Andrew Green, Acting Financial Editor
PARRIS
MAGNA REWARDS of the Caribbean manager Mike Parris says Jamaicans are starting to appreciate the value of his company's loyalty card.
The scannable card identifies the holder as a member of its incentives programme. When using the card, the purchaser gets an allotment of points that can be used for future purchases at most Magna retail partners.
Merchants give back 1.5 per cent on each transaction, before general consumption tax (GCT). This amounts to 1.3 per cent after GCT on the total sales, with cheques being sent out every three months.
"In Jamaica, people want to know what the catch is," Mr. Parris said.
The programme was introduced here two years ago and is now starting to gain more acceptance as users learn how they can benefit from it.
INTRODUCED TO BARBADOS
In Barbados, the Magna programme was introduced eight years ago and now is used in about US$250 million in sales in one year. The country has a population of about 270,000 and there are 140,000 cards in circulation.
Jamaica already has 343,000 cards in circulation, but sales have so far amounted to just a few hundred million Jamaican dollars in the two years since the introduction of the programme.
The country is no different than any other in the life cycle of a loyalty programme, Mr. Parris said. It takes three years for people to understand the programme and adjust their behaviour to maximise the benefits it affords them.
Despite the difference in per capita income between Jamaica and Barbados, this country has a huge potential as Jamaicans are using their cards just 3.58 times per month.
At this point, however, many card users will have received several cheques in the mail and have also started to understand that the more they use their card, the bigger the cheque they get back. This tends to have a snowballing effect as the information gets passed around that the scheme does provide benefits.
"We have expectations of growing in Jamaica by 30-40 per cent in 2006," Mr. Parris said in a telephone interview from Barbados. A major marketing drive is to be undertaken within the next six months that will offer Jamaican card users a lot more value to support this projection.
Magna has already been busy this year. Cambio operator FX Trader recently launched a loyalty programme that will offer participating customers double rewards in the form of preferential foreign exchange rates and Magna points. Individuals can also use a Scotia Magna Mastercard not for where they shop, but for how they pay.
MAGNA GROWTH
Magna started with 23 local partners and that is now up to 80, he said. They recently lost KFC and Singer, but overall, growth is continuing.
Susan Campbell of Magna Rewards Jamaica said, "We are looking for partners who want to find ways to differentiate themselves in the market."
But to take advantage of the programme, the partners need the appropriate technology to make using the magna card easy and efficient. That can be costly.
Carey Rowe, also of Magna Rewards Jamaica, said it costs several million US dollars to launch a rewards programme on the scale of Magna. It needs 'cornerstone partners' such as a supermarket, a gas station and a fast food chain who start as founding partners. The fee to enter is usually a deterrent to a small business, added to the fact that the full benefits of the programme may not start to reach optimum levels until three years after starting.
GRABBING CUSTOMERS
Partners also have to learn to use the Magna programme creatively to delight their customers. The way to do this, Mr. Parris said, is to offer customers a more personalised service.
The information that is collected is confidential and cannot be used by another retailer even within Magna, he said. "The objective of Magna is to find a way for retailers to understand customers more and treat them better."
