The effectiveness of a loyalty programme at a leading casino in KwaZulu-Natal.

Abstract

Customer loyalty programmes have become an important tool in retaining existing customers and attracting new customers. The casino industry in South Africa is highly competitive and spends a considerable amount of money on customer loyalty programmes. Sibaya Casino and Entertainment Kingdom, situated in KwaZulu-Natal, offers a Most Valued Guest (MVG) loyalty programme, based on a 4-tier structure, which boasts an array of rewards and benefits to members, which becomes more and more lucrative as customers ascend to the highest tier. However, the value of customer loyalty programmes has been questioned, in part, because of the limited empirical research being conducted on the effectiveness of loyalty programmes in the South African casino industry. The aim of this study was to establish whether the considerable money spent by casinos on customer loyalty programmes is a successful mechanism in order to gain customer loyalty and increase profitability. The study sought to determine the effectiveness of loyalty programmes in the casino industry in Kwazulu-Natal. A sample of MVG members were selected on a probability sampling design, from 3 tiers, across the active KwaZulu-Natal based members on the MVG database, who elected to receive email communication. Five hundred and three respondents completed a web-based structured questionnaire, which was a sufficient sample size to generalize the findings to the population. The data collected was analysed using descriptive and inferential statistics. The salient findings from this research were that most MVG members of Sibaya were also loyalty members of competitor casinos; however the majority rated the Sibaya loyalty programme as better than those of its competitors. MVG members were highly motivated and incentivized to reach a higher tier. An anomaly was noted whereby even though there were quite a few respondents who were not satisfied with the MVG programme, they would still recommend it to others. An online rewards system and additional rewards will have a significant positive impact on a MVG member. Finally, MVGs were mostly satisfied with the current MVG communication that they received but further improvements can be made in this regard. The empirical findings provide a useful starting point for recommendations to improve the effectiveness of a casino loyalty programme in South Africa; and for further research in this field.