Loyalty programmes have become a default marketing strategy for South African brands. But as participation rises, so does switching behaviour. The data tells a different story: loyalty isn’t creating growth, market penetration is.
Philip Cohen of Fofum Brands gives insight into how are doubling down on loyalty while consumers are switching more than ever. (Image:
Freepik.)
Brands are doubling down on loyalty while consumers are switching more than ever, and the maths suggests they are solving the wrong problem.
South African brands are infatuated with loyalty programmes, built on a simple narrative that they increase retention, build loyalty and drive long term growth.
Yet the latest Truth and BrandMapp Loyalty Whitepaper shows something different, with usage reaching 82% of economically active consumers and South Africans juggling an average of 10.3 programmes.
At the same time, brand allegiance is weakening and consumers are switching more, not less. The industry’s response is more loyalty, even as decades of empirical evidence point in another direction.
The myth that built the loyalty industry
The loyalty industry rests on a finding that travelled further than it should have.
In the 1980s, Frederick Reichheld of Bain & Company found that in some service industries retaining customers could be more profitable than acquiring new ones, but this came from narrow, sector specific data.
Over time, this became a universal rule, with claims that acquiring a customer is far more expensive than retaining one and that small gains in retention drive large profit increases.
These ideas spread because they felt true, even though the evidence behind them was never designed for universal application. A context specific insight became industry doctrine.
What loyalty really means
Loyalty is often misdefined.
Buying a brand more than once is not loyalty, while true loyalty means refusing to switch when your preferred brand is unavailable.
By that definition, genuine loyalty is rare, and what loyalty programmes measure, repeat purchase and engagement, is simply conditional behaviour.
Consumers are not loyal in the way brands assume. They are repertoire buyers, switching between brands based on availability, price and habit.
Mosa Ntwampe,
Brave Group 6 Nov 2025 The science of growth
Research from Byron Sharp and the Ehrenberg-Bass Institute shows a consistent pattern:
- Large brands have more buyers, who buy slightly more often.
- Small brands have fewer buyers, who buy less often.
This is the Double Jeopardy Law, where loyalty is largely a function of market share rather than the driver of it.
Growth comes from reaching more buyers rather than extracting more from existing ones, and models like the NBD-Dirichlet show that loyalty levels can be predicted from market share alone. No programme meaningfully changes that.
Mosa Ntwampe,
Brave Group 4 Feb 2026 Where loyalty programmes fit
Loyalty programmes assume loyalty can be engineered, but the data suggests otherwise.
At best they nudge behaviour at the margins by increasing engagement or frequency among existing customers, yet they do not fundamentally change buying patterns.
Market share drives loyalty, not the other way around.
The attribution problem
When performance improves after launching a loyalty programme, it is easy to assume causation, yet in many cases the brand was already growing. The programme then gets credit for something it did not create.
Market share acts like gravity, shaping behaviour in predictable ways, while loyalty programmes are a small push that does not change the underlying force.
The South African reality
South Africa reflects these patterns clearly, with consumers highly price sensitive, loyalty weakening, and switching and trading down increasing while inflation remains a primary concern.
Yet participation in loyalty programmes is at an all time high.
If these programmes built real loyalty, commitment would be strengthening, but it is not.
Consumers are joining for discounts and cashback rather than brand affinity, which shows that engagement is being mistaken for loyalty.
What actually drives growth
Capitec provides a clear local example.
Founded in 2001, it grew to 15 million clients without a loyalty programme, with success driven by simplicity, accessibility, low fees and reaching underserved customers.
This is a penetration strategy, not a loyalty strategy.
The trade-off
Loyalty programmes are not useless, but they are not a growth strategy.
If loyalty does not drive growth, the implication is straightforward. Many brands are likely overinvesting in it, not because it does nothing, but because it cannot deliver the growth it is being asked to, and that has real consequences.
Budget is being directed toward:
- Rewarding existing customers.
- Increasing engagement among people already buying.
- Optimising programmes that sit on top of existing demand.
Instead of:
- Reaching new buyers.
- Increasing availability.
- Building demand at scale.
Every rand spent on rewards is a rand not spent on what actually drives growth, which is mental availability, physical availability, distinctiveness and reach.
These are the levers that build market share, and market share drives loyalty.
The bottom line
If loyalty does not drive growth, then many brands are overinvesting in it.
Budgets remain focused on existing customers, rewarding and engaging them, instead of reaching new buyers and building demand. The question is not whether loyalty programmes work, but whether they are the best use of capital.
Because growth comes from penetration.
