Unclaimed Bonga points billions shift focus on customer loyalty schemes

Bonga Points

Wananchi queue at a Safaricom customer care centre along Kimathi street, Nairobi to redeem thier Bonga Points.

Photo credit: File | Nation Media Group

Safaricom two weeks ago revealed that it holds about Sh4.5 billion in unclaimed underlying revenue from its customer loyalty programme, Bonga Points as of March this year, highlighting the shortcomings of such schemes.

The Bonga Points loyalty scheme, introduced in January 2007, gives subscribers one Bonga point for every Sh10 spent on the telco’s network on voice, mobile data, and SMS, and for every Sh100 spent on the network for M-Pesa transactions.

Frustrated by the slow redemption of loyalty points, the listed telco has now told subscribers that all unredeemed Bonga points will expire after three years--- meaning that those accumulated before December 31, 2019, will be invalid come January 1, 2023.

Safaricom termed the move to put an expiry date on the Bonga points a business decision aimed at encouraging redemption.

Corporates world over share in the frustrations of Safaricom as customers failed to redeem their loyalty points from the schemes that are targeted at client retention, repeat purchases and increase sales.

Most of the loyalty schemes backfire with clients keeping off for various reasons as captured by research.

For example, a recent survey conducted by professors at the Wharton School along with the customer experience consultancy the Verde Group, reveals an important downside of the loyalty programmes.

The research observed that customers enrolled in loyalty programmes are heavily put off whenever they encountered service mishaps such as outages and stockouts. This is because they shop for the brand more and their frustrations have a boomerang effect on decisions such as redeeming loyalty points.

Low value

Some customers have also taken issue with the low value of the redemption coupons which kills their motivation.

“The last time I redeemed my points was three years ago. It was worth Sh500 meaning from accumulated Sh50,000 worth of shopping from a leading supermarket. Sh500 can’t even buy cooking oil now. You can only pick a small juice, yoghurt, and a cake,” Ann Ndirangu, a resident of Nairobi told Smart Business.

“At the end of the day, it’s not worth it. It should be one point per Sh10 spent,” she added.

Loyalty programmes have been majorly used by retailers and businesses such as supermarkets to retain patronage and get new customers. The increasing need for customer loyalty has seen the usage spread to hotels, merchandise vendors, electronic shops and debit or credit cards, manufacturers, real estate companies, and airlines.

This has seen the emergence of new providers to offer the same solution to companies.

Widespread adoption of the programme in the retail space has also seen a shift where retailers moved from charging Sh100 to a free membership to entice customers to sign up.

Loyalty cardholders earn different points across businesses depending on the amount they spend.

Naivas Supermarket, for instance, rewards one point for every Sh100 spent without the inclusion of value-added tax (VAT).

For Carrefour, it tapped into the digital shift by introducing MyCLUB programme, accessible through the Carrefour Kenya App, allowing users to collect points based on their purchases at the retail stores.

For every Sh100 customers spend, they receive 2.5 points in return, while they also stand to gain additional points based on selected promotional items. Upon collecting 10,000 points, customers can either choose to redeem them instantly towards their bill or continue to accumulate points for a larger reward later.

Superior Homes Kenya, a real estate developer, has also been running a similar programme where investors and visitors earn loyalty points whenever they transact at any of the developer’s properties.

The programme allows users to redeem the points accumulated whenever they spend money on accommodation, conferencing, events, meals, and drinks at any of the developers’ properties.

Both individual and corporate customers gain 100 loyalty points for every Sh1,000 spent, with each point being equivalent to Sh1.

However, several customers fail to redeem despite their increased use of the services.

Some shoppers have failed to join the programme and redeem due to the collapse of some retailers such as Nakumatt that closed down with thousands of accrued customers’ loyalty points from different outlets.

Nakumatt stores gave one point for each Sh100 spent.

The programme was suspended with the first announcement of the closure of some outlets in 2017 which saw customers turn to social media platforms to express their frustrations.

Spooked by the low redemption of Bonga Points, Safaricom has recently adopted a raft of strategies to try and spur customer interest in making use of the scheme’s redemption options.

Nairobi Securities Exchange

The company has expanded options for redemption to include the purchase of shares at the Nairobi Securities Exchange (NSE), air time, data, phones, and even plane tickets.

However, the value of outstanding or unredeemed points has been going up over the years—hitting Sh4.5 billion in March 2022 from Sh3 billion in 2015.

The telco awards four minutes of talk time for 50 Bonga points, graduating to 280 minutes for 4,000 points.

For those redeeming airtime, the redemption ratio ranges from Sh3 worth of airtime for 10 points, up to Sh600 worth of airtime for 2,000 points.

For SMS redemptions, the award ranges from 20 texts for 15 points, to 3,500 texts for 600 points, with expiry ranging from 24 hours to 30 days.

However, the valuation of Bonga points has not been consistent over the years, with the worth of each loyalty point varying depending on the merchandise or non-merchandise being redeemed.

Parliament has said it will probe telecommunications firms for imposing expiry dates on loyalty programmes including data bundles and airtime, saying the move would only benefit service providers.

MPs now want the ICT Cabinet Secretary Eliud Owalo to explain the rationale behind the imposition of expiry dates on the services.

Kamukunji MP Yusuf Hassan said forcing expiry dates on subscribers only benefits internet providers and harms efforts to promote digital adoption in the country.