An investigation into the effectiveness of the municipal payment incentive scheme as a loyalty programme : a case study of the city of Tshwane with a special focus on Soshanguve.
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Payment for services has been a challenge for municipalities for sometime in South Africa. This has caused municipalities to employ a number of strategies to assist in the collection of revenue. The methods of collection that have been used in the past mostly focused on the stick approach where your services would just be cut until you make the payment. Methods like Masakhane tried to explain why ratepayers needed to pay but fell short as the emphasis was on payment for services and not on the obligation for the municipalities to provide quality services as well. Loyalty programmes are used widely by the private sector and are proving worthwhile in getting customers to become loyal. The purpose of this study therefore is to find out the effectiveness of the municipal payment incentive scheme as a loyalty programme in the City of Tshwane- Soshanguve. Relationship building, the researcher found, is an important component in establishing loyalty amongst customers. This study follows the conceptual framework for modelling customer lifetime value and building customer equity. Soshanguve which is a township was chosen as an area of focus. Soshanguve is one of the biggest areas in the City of Tshwane area. The sample had to be representative of such a big population of about 88 000 households. The study used a stratified random sampling method of 375 Soshanguve households. The results attained from Soshanguve can be applied to other townships found in the City of Tshwane as they have similar characteristics. Structured interviews were conducted with 375 respondents who were drawn from ten different wards that are billed by the municipality to represent households. The questionnaire had both open ended and closed ended questions. The data that was collected was analysed using content analysis from the computer and open ended questions were self analysed. Secondary research was done using City of Tshwane documents and its website. The researcher found that municipalities and government departments have not used this kind of a loyalty programme to encourage payment; City of Tshwane is the first in South Africa to employ such a strategy. The study found that respondents believe the City of Tshwane should offer affordable services and improve service delivery as part of improving payment for services. The incentive scheme, although in its early stages was found to be a motivating factor for the majority of the respondents to pay on time because they want to qualify to win and get the cash back rewards and prizes offered by the scheme. The study found that there was a need to use local merchants that can be accessible to a large number of people. The researcher also found that the marketing and visibility for such a scheme was of utmost importance. On the overall the respondents were happy and proud to have such a programme, for them the municipal incentive payment scheme showed a caring side of the municipality for those meeting their obligation.