Like all big businesses with a loyalty scheme, Pick n Pay is the latest to try its hand at expanding its program. Announced this week the retailer is launching a mobile virtual network operator (MVNO), called PnP Mobile.
It differs from a mobile network operator (MNO) like Vodacom or MTN because it is a virtual operation that piggy backs on the MNO’s network.
It’s not only notable that the second largest retailer in the country is expanding its Smart Shopper program but that it’s partnered with MTN. Previous MVNOs – including the original Virgin Mobile (now in business rescue), FNB Connect, Standard Bank Mobile and MRP Mobile – have all been on Cell C’s infrastructure. It’s a lucrative business. Cell C earned R399m from its MVNO business in the six months to June, growth of 18%.
There is good reason to believe this expansion of Smart Shoppers will find fertile ground. Other big firms with loyalty programs have mostly had success in expanding their own.
FNB, whose eBucks have been the gold standard for many years, is trying to extend itself into other areas with its nav offerings, having launched its own MVNO, FNB Connect, several years ago. You can use eBucks to buy food, fill up petrol, get cheap flights and a range of other things, including those long-forgotten havens of travel, the Slow Lounges.
Discovery, arguably the granddaddy of behavioural loyalty, has parlayed its health expertise into a digital bank, having proved its case with cheaper flights and movies, and reduced gym fees.
Both of these respective giants have been very good at playing to their strengths and identifying not just the value of their loyalty incentives, but the power of using digital to transform their high-touch customer businesses into self-service websites and apps.
I’m very curious to see how Pick n Pay fares. The Smart Shopper program is a good one – and brings you this newspaper for free – and is in a different field completely to financial services.
PnP has clearly noticed that airtime is like a currency in of itself. During these Covid-19 lockdown months when I haven’t been carrying a wallet, I’ve taken to tipping garage attendants with airtime instead of cash.
Getting airtime by shopping at Pick n Pay, makes the MVNO a very clever add-on to the loyalty basket. After buying R100 on their PnP Mobile SIM card, customers who spend a further R1,000 on groceries get 500MB data, for instance. Smart Shoppers can earn up to 2.5GB in free data rewards every month for buying at a Pick n Pay store. This is over and above the usual loyalty points.
By linking the rewards to the primary aim – spend more at PnP – the customer gets added value
The retailer showed good nous to buy the Bottles delivery app, which pivoted from booze delivery to groceries when lockdown halted alcohol sales. It said in its results for the six months to August that online sales had doubled.
This is a broader set of offerings – shopping, ecommerce and airtime – but from a single supplier. I’m old enough to remember when Raymond Ackerman started selling petrol at a steep discount, having already fought the government over increases in the price of bread.
It’s clear that loyalty schemes are a new form of creating value for customers – see Vitality, eBucks or Amazon Prime – as well as keeping them coming back to the store.
It’s a clever play by Pick n Pay to pivot into an MVNO, which other retailers have done successfully internationally.
This article first appeared in the Daily Maverick.