The value of unclaimed Safaricom #ticker:SCOM customer loyalty awards, popularly known as Bonga points, has dropped from Sh4.04 billion to Sh3.85 billion in the year to March 2019, pointing to increased redeeming by customers.
This is the first time since 2016 for the value of revenue tied up in Bonga points to drop, with Safaricom attributing the decline on aggressive marketing of ‘Bonga everywhere’, which now allows customers to redeem points for air tickets, shopping, fuelling their cars and even paying education loans.
“We decided to extend redemption options instead of limiting customers to only Safaricom products. Customers now have more options and last financial year we did a lot more in publicising these options,” said Safaricom.
The points are accounted for as a liability or deferred income in the telco’s books and only recognised as revenue once they are redeemed by customers for airtime, SMS, merchandise or shopping.
Management also recognises revenue on the remaining loyalty points for the churned SIM-cards.
The scheme, introduced in January 2007, gives subscribers one Bonga point for every Sh10 spent. When the points build-up, they tie up revenue for the telco until redeemed. This runs for both individual subscribers as well as enterprise business customers.
“Enterprise business customers earn loyalty points upon achievement of their revenue targets and the accumulated amounts are only redeemable after the maturity of the underlying revenue contracts with the group,” says the telco in its annual report.
Safaricom uses the same concept to recognise airtime revenue. Prepaid airtime sold to customers is held as deferred revenue until the customer uses it.
Deferred airtime revenue dropped from Sh2.94 billion to Sh2.38 billion in the financial year ended in March 2019. The telco hit 31 million customers with net profit rising from Sh55.3 billion to Sh62.5 billion.
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