I recently attended a presentation for a new shoppers loyalty programme. To someone who is constantly looking for ways to save, the presentation felt oddly familiar. As with most presentations like these, they start by telling you about all the hardship in the world, the struggling economy, rising inflation, the increase in living costs, and so forth.
Luckily, just before you start crying, they reveal a miraculous solution that will not only save you from starving, but also save your extended family, friends and acquaintances.
I walked out of the presentation with my new cashback card safely tucked in between my collection of loyalty cards. Looking at the width of my wallet, you might mistake me for someone with money.
These days nearly every major chain store or franchise has some sort of loyalty programme, most banks offer you some form of shoppers reward. Even local businesses have jumped on the wagon: with every ten stamps you get a free car wash, free coffee, discount on your haircut or an extra scoop of ice cream.
At home I neatly stacked all my loyalty cards out on the table. Is it even worth having all of these? Most people will argue no, loyalty programmes are just another marketing tool used to convince us to shop more.
While this might be true, if you are trying to become financially free, you should know that every cent counts. If you can save a rand or two, why not?
The trick is to be smart about it. Collect those loyalty cards, sign up for the reward programmes, but always keep the below in mind:
1. Is there a signup fee?
Remember that the whole point is to save wherever you can. If the loyalty programme you are considering is asking you for a signup fee or a minimum spend in order to join, it is probably not worth it. In this case you will be spending money, not saving it.
2. Make sure it is not a scam
If you are signing up for a rewards card at a well-known franchise, you can probably rest assured that it is not a scam. Simple reward programmes from small business that offer you freebies or discount after a certain amount of purchases are also mostly harmless. With anything else, it is best to investigate thoroughly and make sure it is not a scam. If there is a signup fee, it should already raise some red flags.
3. Do not shop for points
This is the big problem with reward programmes. Always remember what you are trying to achieve; you want to save money! Thus, if you need to purchase an item of R10 and your rewards membership gives you R1 discount, great! Every rand counts. If, however, you need to purchase two items in order to get your discount, it’s probably not such a great deal; buying two items will still cost you more, even with the discount, especially if you really only need one.
You need to be very careful that you don’t buy extra, shop more frequently, or buy more expensive items just because of the benefits you will get from a rewards programme.
4. Do not allow your cards to dictate where you shop
Let’s say you want to purchase bread, below is the cost of a loaf bread at two different stores:
Shop A – R9 plus you get loyalty points worth R0.50
Shop B – R8 no loyalty programme
In this scenario Shop B is still the better option. It will not make sense to shop at the more expensive store just because of the perceived value you get from the loyalty programme.
You also have to consider your driving distance. Be careful to not spend more on petrol because you insist on travelling to stores where you get minor loyalty rewards.
5. Make sure you know exactly how it works
Some people use their loyalty cards as additional “saving pockets”. FNB’s eBucks or Pick ‘n Pay’s Smart Shopper programmes are popular choices for this approach. In essence, you try not to use your loyalty rewards until you have accumulated enough to really make a difference.
This is perfectly fine and even makes financial sense. You should, however, make sure that you know exactly how the rewards system works, and make sure that you don’t end up spending more in the long run than what you are actually saving.
At the end of the day, if you can save by swiping a card, then you should. If you do your monthly shopping at a store that offers some form of rewards programme, you should remember to bring your card, just like you should bring your own bags.
Be careful, however, that you do not get caught by the “casino effect”. The rewards, points or discount that you get should help you save, and not “trick” you into spending more.