Retailer loyalty cards have been a popular tool many UK retailers use to encourage customers to shop more frequently and spend more.
Although loyalty schemes date back to 1958, Tesco Clubcard was the first nationwide loyalty card launched in partnership with DunnHumby in 1995.
Until recent years, UK retailers have focused their loyalty schemes around collecting points, with shoppers accumulating points that can be redeemed for rewards.
However, research by Eagle Eye tells us that 63% of Brits say they want discounts from their loyalty schemes, while only 20% prefer points, miles, or other rewards.
Tesco led the way once again, launching Clubcard Prices in 2019. They now incorporate all of their promotions into the Clubcard scheme, allowing shoppers to benefit from immediate discounts on almost 6,000 different products.
This shift has proven successful for Tesco, with the Clubcard scheme now boasting a membership of 79% of its UK shoppers and a positive impact on market share.
Other retailers are following suit, with Sainsbury's launching its version of Clubcard Prices, called Nectar Prices.
It took a while for the Clubcard Prices mechanic to enter into its own, but now shoppers have a clear understanding, it is working well.
What about Asda Rewards?
Asda went a different direction with 'Asda rewards', their communication in-store was unmissable when they launched it last year.
Its core message 'pounds, not points' taps into our ever-increasing need to save money. There is however still an element of saving your pounds to redeem rather than the immediate saving being apparent at the till.
There is also quite a bit of gamification on the app, in an attempt to make shopping fun.
You can earn 'pounds' by buying certain star products or completing missions, such as buy 5 health & beauty products or spend £50 within a certain timeframe.
It is a little confusing and it seems you don't get much back unless you are a regular Asda shopper.
It will be interesting to see if this is enough to encourage loyalty among their existing shopper base.
In their end of year report, Asda reported that over 4 million customers signed up to the scheme, accounting for 37% of total sales.
What are the opportunities for brands?
The shift towards discounts from loyalty schemes is likely to continue. Retailers offer more discounts on a wider range of items to attract and retain customers.
Loyalty card schemes will still have their place, especially among younger shoppers who are more likely to join new schemes to save money.
However, brands need to work with retailers to offer a range of benefits, including discounts and personalised offers, to keep customers coming back for more.
39% of UK shoppers claim to prefer personalised offers over traditional loyalty schemes.
As a brand you can benefit by partnering with retailers to target the shoppers you most want to communicate to. You can target shoppers of a certain demographic, or shoppers with specific shopping behaviours.
Make sure you’re using these features to attract new shoppers to the category, get existing shoppers to spend more or get them back more often. That way, its a win win for your brand and the retailer!
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