Safaricom’s unclaimed Bonga Points hit Sh3.5bn

The value of Safaricom’s customer loyalty awards known as Bonga Points increased by nearly a tenth to Sh3.5 billion, the telecommunication company’s latest annual report has shown.

Safaricom accounts for Bonga Points as a liability in its books in keeping with accounting guidelines, and only recognises them as an income whenever customers redeem them either for merchandise, airtime or SMS credit.

The Bonga Points are accumulated based on a customer’s airtime usage, with each Sh10 airtime loaded earning subscribers one point.

“The growth in points is in tandem with increased usage of Safaricom products and services,” said Nzioka Waita, director of corporate affairs at Safaricom in response to Business Daily queries.

Unclaimed Bonga points in the company’s books totalled Sh3.2 billion in the year to March 2013, reflecting a growth of 8.9 per cent in the 12 months to March this year.

Safaricom ordinarily maintains a long catalogue of smartphones, laptops, tablets and other devices that subscribers can choose to redeem their Bonga points.

Customers are, however, limited to picking from a pool of specific offers, which contributes to the accumulation of the Bonga Points liability for those that do not find devices to match their tastes.

READ: Safaricom to offer free selection on Bonga point buys

The company also occasionally runs promotions dubbed Jisort na Bonga Points, which introduces select devices to the catalogue of redeemable items.

Safaricom said it has sold over one million devices in the past two years under the sale campaigns which give customers the option of using part cash and part loyalty points to purchase smartphones and tablets.

Part of the challenge for Safaricom has been putting a fixed value to Bonga Points to allow customers to monetise the rewards scheme.

“As regards valuation of Bonga points, it’s discretionary and not something we disclose as it varies depending on the sales season,” Safaricom said in a statement to Business Daily.

Uncashed Bonga Points eat into the telco’s revenue given that accounting guidelines require the firm to only recognise the loyalty points as sales once customers redeem the credits.

This means Safaricom’s total sales for the year to March 2014 would have been 148.17 billion without the deferral of revenue.

Under the loyalty scheme, subscribers earn one Bonga point for spending on voice calls, short messages service (SMS) data and M-Pesa services.

Bonga Points can be redeemed for rewards ranging from talk-time (minutes), data, text messages and multimedia messages to merchandise such as smartphones and tablets.

Safaricom’s Bonga points programme was introduced in 2007 as a customer loyalty scheme to reward customers based on their spending on the network.

The company has now turned to innovations such as pooling of Bonga points and partnerships with other companies to encourage customers to redeem their loyalty points.

Safaricom last year introduced ‘Changa Na Bonga’ which allows subscribers to pool Bonga points and use the credits to purchase merchandise using part cash and part Bonga points.

The telco in May last year partnered with national carrier Kenya Airways to allow subscribers to redeem their loyalty credits for domestic air tickets.

Subscribers need 28,000 Bonga points for a one way ticket.