Reaching and Understanding Stokvels

23 Jun 2016

Busi Skenjana: CEO and founder of BSK Marketing & Associates recently presented at the Abstract Club, sponsored by Ads24, unpacking the Stokvel market and Daya Coetzee interviewed her afterwards. At the heart of BSK Marketing is the need to create and provide environments for the consumer and brands to interact and connect in a way that is both meaningful and valuable to both parties. With humble beginnings in the FMCG retail environment, BSK Marketing began its long path to success by making use of a previously untapped and valuable market segment – namely the Stokvel.

A Stokvel is a uniquely South African economic institution that is often neglected by marketers despite its huge spending power. According to an African Response survey conducted in 2014, there are about 8.2 million Stokvel members countrywide, making up 421 000 clubs and total contributions were estimated to be about R25 billion per annum. On average each member contributed between R134 and R319 to their Stokvel monthly depending on what the purpose of the Stokvel was. Individuals often belong to more than one Stokvel.

So what then is a Stokvel exactly? It is a proudly South African social club created by people who know and trust each other coming together to save money for a common purpose such as general savings, burials, groceries, investments, birthdays and other purposes, for example, school fees.

Stokvels are important to the mass market providing a support system not only from a financial perspective, but they fulfil a key social function. Stokvel members are family and friends and these social clubs are normally made up of 5 to 15 people.

Stokvel members are mothers, professionals, small business owners, business executives, community leaders, they are 30 to 80 years old and they live in townships or in suburbs. Stokvels normally meet monthly at the end or beginning of the month. They meet either in one of the member’s homes, rotating with the host catering for the Stokvel that month or they meet in a publically designated area. One example is in a park on the corner of Sandton Drive and William Nicol, thousands of Stokvels regularly use this common area on specific dates to meet in their separate social groups and have a picnic.

Stokvels were initiated in 1932 when they functioned exclusively as burial clubs. In the ‘50’s,’60’s and ‘70’s they expanded to become both burial and savings clubs. From the 1980’s to date their scope has diversified and they can be burial and savings clubs, but for any number of purposes, for investment, businesses (taxis, spaza shops), property (Kemano, Abomakhi Clubs), or holiday (Black Energy Club, Thahasello Club).

Stokvel members often distrust banks and will use a Stokvel to start and stock a new spaza shop, taxi owners will buy new vehicles through Stokvels. People will buy houses for personal use or to rent out through a Stokvel. They will use a Stokvel to furnish their new home and to buy electronics. There is massive scope for the hospitality industry as Stokvels are used to book flights, holidays, cruises, and also for travel and accommodation for weddings and funerals.

Many FMCG retailers and wholesalers have realised the power of Stokvels and have various offerings catering for the Stokvel market and four banks now have Stokvel account options. Nonetheless, 51% of Grocery Stokvels save their money at wholesale supermarkets (with no interest) for year-end bulk grocery shopping. The rest is kept in banks (31%) and amongst members (18%).

Still, the potential around the Stokvel market is still hugely untapped by brand owners. The industry sectors that benefit the most from Stokvels are FMCG wholesalers and retailers, home improvement, financial institutions and tourism.

Stokvel members want information from advertisers about products and services they consume and to be educated on how to use their savings more profitably and efficiently. They will benefit from more information about the whole economy, political landscape and the impact it has on them.
If marketers want to refine their strategies when targeting the Stokvel market they need to consider content marketing. There is a great need for education about finance. To reach members you must understand the Stokvel lifestyle – how, why and when do I spend. I am too many things in one, a professional, a community member, a community leader, know your consumer. Stokvel is just a tag.

Stokvel members definitely read Ads24’s mass market newspapers which include Daily Sun, Sunday Sun, Die Son, Son op Sondag, Soccer Laduma, Illanga and Illanga le Sonto. They like them because they provide local news, gossip in the village, political updates, but there is not enough information about financial literacy. These newspapers understand this market, but advertising could provide more tailored information. Stokvel members take note of adverts in these Ads24 titles which have an impact on them and their views about products.

Readers in general of these newspapers use inserts to see specials – how can I make a saving, how can it make my life better. These inserts don’t, however, holistically address shopping and there is great scope for content marketing. Aspirational images can be very impactful, for example, an image of cooking in an aspirational setting – how does this brand enhance my life in a genuine and realistic way without being out of reach and intimidating. Advertisers should aim to provide soul fulfilment -address my life in a different way, be part of my life, my church, my sport and my community.