Interview with Steve Hoban, Master Loyalty Marketer

Interview with Steve Hoban, Master Loyalty Marketer

Chuck Ehredt sat down with Steve Hoban, who recently returned to the UK after spending 11 years working for Pick n Pay in South Africa, to discuss brand collaboration in loyalty schemes.

The Pick n Pay Smart Shopper loyalty scheme was launched by Steve in 2011 and quickly became the leading loyalty program in the country – in large part because of constant innovation and relevant partnerships with complementary brands.

Chuck: Hello Steve, you are a pretty humble guy, so I really appreciate your willingness to discuss the success that Smart Shopper quickly achieved in South Africa.

We all know the economy in South Africa has its challenges and this directly affects the majority of the population. In such a context, the extra value that a loyalty program can deliver to customers was probably meaningful to many people.

How did the program evolve under your leadership?

Steve: I developed, launched, and ran South Africa`s number-one loyalty scheme, building it to thirteen million customers in a matter of years. We reached one in three households having a card within a matter of years. That was equivalent to 10 swipes per second during the time that the shops were open.

Initially it was a fairly simple points-only based scheme with 1% given on every swipe of the card. Such a simple program quickly revealed invaluable insight into the customer and opened a whole new channel of communication across email, SMS and good old post!

With the program live, we could suddenly promote in a whole new way such as double points events for the company, or at an individual store, or on a specific category, or even to promote a brand/supplier.

Very importantly, I started to understand personalization and promoting in a relevant way to groups of customers using segmentation – not only at the 1% level.

Chuck: I presume you relied on many traditional methods of promoting the loyalty program to the customer base. What types of insight were you able to capture and how did you put that information to use?

Steve: The base of customers built extremely quickly and it became clear we needed to do two things:

1. Use the insight & data – across the entire business. Nearly every department from buying, marketing, store operations, etc. were suddenly able to use the data to make better decisions. Enterprises also use data profiling as a way of effectively managing and organizing data in way to glean useful information. Even suppliers started to benefit from our unique insights.

2. Evolve regularly – to keep the program fresh & relevant

Chuck: That sounds like a bit of work, but also some significant benefits. How did you keep the program fresh and relevant to your customers?

Steve: We constantly focused on evolving the program. I made sure it changed every year, introducing real-time ticketing at till, various types of cash off promotions, personalization and a highly relevant partner program.

Chuck: We talk a lot about adding relevant partners to loyalty programs because customers can’t always shop as often with one brand as they might like. In your case, grocery is a high-frequency category, but it may not be so exciting to redeem points for vegetables or house cleaning supplies.

What types of partners did you work with?

Steve: The partners helped me understand the value of giving relevant offers outside of the shops and that I didn’t need an expensive third party to help implement these relationships.

The initial foray into partnerships was driven off the wrong motivation. We viewed partners as a tool to recoup costs – since they would pay us to drive traffic to their businesses. This had mixed initial results and some of the partnerships we established were not what customers wanted.

The beauty of a loyalty program is it is very easy to test and learn, minimizing risks. To step-change the partner program, I started experimenting more. I also listened to my customers and established what customers wanted.

In tough economic times, customers told me they were cutting back on the fun things in life – so I identified partners for dining out, cinema, travel, leisure, theme parks etc. I spoke to these complementary brands to understand their needs – footfall vs retention etc. and built a solution that was meaningful to customers. For example, we started promoting free fuel, price cinema tickets, as well as restaurant & theme park vouchers offering deep discounts.

The customer’s access to these customized deals was by shopping with Pick n Pay. So for example, a 10 cinema ticket could be bought using 5 worth of points, but I was paying the cinema partner only 50% of the typical cost of a ticket and passing the savings on to the customer. To the customer, the points conversion to cinema tickets was effectively free as no cash left their wallets.

Chuck: That is exactly how brands can create a step-up in perceived value for the points. But if customers are getting some of their fuel for free, somebody needs to be paying for that. What was transpiring in reality?

Steve: My fear was there would be a run on the bank and all points that were previously being redeemed in our shops would flood out into partners and I would have to pay for that. The partner fear was the overall cost if they got too much demand on discounted offers.

Testing in a few stores that had cinemas next door allowed me to test the business case and results showed once customers first convert points value to a partner offer, they become much more valuable as they want to earn more points in order to redeem again. So there was a cost to me, but what I had not anticipated was that the upside comes on the initial spend – not upon redemption. We had a huge increase in share of wallet because customers really valued what they could do with the points.

This had been counter-intuitive at first, and addressed concerns on all sides regarding risks and costs.

Chuck: So you did have to pay partners a portion of the customer’s perceived value of the rewards, but that cost was small compared to the incremental revenue and margin the business was earning from greater customer engagement.

It also sounds like you learned a fair amount from this hands-on experience in developing a loyalty program from scratch. Are there any particular lessons you care to share?

Steve: I would say the three key lessons were:

  1. Delivering real customer benefit from relevant partnerships is crucial. If a customer is already buying your core products, they may not be motivated to redeem for the same things
  2. Adding partners has a positive sales impact because the partnership makes the program more relevant to a wider base of customers
  3. You need to flex the level of discount, which was also endorsed by our learnings from personalization. Not every customer responds to the same offer and not every product deserves the same level of incentive

Perhaps a bonus lesson was that many brands are willing to explore collaboration opportunities and you don’t need a 3rd party to bring brands to the table. In fact, this plays into the hands of Currency Alliance – because the platform enables partner connectivity at very low cost, while providing the management portal to stay on top of progress, measure results, and facilitate the collaboration.

Chuck: Thanks for the plug. We do believe that for a loyalty program to be relevant to any particular customer, it needs to generate about $25 per year in value. That is fairly easy to reach in the grocery industry because of the frequency and size of purchases. However, most brands just don’t sell enough to customers, so they need to collaborate with complementary brands so that together the customer can earn enough to justify allocating their share of wallet to the collaborating businesses.

As a final question, now that you are back in the UK, what are you planning to do?

Steve: Well, I’ve had a number of interesting job offers, but I think I can add more value and enjoy greater challenges by remaining independent. I m working on a few projects right now and enjoying the opportunity to shift focus from one marketing initiative to another.

If any marketing leaders wanted to learn more from my experience at ASDA, Pick n Pay, Walmart or more broadly from working with partners, I would be happy to share.

Thanks for the opportunity to share my story about the Pick n Pay Smart Shopper program.

About Steve Hoban

Steve is an advisor, consultant and non-executive director with 25 years’ experience as a retail executive. His track record features brands including Sainsbury’s, ASDA, Walmart* and Pick n Pay, which he has supported on commercial procurement, buying, loyalty, data insight, marketing and more. More recently, he’s masterminded strategic change initiatives in strong-cultured organisations, delivering sustainable results for customers, colleagues, shareholders and investors alike.

About Currency Alliance

Currency Alliance helps consumer-facing brands revolutionise their loyalty programs, maximizing participation by customers, and earning of data by businesses.

Our simple, cost-cutting SaaS tech platform makes it quick and easy for loyalty brands to form partnerships, creating new earning and redemption opportunities and greater relevance for customers.

To discover the full range of benefits, explore the platform for free and get in touch at