#OpEd: Brand Loyalty Programmes Drive Growth — the Maths Disagrees

Why It Matters

Over‑investing in loyalty distracts from the activities that actually expand market share, limiting revenue potential for brands in competitive, price‑sensitive markets.

Key Takeaways

• Loyalty programmes boost repeat purchases but rarely increase market share
• Double Jeopardy law shows growth stems from acquiring more buyers
• South African consumers juggle 10+ programmes, yet brand allegiance declines
• Apple’s loyalty matches predictions, proving programmes aren’t essential
• Shift loyalty spend to penetration to unlock higher growth

Pulse Analysis

The loyalty industry’s narrative—retaining customers is cheaper than acquiring them—originated from narrow service‑sector studies in the 1980s. Over time, Frederick Reichheld’s wide‑range cost‑multipliers (5‑25 ×) morphed into a universal rule, even though later research showed the variance renders the claim statistically weak. Modern marketing science, especially Byron Sharp’s Double Jeopardy law, reveals that larger brands simply have more buyers who purchase slightly more often; loyalty is a by‑product of market share, not its cause. This reframes loyalty programmes as marginal nudges rather than growth levers.

In South Africa, the loyalty boom is stark: participation rose from 67% in 2015 to 82% today, with shoppers managing over ten active programmes each. Yet price sensitivity remains high—75% of consumers cite inflation as their top concern—making deep brand commitment unlikely. Real‑world cases illustrate the point. Capitec grew from 25,000 to 15 million customers by focusing on low fees, product simplicity, and broad distribution, not on points rewards. Similarly, Clicks overtook Dis‑Chem by expanding store footprint, not by tweaking loyalty mechanics. These examples underscore that penetration, availability, and relevance outweigh programme incentives in driving growth.

For marketers, the actionable insight is clear: audit the allocation of loyalty spend versus acquisition spend. Prioritize tactics that increase brand visibility and ease of purchase—such as expanding retail presence, optimizing pricing, and enhancing product relevance—especially in categories where switching costs are low. Re‑channel a portion of loyalty budgets into campaigns that attract new buyers, improve share‑of‑search, and strengthen distribution networks. By aligning investment with the proven drivers of market share, brands can achieve sustainable, double‑digit growth rather than the modest, incremental gains offered by traditional loyalty schemes.