Posts by Russell Martin - Cape Town

South Africa’s Nedbank lures new customers with cash

untitledkOne of South Africa’s “big four” lending institutions, Nedbank, is attempting to grow its client base by offering R750 (approximately $100) for new customers. Aptly named the “Fresh Start Account,” this targets consumers in their early twenties who have not yet formed any serious attachments to banks. When a minimum salary of R3,000 (about $450) is paid into the account, Nedbank credits it with R750 after 45 days. A “refer a friend” portion of the promotion attempts to tap into the social networks of these new consumers by offering R30,000 (just over $4,000) in a random drawing to one customer who has successfully referred a friend.

This is a good tactic by Nedbank. Not only is it providing a financial incentive for joining the bank (at a time when people really need extra cash) but it’s targeting people who will potentially stay with the bank for years and expand their product portfolio, generating revenue for Nedbank that will eventually eclipse the R750 it has paid out.

Why South Africa’s coupon-shy marketers are missing out

coupons-plus1Although redeeming coupons is a common phenomenon in the U.S. that seems to be on the increase this recession— has seen a 90 percent increase in the past three months—the concept has not taken hold in South Africa. Radio station Algoa FM in the Eastern Cape is looking to change this paradigm by encouraging listeners to download coupons from its Web site; local businesses are offering discounts on products and services. As this is a regional station, the tactic fosters a sense of community with listeners and benefits all parties involved: The station is seen as having the interests of its consumers at heart; the featured companies get free exposure; and the consumer wins through saving money.

By not offering discounts, South African marketers are missing out on a key opportunity to boost customer loyalty and retention. Whether these savings are presented in the form of loyalty schemes or coupons depends on the category and consumer, but when times improve, consumers will remember those who helped them through the tough times.

Cell C network tries to keep South Africa talking

wozaWith mobile phone penetration in South Africa at over 90 percent, a significant percentage of disposable income is spent on recharge vouchers for airtime. In response to the recession, Cell C (one of the country’s four network carriers) is rewarding subscribers with “free minutes,” based on the size of the recharge voucher purchased. The campaign, “Woza Wheneva,” invites people to come together (“woza” is the Ndebele word for “come forward”) and keep talking—even through these hard times. But while it seems to offer a great value proposition—R50.00 (approximately $7) rewards the user with 100 additional free minutes—small print on Cell C’s Web site explains that free minutes are redeemable only on calls within the network and that the number of minutes redeemable each week is limited.

This isn’t the first time Cell C has misled consumers through “information management”—last year it came under fire from the Advertising Standard Authority for advertising subscriber benefits that had been discontinued. The company is in danger of eroding its brand value if it continues to consistently over-promise and under-deliver. While this type of offer is a good move at a time when all consumers are looking for bargains, people are also much less likely to forgive and forget misleading tactics.

Raising a toast to Bailout Bitter ale

With government-financed corporate bailouts dominating North American headlines, Howe Sound Brewery in British Columbia is selling an ale it’s calling Bailout Bitter with the slogan “Bitter ale for bitter times.” The beer is usually offered at a lower price than other house brands.

People do tend to drown their sorrows in a recession: Alcohol sales are generally resilient in tough times, with people more likely to frequent bars—and some sectors of the alcoholic beverage industry are currently seeing a spike in sales. While there are serious socioeconomic implications to this trend, times of crisis also cry out for humor and a lighthearted view on what’s in the news. By doing just this, as well as offering a much-needed cost incentive, Bailout Bitter helps remind us that things will invariably get better. I’ll drink to that! —with contribution by Megan Wall

Coping with the recession in style

recessionista-2The car industry has been hit especially hard by the recession. As a result, manufacturers have had to become innovative in selling their wares. Volkswagen South Africa has launched a “Recessionista” campaign (they define the term as a fashionista who makes the most of the recession). Fashion and style tips are provided to ensure that “the recession doesn’t get in the way of your style.”

The main objective of the campaign is to draw attention to the low price of a new VW Citi Golf (“Recessionista rule number 1″), but users are also encouraged to enter their own tips on how to beat the recession. These are listed on the site and range from the useful (“Don’t buy books, join a library”) to the obscure (“Cut your own hair. Messy is in.”).

recessionista-1Not only does this tongue-in-cheek approach to the recession lighten up what could be a depressing subject, but by encouraging users to add their own content, VW creates a database of potential future buyers. This enables them to keep in touch with the consumers and open the channel for future dialogue.

In South Africa, Woolworths touts complete dinner menus

woolworthAs the global recession forces consumers to trade down in all areas, including where they buy their food, Woolworths—a high-quality, high-priced retailer here in South Africa—is seeking to keep its clientele by offering complete dinners for a family of four for less than R100 (approximately $10). It’s a popular tactic worldwide—in the U.K., Marks & Spencer is also touting a nice round number, urging customers to “Dine in for £10 with M&S this weekend.”
These bundled offers have two objectives: saving the consumer money and helping to answer the age-old “What’s for dinner?” question—more relevant than ever as people cut down on dining out. While Woolworths’ average basket cost is a lot higher than at most supermarkets, offers such as this—one that lends a helping hand and demonstrates the brand’s understanding of the customer’s needs right now—endear the retailer to its already loyal shoppers. And when the economic cycle turns again, Woolworths hopes to enjoy many more years of their support.

Retail therapy at the right price (free)

retailIf you’re going to be tightening your belt in these uncertain economic times, why does it have to be an old one?

While shopping sprees are now out of the question for many consumers, shopaholics around the world are getting their retail therapy by attending clothing swaps. These gatherings recycle wardrobes among friends, with guests bringing items they no longer want or fit into and leaving with “new” clothes. No money exchanges hands, and at the end of the evening, all clothes left go to a charity. It’s an economically, socially and environmentally beneficial way to achieve the post-shopping glow.