And while cash back for buying fuel is certainly not a new concept, we wanted to understand how the loyalty value proposition was tailored to the local market, and any insights that can be leveraged from our friends in South Africa for other markets around the world.
“Everyone is promoting loyalty programmes but these programmes need to be simplified” – commented Joe Boyle, Director at FreshStop in the launch press release and it certainly is one of our own key beliefs about building a loyalty programme that customers will love.
There’s no doubt that customers love cash back as a concept, with recent loyalty research showing this format identified as the leading loyalty proposition with South African consumers. Cash back is preferred by 73% of customers, followed by instant discounts at 57%.
And while the customer’s benefits of cash back are certainly clear and popular, there are a number of steps that customers need to take in order to avail of it with FreshStop. Firstly, users need to download and use the free app to reserve their items in advance, which they pick up and pay for in store. Separately, members need to actually photograph the receipt and submit it to the app in order to avail of their cash back credit which allocates the savings to the member’s Rewards account. The video below shows the customer journey.
The Pros and Cons of FreshStop Rewards
- Cash back is a simple strategy that makes sense for FreshStop as it allows them to collect customer data – an essential step required in order to create and communicate personalised offers to customers in the future. According to the South African edition of the Sunday Times, the most popular loyalty programme in the South African market is “Pick n Pay” whose seven million members say that “personalised discounts” are critical for them, so this strategy has the potential to work equally well for FreshStop over time.
- While the value proposition of this programme is simple on paper, it does require a number of behaviour changes from customers as follows.
- Products have to be pre-purchased or reserved in advance on the app.
- Members then need to scan the receipt in to the app after their purchase.
- Finally, if they want to enjoy the cash back in their bank account as offered, a separate process will also need to be set up.
- Extra steps like these do affect customer adoption, so it will be fascinating to follow South African customers and their willingness to embrace these steps with FreshStop.
- In terms of overall appeal, it’s also actually not clear anywhere within the programme’s promotional terms what percentage is being offered back to the member for in-store purchases. FreshStop is keeping the maths to themselves, which it makes it harder to get excited about what’s on offer.
- Fuel margins are notoriously thin, however one current single-store promotion is offering a 3% cash back to 1,000 customers over a three month period, so some relatively generous tactical campaigns are clearly being tested even at this early stage.
Part-Payment a Compelling Proposition
One other exciting insight worth noting from the market leader Pick n Pay is the huge increase reported in the number of customers using their accumulated points to immediately claim a discount on their next shop, with the programme quoting a “400% increase” in usage by members. Although the base figures are not mentioned, with over 7 million members, it’s same to assume that there was already at least a critical mass of customers enjoying this feature.
It’s also an increasingly popular feature with other sectors such as airlines and pharmacies including Boots in the UK, so is definitely an exciting idea to consider for other points based programmes globally.
Driving Loyalty in South African Convenience Stores
While South Africa boasts some exciting loyalty programmes, the market leaders come from a variety of sectors including banking, supermarkets, airlines and pharmacies. It seems the fuel sector and convenience retailers in South Africa, like many markets, are only discovering the power of digital technology to drive their consumer relationships. FreshStop may be the first convenience retailer in South Africa to launch a rewards programme, but it certainly won’t be the last.
Liquid Barcodes is a leading global loyalty and digital marketing technology company specialised for the convenience store and foodservice industries. Our proprietary cloud-based technology platform allow retailers to create and manage their digital marketing campaigns with a proprietary process we call the “customer connection cycle’ to engage, promote and reward customers activities in real-time across digital and media channels.
How we do it:
We have developed the most advanced loyalty and digital marketing technology platform specifically for convenience store and foodservice retailers globally.
Retailers use our self-service dashboard to create and manage loyalty driven marketing campaigns that increase purchases with their existing customers, as well as effectively target and acquire new customers through partners or paid media channels.
One core component of live loyalty is gamification. We have gamified branding, loyalty and promotions. We believe this approach is essential in order to get customers’ attention and ultimately truly engage them with repeatable actions thereby winning their loyalty.
Check out some of our exciting/proven results here:
Chief Content Officer, Liquid Barcodes and Independent Loyalty Consultant.
With over twenty-five years marketing experience, I specialise in loyalty marketing consulting, managing consumer loyalty propositions, strategy and operations. In addition to working with Liquid Barcodes, my clients have included Telefonica O2, Three Mobile, Electric Ireland, Allied Irish Bank and The Entertainer, as well as Avios – the global points currency for some of the world’s top airlines. I am also a judge for the Loyalty Magazine Awards.