Our poorly performing economy means many consumers will continue experiencing hardships and increasingly look for bargains and specials wherever they could find them. Loyalty programmes promoted by many companies will now become the focus, with consumers leaning more towards those offering more benefits without unnecessary limitations and hindrances.

But many companies are beginning to scale down offers on their loyalty programmes. Some now reduced the number of “points” consumers can accumulate on purchases, others have restricted places consumers could earn them from, others have introduced expiry dates to points already earned, while others are charging consumers a regular fee to sustain the programme. Whatever it is, many a loyalty programme are not what they used to be and consumers are voting with their feet. Small-businesses need to learn from this observation and ensure their growth isn’t stunted by regular customers’ dissatisfaction with not well-thought through incentive schemes. By Nimroth Gwetsa, 31 October 2019.

Incentive schemes are not exclusively offered by big-businesses. Many small-businesses offer some form of incentives to encourage consumers to behave in a particular manner. Offers of certain discounts if consumers settle earlier, to bundling other offers on certain purchases are not uncommon among small-businesses. While many small-businesses offer them to encourage sales or to cover their working capital shortages, small-business owners should think beyond short-term benefits of their loyalty programmes. Small-businesses could gain from adopting more sophisticated uses of loyalty programmes as it is done in bigger businesses.

Data or information is king. The possessor of important information will gain an advantage over those who do not have it. Big-business uses loyalty programmes to gain more information they would ordinarily pay a premium for, to companies specialising in market research. I understand mining such information requires specialised infrastructure and systems to store, process and manipulate information, but small-businesses can also use inexpensive basic office productivity tools to store, mine and manipulate similar information for their needs.

Every piece of information that can either help the small-business or their suppliers or parties they interact with, can be commercialised or used gainfully to meet other business needs. As small-business owners or managers, we should learn to harness the information we gain from interactions with customers to better manage and improve business performance.

Many small-business owners offer incentives without understanding holistic implications and regularity of such offers. They fail, also, to realise such offers create an expectation and induce a particular behaviour among customers. They fail to anticipate risks of unfavourable conditions that would prevent continuation of such offers. Because such offers were made for expediency, consumers end up wondering why companies have suddenly stopped offering them their familiar benefits without a reasonable explanation. What was then a catalyst for increased sales has now become a deterrent against business growth and revenue maintenance during times of hardship.

But even many big-businesses have not learnt to harness the power of the valuable information gained from such loyalty programmes. Instead of using the information to manage stock, understand consumer patterns and finding ways to encourage other behaviours, they seem to use it to promote irrelevant products to their customers hoping to stimulate sales. The irrelevance is owing to difficulties in linking those promoted products to previous purchases of the consumer.

Think, for a moment, how powerful it would be for companies had they applied some level of intelligence to information derived from mining their loyal customers’ spending patterns. But such intelligence can best be obtained when companies invest in understanding consumer, if not human behaviour. For example, in a case of a consumer purchasing a vehicle, they would be flooded with euphoria, and though may not wish to lay out further cash on anything else, they may find it useful obtaining promotions on vehicle care products, security and maintenance. They may even be tempted to consider accessories and any offers of memberships to sustain their excitement and usage of their priced purchase.

Big and small-businesses could and should learn from such vehicle retailer activities and offers. A full value chain and ecosystem-type analyses and behaviour of consumers should be anticipated and offers tailor made accordingly. Such offers do not necessarily imply the company should be responsible for all offers along the value chain and ecosystem, but strategic, dependable and quality partnerships could be sought and secured to offer consumers an integrated seamless experience. Such integrated experience is not necessarily too difficult to offer, as businesses can already work with their suppliers and related others to offer consumers what could benefit all parties.

The problem is, many businesses conduct their sales using “old school” methods premised on the hope and expectation of “unlimited” supply and availability of new customers, that minimal effort is made in maintaining and managing current customer relationships. We should learn from patterns of behaviour of Silicon Valley companies, mining and profitably using information to create stickability and dependence on their products and services among consumers. They embedded such intelligent use of information from the start and continually improve the quality and extent of information collected.

In the era of increasing dependence on artificial intelligence, we should, likewise, try our best to think beyond sales and revenue and be consumer-focused. Then we should find ways of deriving relevant information to keep customers dependent on and regular consumers of our business services.

In so doing, our loyalty programmes should never become disloyalty programmes leaving our consumers in great agitation.