discovery bank
Discovery Bank
  • Discovery Bank will now give you free miles if you successfully convince other people to sign up.
  • The bank is offering between 1,500 and 5,000 miles per referral, which has a real-world rand value of R150 to R500.
  • Discovery is not a low-cost bank, though.
  • In most cases these rewards would be around the same as what you'll pay in your first month's mandatory fees.
  • But even if you wanted to offset the cost of the fees, you'll have to spend them on things like vouchers and smoothies instead.
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Discovery Bank has launched a new programme that gives certain existing clients "up to 5,000" Discovery Miles for every successful friend or family member they refer to the bank. But actual amounts vary between 1,500 and 5,000 miles, excluding certain "bonuses" – and will for many people not represent a great deal.

The bank is calling this a first of its kind for financial institutions in South Africa, and CEO Hylton Kallner said in a press release that it is modelled on programmes successfully used by global tech firms.

"Internationally, some of the most successful technology-driven businesses, such as Airbnb and Uber, have reached unprecedented scale from 'digital word-of-mouth' referrals and, at Discovery, we've always believed that our clients should be our greatest ambassadors as they experience our products first hand," Kallner said in the statement.

Central to the success of Uber's referral programme was the ride hailer’s novelty at the time, a general need for the service, and its innate desirability - the perfect storm to kickstart a successful referral programme.

But equally important was the Uber referral programme's simplicity and understandable cash value: existing and referred users had the ability to instantly receive credit in local currencies to be used directly against future rides. 

The same is true for AirBnb's referral programme, which allowed travellers to earn credit in local currency for each referral, for use against any future bookings on the platform they already used.

Neither of these referenced reward programmes had lengthy terms and conditions, needed sub-site explainers, had entrance requirements, tiers, or required point conversions in order to understand their value. Their goal - to simply ramp up user numbers with generous, concise rewards - occasionally even came to the short term detriment of the company.

Discovery Bank believes that its new referral programme, which offers various tiers of Discovery Miles rewards redeemable at certain partner stores, is in the same ballpark as these, and its rewards are compelling enough to help drive new customers to sign up and pay for an account at the bank.

"Up to" reward tiers

The hint to the first caveat on Discovery Bank's referral programme lies in the subtle "up to" wording in its marketing collateral. 

The maximum reward of 5,000 miles mentioned most prominently is only applicable should the person you refer sign up for the "full banking suite", which costs between R185 and R440 per month.

If the referred person only signs up for a credit card account, which costs between R75 and R185 per month, you'll only get 2,500 miles, or half the reward. 

And if they only stump up for a transactional account, which must be with bundled fees and costs at least R120 per month, you'll each only get 1,500 miles.

And unless the new referral makes a specific transaction within two months, all of it will be for nothing and neither of you will get the reward.

Bonus miles and restrictions

There's another layer of complexity that will earn you additional miles, however. If you can convince three friends to sign up you'll get a bonus of 2,500 miles, ten and you'll get another 5,000 miles.

Given that the Discovery Bank app allows you to connect directly to your phone's contact list and spam your friends and colleagues with a pre-written SMSs directly, getting the word out to your database is a relatively easy operation.

If your referred friends have signed up, but not yet made a transaction, the Discovery Bank app will also inform you of this - and allow you to "nudge" them in order to help realise your reward. 

The Discovery app also allows you to see which of your contacts are already clients, who joined, who and does or does not qualify for the reward – and who is in the process of opening a bank account.

The referral programme is only open to certain cardholders; secondary cardholders, those with only savings or investment accounts, or those who received a card before the official launch of Discovery Bank, don't qualify.

Cashing in those miles

Discovery claims in its marketing collateral that its miles are "more valuable than cash", by virtue, it seems, of a 20% mile discount they offer. Miles are, however, only redeemable against certain rewards and services offered by the bank's partners - and so not quite as useful as the cash equivalent.

Discovery Vitality members will be familiar with the various rewards on offer for miles holders, including luxuries like Kauai or Nü smoothies (250 miles), Vida E Caffè coffees (150 miles), and in-store vouchers of fixed denominations for the likes of Dis-Chem, Pick n Pay, Sportsmans Warehouse, and Waltons.

Banking customers can also convert miles into airtime, data, and SMSs via the Discovery Bank app - or convert specific numbers of miles into vouchers at certain stores within the ecosystem.

And all of this is further complicated by Discovery’s mile strategy that adds a 20% miles discount to certain transactions - and limits users to certain stores and denominations.

In theory, however, Discovery Bank customers can convert miles to "cash" at a rate of 10 Discovery Miles for R1 - provided this is spent at one of the bank's partners.

Realising the rewards

This means that with the minimum referral bonus of 1,500 miles, Discovery Bank customers officially receive a benefit of R150; the mid-level tier a reward equivalent of R250; and a maximum reward equivalent of R500.

Each of these reward tiers is in most cases little more than the equivalent of a single month's qualifying Discovery Bank account's fees - although it's not possible to use reward points to offset real-world costs like these.

The rand equivalent is also complicated by the fact that it would also be possible to cash your entry-level referral reward in for six smoothies or 10 coffees - both of which might have an ultimate rand value of more than R150.

And although it's also possible to cash in miles to spend as rand-based vouchers at specific stores, many of these limit the amount that you can cash in at any one time.

At first glance a promised reward of "up to 5,000 miles" per referral sounds enticing, but when the rand equivalent reward, which is redeemable only against items like smoothies and in-store vouchers, is immediately swallowed up by hard cash payments required for the new bank account, together with the complexity of actually switching banks, it may somehow make the rewards less appealing.

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