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Loyalty Cards Opinion Offering: Danny Bryer
The proliferation of loyalty cards in South Africa over the past decade has been nothing short of incredible. Loyalty programmes offer a world of promise to consumers who sign up, but while some enjoy supreme success and customer allegiance others are failing on the basics which can cause lasting brand harm.
The lessons are there to be taken from those programmes that have stood the test of time, because the success or failure of any such venture as a brand affinity exercise is entirely dependent on whether consumers perceive tangible benefits for themselves.
The concept of loyalty programmes has been around globally for more than 50 years but only became a reality in South Africa in the 1980s when Protea Hotels launched the first one and called it Prokard. It took nearly 20 years for 15 customer loyalty programmes to develop in SA after that, but from 2000 the industry exploded and today it has become a R12bn p/a business with more than 10 million South Africans who carry at least one card. Globally, according to industry experts, there are more than 1 billion people who carry one or more loyalty cards – about one sixth of the world’s entire population.
Loyalty programmes are defined as structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially of benefit to the firm and loyalty programme members. But while loyalty programmes proliferate, the offering to the broader consumer base is frequently of negligible value and difficult to negotiate because of the many “terms and conditions”. This ultimately provides little satisfaction to the brand or its customers.
It therefore follows that for loyalty programmes to have longevity and for enterprises to effectively use this avenue to grow brand recognition and affinity they must provide tangible value to their customers and make reward redemption guaranteed and an uncomplicated process. The Protea Hospitality Group took note of consumer demands for simplification and their changing lifestyle habits in relation to the internet, which led to a major overhaul of Prokard in 2010 that propelled SA’s oldest loyalty programme to the forefront in line with these changes.
The most significant aspects of the overhaul were to move the programme entirely online, provide substantially improved privileges and redemption of points and benefits and to simplify the system with a one point = R1. The online platform allows members to create and manage their profiles, which allows for greater 1:1 CRM and gives members greater control of their accounts. The programme also allows for immediate rewards redemption without restrictions by loyalty card holders.
It is critical for any such programme to drive customer engagement as opposed to a simple and unabated acquisition of members, because in the end unless members are engaged with the offering – understanding and using it – companies that sink substantial amounts of money into setting up these programmes are not going to see long term ROI in terms of their defined business objectives.
For programmes of this nature to succeed, what is fundamentally important is building a strong business case for driving client engagement and measuring performance against clearly defined objectives.
It boils down to understanding customer desires. Unless that core principal is in place a loyalty programme will not grow to see the desired results. Prokard has been around for more than 25 years because we understand what it is that our guests want and need from us. In the case of hospitality loyalty programmes, the list is clearly defined and those with Prokards have every box ticked. Members want preferential rates on accommodation, easy redemption based on a guaranteed last room availability structure, a good percentage value return on their business and leisure accommodation spend, flexibility in booking, no punitive rates when redeeming points and add-ons such as preferential rates on dining.
We have also found that in the current economic climate consumers are seeking packages that provide greater added value which meet their particular needs. We see these as bite size luxuries for our guests. This trend occurs across the board from our mid – up market brand to our luxury African Pride Hotels brand.
Ultimately loyalty cards are only as good as the value they present in terms of rewards and simplicity of use, and most importantly the ease of the benefits redemption process. These rewards and benefits should be focussed on the core brand as opposed to diluting it with numerous reward partners. The Prokard programme is focussed on exactly that as the rewards and benefits are experience-focussed within our hotels. The proof of this strategy is in Prokard’s longevity; it was launched 25 years ago and it is still going and still growing, which is a clear sign of its present and future value and a loyalty programme model for others to follow.