials

Many would think businesses benefit a lot from the regular specials because many consumers make purchases, however, Stewart says it is a risk for businesses if they offer cost-cut goods too often.

He explains that if a specific brand is always having a sale, then consumers wait for the sale to happen again, instead of buying the product at full price.

“Even though revenue comes into the business, it’s at cost or maybe even lower, which is bad for business sustainability.”

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When it comes to brands, he advises they be aware that most consumers have become unreliable, and disloyal.

It does not matter for most consumers if they have shopped at the store for decades, but that doesn’t hold up when prices go up.

He says over the years, consumers interest has changed. When it comes to shopping during Black November, they would head over to furniture stores and get an extra-large TV screen at 75% off. However, this has changed, consumers are more inclined to pay less for groceries and clothing.   

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He views the change in interest as a big one and shows how under pressure consumers are.

“Interestingly, the biggest seller last year for Black November was the air fryer – according to Vish Chetty, technology and business transformation executive at Absa – not the high-end washing machine.”

ALSO READ: Less ho-ho-ho, more no-no-no for consumers this Christmas – survey

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How to grow loyalty in a brand?

There is little to nothing when it comes to what brands can do to keep an unfaithful consumer. Businesses are already cost-cutting, making smaller pack sizes, upping how many loyalty points are earned after swiping etc.

However, that is not enough to keep consumers from looking around at what else is on the market.

Stewart adds that the economic climate will not change overnight, but news such as the prediction of the Central Bank reducing interest rates in September is encouraging.

Some factors that can be attributed to hope being given to consumers that will get better are the formation of the government of national unity (GNU), the stronger rand and easing inflation.

Motorists have been enjoying a decline in petrol and diesel prices, giving a relief to motorists’ wallets. If another cut happens, it will be the fourth consecutive cut this year.

“This positively points to some financial easing on the horizon. Which is why it is key that brands do not discount till they drop (out), just to stay in the race, but rather become strategic about the long game of loyalty programmes.”

There’s more to a relationship than just a good deal

“Brands must look at their entire customer journey, which today is like a complex web of entrance and exit points, on and offline, and do the very best that they can at every single moment of consumer interaction.”

The report shows that businesses have a better chance of staying competitive while making margins if they stay reliable, deliver on time, are trusted and always have stock.

71% of the respondents said they are willing to always come back if the brand is reliable, 60% said they will go back if they deliver on time, 54% said they go back because they trust the brand, while 60% said they will go back if the brand always has stock.

“The bottom line is loyalty cannot be bought. It needs to be earned, often over years, where a consumer repeat buys because the brand in question lives up to their needs – and gives them a real deal.”

He adds that real loyalty versus deal loyalty is the play and those brands that choose the former have more chance of getting repeat purchases and armies of brand fans who will stay faithful to them for life.

NOW READ: Research shows what SA consumers want most when buying products and services

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By Tshehla Cornelius Koteli
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