Loyalty programmes can assist SMMEs reduce costs

21 Aug 2014

Over the last decade, loyalty programmes became a norm in South Africa and these are among the most useful solutions to help SMMEs curb the cost of month-to-month variable expenses, such as stationery supplies, travel costs and many other necessities.

Currently, local banks and select retail stores have a variety of loyalty offerings, which incentivise clients for adopting a particular behaviour. In addition, banks have been using loyalty programmes to encourage clients to use safer banking channels, thus limiting the risks associated with handling cash.

However, most of them are being utilised by individual consumers - so how can SMMEs benefit?

Maximising loyalty programmes

Understand the mechanics of each loyalty programme.
It is important to understand the mechanics of every loyalty programme you are part of, because some will give you value in the form of cash and others offer discounts or points. Find out what benefits you get on your current loyalty programmes.
Disciplined financial behaviour.
In banking, disciplined financial behaviour is crucial because that is what banks incentivise. The same principle applies to most loyalty programmes. Why withdraw cash when you could be using your card at a fraction of the withdrawal cost, and still earn rewards.
Use it or lose it.
What is the point of stocking up on loyalty cards or signing up for a loyalty programme if you are not going to use it? Use every Rand or maximise every point you get in order to realise the true value of the offering.
Behave like an ordinary consumer.
The rise in cost of living has influenced the way in which people treat loyalty programmes and SMMEs need to follow similar principles to those of consumers, who are starting to ensure that every Rand goes a long way.

Even though loyalty programmes could be effectively used to minimise certain costs associated with running a small business, they are by no means a blanket solution to every business need. Business owners need to understand that maximising rewards will not necessarily settle fixed costs such as rent and salaries. Hence, the need to explore using rewards or loyalty points for variable costs. Loyalty programmes certainly can offer some relief, provided they are utilised properly.