“Consumers want to feel like they are in control of their finances and are wary of being exploited. We have found that many eBucks members see the rewards they earn each month as away to stretch their wallets, ,” she says.
Rewards and loyalty programmes are seen to play an increasingly important role in the economy as they help increase purchasing power.
For example, in good times, loyalty points earned by making everyday purchases can be set aside to purchase big ticket items or luxury items such as expensive electronics, holidays or expensive jewellery. In tougher times, members of rewards programmes tend to rely more on their rewards currency to make ends meet by purchasing everyday items like fuel, groceries, medicine and airtime.
Duvenage said eBucks has brought more retail partners on board over the last few years to add everyday value to members. In the last year alone, nearly half the total eBucks spent each month were redeemed on necessities.
Loyalty programmes must make ‘cents’
Loyalty programmes generally use one of four mechanisms to reward members, with each reward type offering its own set of benefits.
1. Discounts and cash backs
Discounts offer an immediate monetary reward to members but are generally limited to transactions at specific partners. A cash back programme generally gives customers cash back in the form of a credit against an outstanding balance.
2. Rewards currency programmes
This would be a programme like eBucks where the rewards currency is not a reward in itself, but a means to a reward. These programmes offer versatility and choice.
3. Soft Benefits
Soft benefits hold significant appeal for many rewards programme members. In this case there is no money that customers will receive back and no rewards currency. Rather, soft benefits involving additional services or exclusive privileges for customers are offered. A good example is the FNB Slow Lounge.
4. Hybrid rewards
The latest trend in the loyalty industry is to offer a combination of rewards currency, discounts, cash back, and soft benefits. A ‘hybrid’ programme allows consumers to use their rewards currency as a way to extend their purchasing power. For instance, eBucks allows its members to take advantage of significant eBucks discounts on earmarked items in the eBucks shop such as gadgets, movie tickets, flights and more, using either their eBucks as a method of payment.
The different mechanisms are then packaged into a rewards programme offering either in the form of a 'club', where you pay a membership fee, or as part of a free rewards programme.
Whether a consumer prefers several frequent, smaller rewards or the ability to save or pool their rewards currency for a luxury item, the success of a rewards programme to a large extent depends on how relevant the reward is to the individual.
It is important for consumers to establish whether their lifestyle and behaviour is aligned to the rewards programme of their choice to ensure that the most value can be derived.
Duvenage highlights a few questions for consumers to ask in assessing the value and relevance of a rewards programme:
- Is the reward transparent in how much it is worth?
Being able to measure and attach a rand value to a reward makes it more tangible to consumers so that it is clear to them how much the rewards currency can buy, and how far it will help them stretch their wallet.
- How difficult will it be to earn and spend rewards?
In evaluating a rewards programme, it is important to look into the actual earn rate what does the consumer need to do to earn a reward unit, and how much the unit is actually worth. In the case of eBucks, members are offered the benefit of accelerated earnings as they can earn from more than one partner at a time, significantly boosting their earning potential. For example, when members use their qualifying FNB or RMB Private Bank Card to pay for purchases at certain programme partners, they earn from both the bank and the partner.
Spending rewards should also not be a difficult process and consumers need to understand where and how these may be spent. With this knowledge, consumers can decide whether or not the rewards programme will add value by offering them opportunities to spend on items they actually need or ‘the special extras’ they would like to purchase.
- How much choice is available when it comes to spending rewards?
Duvenage says that the monetary value of a reward only represents one aspect of the full value proposition of a rewards programme. It is equally important to evaluate the number of opportunities available for consumers to spend their rewards. Some programmes only allow customers to spend in the same environment in which they have been earned while others, like eBucks, allow members to spend in a variety of places and environments, such as online, in-store or via cellphone banking.
- Do the rewards expire?
Consumers need to know if a programme’s rewards expire. For example, if a consumer is looking for a programme that will offer the opportunity to ‘save’ rewards for a big ticket item, they need to know how long they have to save and spend their rewards before the rewards expire.
- Will the programme offer additional value?
With the exception of monetary rewards and discounts, consumers should also consider additional services and privileges available, such as lounge access at airports.
“You need to look at the specific behaviours a programme is asking you to adopt, and then evaluate if you are prepared to do so. You will also need to weigh up the value of the reward offered, how easy it is to access your reward and at what cost,” Duvenage says.
“Most loyalty programmes are looking to create ‘smart customer behaviour’ like better banking practices, and by slightly changing a few behaviours like using electronic banking channels, you can earn even more rewards, while saving on your banking fees,” she concludes.