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? The Smart Shopper card enables the basis of their purchase behaviour is
Barriers to switching customers to gain points for purchases, misleading, because behavioural loyalty
between retailers which can later be turned into vouchers may be driven by short-term incentives
remain very low to be used in-store, or converted to rather than loyalty to the brand.
cash to be donated to charity. Smart
loyalty programmes are an important Shopper has nearly 9-million members, For example, clients might be
instrument for customer retention. making it an enormous and very dissatisfied with a store, but continue to
relevant loyalty programme. shop there because it is convenient. This
Yet research has shown that these indicates behavioural, but not necessarily
reward programmes are, on their own, NON-ADOPTERS attitudinal, loyalty. Research also suggests
not enough to induce loyalty when there that truly loyal customers exhibit repeat
is as absence of an emotional bond with Interestingly, the Food Marketing Institute purchase behaviour that is supported by
the brand. Instead, effective commitment in the United States reports that about a strong internal disposition toward the
– that elusive emotional bond – is 60% of retailers in that country do not brand – whereas customers who make
needed to ensure repeat patronage. have loyalty programmes, with 70% of repeat purchases without any emotional
these non-adopters having no plans to bond are susceptible to defecting to
The South African Loyalty and introduce any such programme in the competitors at any time. Thus, focusing
Rewards Survey has identified a total future. This is because they consider solely on repeat or frequent shoppers
of 101 rewards programmes in the them unsuitable for their businesses or creates the risk that retailers may neglect
country today. The figure has grown for the market in which they operate. the truly loyal customers.
significantly over the last two decades,
but it is in the past eight years that Given that South Africa is still South African retailers need to
we have seen the greatest uptake. In considered to be a developing market, understand that loyalty programmes
1986, for example, there were only nine could this be the direction grocery are just a way of providing positive
loyalty schemes in the country, with the retailing will eventually take in this reinforcement of buying behaviour.
number rising to 38 in 1996, not long country? Or are we likely to continue Such conditionally loyal customers
after the first democratic elections. to experience phenomenal growth in do not necessarily develop a favourable
loyalty programmes? association with the brand, and
Most of these schemes are well ongoing purchases are unlikely to
structured and managed, with millions What is very noticeable is that almost stem purely from their participation
of consumers enjoying benefits, earning all our local loyalty strategies are similar. in the loyalty programme.
points and taking up the offers that From an independent perspective,
these plans afford them. it seems South African retailers are In such cases, customer loyalty
practicing one of marketing’s most focuses on the programme rather than
Surveys into the loyalty industry familiar strategies: ‘if you see a good the business or chain. Attractive loyalty
point out that, on average, South idea, then copy it’. programmes only lead customers to build
African consumers now have 10 relationships with the programme. Thus,
loyalty offerings per household. Does The question is whether these when the reward factor is removed, the
this mean they’re over-subscribed? programmes create extra loyalty beyond positive effects of the loyalty scheme
Considering the rate at which retailers that which is derived from the relative disappear and the result can be a
are expanding and building new stores value of the merchandise sold? Do they calamitous drop in the retailer’s sales.
in previously under-represented areas, encourage customers to dig deeper into
this might seem to be a logical number. their pockets? Or do they merely bribe Girland Chibaya is
So the answer is probably ‘no’. the shopper to buy again? a retail professional
with extensive
In the US, by way of comparison, it In the competitive local market is experience in retail
is interesting to note that families are it really feasible for every retailer to management, supply
signed up to an average of 18 such increase customer loyalty through a chain management,
programmes per household. points-based reward system? Evidence strategic planning and
shows that some of these programmes general management
According to recent surveys, Pick do work for certain retailers, especially spanning more than 18 years. He has
n Pay Smart Shopper is the biggest those schemes that can be converted worked for major SA companies such as
supermarket rewards scheme in SA. to cash. But research also asserts that Woolworths, Nike SA and Edcon. He is
measuring customers’ loyalty strictly on currently studying for an MBA.
October 2016 – January 2017 strategicmarketing 19
