Discovery Miles more valuable than cash

Discovery Miles is more valuable than cash as a currency due to the added discounts and benefits clients receive when using the rewards currency to purchase goods and services.

Vitality members are set to earn more than 10 billion Discovery Miles in 2024, equivalent to a potential rand value of around R1.4 billion.

Discovery Bank launched Discovery Miles in 2019, based on the Vitality Money financial wellness programme.

This is part of the company’s strategy to leverage its shared-value model within the financial services sector, particularly banking.

In essence, Discovery tries to incentivise individuals to make better health and financial decisions.

The model creates a win-win for clients and Discovery, with better financial behaviour rewarded with lower interest rates on loans or boosted savings rates.

For example, Discovery Bank’s new home loan product rewards good financial behaviour with a lower interest rate on clients’ mortgages.

“The unique nature of home loans means client and asset risk typically reduce over time,” Discovery Bank CEO Hylton Kallner told Daily Investor.

“With high costs negatively impacting repricing or switching to a different bank, an estimated 60% of clients are overpaying on their existing home loans today.”

The behaviours that are rewarded include saving, being adequately insured, investing for retirement, and paying off home loans faster.

Discovery Miles is designed to provide an immediate reward for behaviours that benefit clients in the long term, effectively bringing forward gratification.

People fall off the wagon and take the path of least resistance for immediate gratification — whether having an ice cream, a piece of chocolate, or scrolling on social media.

To help members make long-term behavioural changes that will benefit their health, Vitality has “got to trick the brain” by bringing rewards typically felt in the long term into the present.

Longer-term rewards, such as free flights with Vitality Travel, are used to ensure the sustainability of good habits.

Members earn Ðiscovery Miles from millions of Healthy food items purchased, workouts, driving well, weekly exercise, drive and financial goals.

Over a year, members redeem billions of Ðiscovery Miles on over 1 million coffees and smoothies, on over 100,000 donations to charity initiatives, and to fund over 1 million local and international flights.

A major attraction of Discovery Miles is that they are more valuable than cash due to the discounts available when using the rewards currency to purchase products.

Discovery’s calculations show that a single Discovery Mile is worth R1.23 in cash when spent through its in-store and online partners or the Vitality Mall.

Originally, Miles was redeemed at a value of 10 Miles to one rand. During the Covid-19 pandemic, the company decided to enhance the value of the miles.

This campaign offered extra savings based on a client’s product holding when redeeming rewards.

Miles is available through Discovery’s partner network, in the Vitality Mall, and on prepaid products and services on the Discovery Bank app.

Following the campaign’s success, Discovery launched Miles D-Day, when members’ Discovery Miles spend discount doubles for 24 hours on the 15th of every month. 

Today, both the Discovery Miles spend discount and Miles D-Day are permanent features of the Vitality programme. 

Members automatically enjoy from 5% to 15% off every day of the month, and from 10% to 30% off on Miles D-Day when spent within the retail partner network.

In 2023, members used their Discovery Miles spend discounts to make purchases worth R530 million in exchange for 4.3 billion Miles — meaning clients enjoyed 23% more in value than if they had opted for a cash-out option. 

Thus, Discovery claims to have succeeded in what it set out to achieve — creating a reward currency more valuable than cash.

Below is a table showing the relative prices of products when purchased with Discovery Miles versus in cash, with Miles coming out slightly cheaper.

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This article was first published by Daily Investor and is reproduced with permission.