The value of unclaimed Safaricom #ticker:SCOM customer loyalty awards, popularly known as Bonga points, hit Sh3.94 billion in the year to March 2020, offering a rich pool for customers to redeem for food and household items.
This is a rise from previous year’s Sh3.85 billion even as the telco offers increased options for customers to use the resource such as paying for air tickets, shopping, fuelling cars and even repaying education loans.
About one billion points valued at Sh301 million were redeemed in the two months to June 4 through the Bonga for Good initiative.
The initiative, in which one point converts to 30 cents, was launched on April 3 to help customers purchase goods and services in the wake of the economic disruption brought by the Covid-19 pandemic and local measures to slow down its spread in Kenya.
Safaricom has been pushing for points redemption since they are accounted for as a liability or deferred income in the telco’s books and only recognised as revenue once customers utilise them.
“Management defers revenue for every point accumulated and recognises the revenue relating to the points earned on redemption,” says Safaricom in the latest annual report.
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 also earn loyalty points when they achieve their revenue targets and redeem the points after revenue contracts with the Safaricom.
The telco uses the same concept to recognise airtime revenue. Prepaid airtime sold to customers is held as deferred revenue until the customer uses it. Unused airtime and data bundles by prepaid customers was at Sh2.5 billion at the end of March, being the same as in the previous year.
Safaricom had 35.61 million customers by the end of March. Net profit grew by 17.9 per cent to Sh73.66 billion in the year under review.