LOYALTY PROGRAMMES AT
Date
2011-04-15
Authors
Human, Lezánne
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Abstract
The financial services industry is becoming increasingly competitive, resulting in
higher customer churn and lower profitability. Well-structured loyalty programmes
can play a key role in retaining profitable customers and driving profitable
behaviour in those customers. Loyalty programmes in South African financial
institutions have been launched with varying degrees of success, requiring an
understanding of why a loyalty programme is needed and how it should be
structured to achieve its objectives.
In-depth interviews at a case site – the eBucks programme of FirstRand – were
conducted. It was found that eBucks was implemented to increase profitability
through driving profitable behaviour and retaining profitable customers, as well as
through cross-selling and providing differentiation.
The programme follows a ‘promotional currency’ structure and is multi-partner in
nature. It reflects its unique environment and is specifically designed to ensure
value to members and a competitive advantage against other loyalty programmes.
Strong top leadership support adds an important dimension. The research should
be of value to financial institutions debating the implementation or discontinuation
of their loyalty programmes.
Description
MBA - WBS
Keywords
Loyalty programmes, Financial institutions