How loyalty cards reward retailers with big bucks

Way back in 1896, the first loyalty programmes were initiated in the US – with astounding success. The system was simple, yet incredibly effective: customers received stamps when they made purchases, which they could then glue into a booklet. Once the booklets were full of stamps, they could redeem them for products.

Since then, loyalty card programmes have been a popular method of customer retention around the globe. Loyalty cards and customer reward schemes have gained particularly significant traction in South Africa, with many large retailers offering their customers loyalty card programmes that benefit both parties.

In 2010, it was estimated that 15 million South Africans belonged to a loyalty scheme.

According to Personal Finance, the market for these programmes in South Africa has seen astonishing growth.  In the past decade the use of loyalty programmes has skyrockets from a handful of loyalty cards that rewarded users with air miles, to more than 80 loyalty card programmes that offer a wide range of customer benefits. A chief example of a large retailer using loyalty card programmes successfully is Pick n Pay.

Pick n Pay has issued over 1.6-million redeemable vouchers in the last six months.

Bizcommunity reported that since September 2014, Pick n Pay smart shopper card-holders have collectively redeemed 1.6-million vouchers. This is a million more vouchers than the number generated over the same period last year. It was recently reported that the retail giant increased their earnings by 28% this year – thanks, in part, to their loyalty programme.

The Smart Shopper programme has evolved to take individual consumer behaviour into account – further increasing its efficacy.  

The first inception of Pick n Pay’s loyalty programme worked on the following premise: people would shop, earn points, and then redeem those points for discounts on in-store purchases. Now, thanks to technology that gives the retailer insight into the personal shopping habits of customers, rewards can be tailored accordingly. Pick n Pay now offers customers coupons and vouchers for discounts that are in line with their personal shopping habits. What’s more, customers now get free benefits with third parties as a reward for shopping with Pick n Pay.

Rewards programmes are increasingly going mobile

Loyalty cards and programmes are becoming sophisticated due to the growth and increased availability of mobile technology. Thanks to information gathered by physical loyalty cards, companies are now able to collect information about their customers and as a result mine and action this data more effectively.

 Incorporating loyalty cards into your brand offering is a smart way to increase customer satisfaction, and revenue as a result.

Customer rewards and incentive programmes are evolving – as is consumer behavior and expectation – which means that it’s crucial to partner with a loyalty card programme provider who intrinsically understands this, and who has developed the technology to cater to the different needs of your business.

Loyalty cards and customer reward programmes should incorporate several crucial qualities in order to be effective:

  • Immediate cardholder gratification
  • Long term sustainability of the programme
  • Easy to understand rewards system
  • Tangible rewards
  • Customer retention
  • Increasing the frequency of purchase

 Tutuka offers loyalty card solutions that enable a cardholder to swipe their loyalty card every time they make a purchase, and when they reach a threshold of spend – as determined by the retailer – they earn cash-back rewards which are loaded directly onto their loyalty card for redemption back in-store. Cardholders are also able to log onto a branded loyalty portal where they can keep track of their spend in-store as well as their rewards earned, and read up about the latest offers available to them.