Loyalty marketing strategies that work in 2024

Loyalty marketing is a discipline that never sits still. Every week we see major new news – be it an existing loyalty programme making a big changes (like Club Pret), a new programme launching (like Wagamama’s Soul Club), or sometimes, a much loved programme that closes.

Brits love loyalty programmes more than ever – in our latest 2024 white paper “What the Brits Want from Loyalty 4.0”  we’ve seen higher than ever loyalty love and engagement:
• 79% of Brits are members of at least one loyalty programme (up from 70% in 2022)
• 97% find at least one loyalty programme appealing (up from 86% in 2022)
• 74% think programmes are a great way to reward customers (up from 70% in 2022)
• 54% think all brands should offer a loyalty programme (up from 48% in 2022)

Loyalty marketing is on the rise and the level of innovation and change in the British loyalty landscape is really fascinating.

Here are my top 3 exciting and interesting things that I think loyalty marketers should be thinking about right now:

With the advent of a new government comes new hope, but we are still deep in a cost-of-living crisis and households across the nation are still struggling.

According to Mintel’s “Customer Loyalty in Retailing – UK – 2024” report, value is one of the primary drivers of consumer usage of loyalty schemes. We saw the same in our loyalty research with YouGov – 59.7% of Brits want loyalty rewards to offer them great value (a +19.5% increase since 2022).

Value matters – getting it right gets you plaudits, getting it wrong gets you issues.

Just look at the challenges of myWaitrose when they took away the free coffee (now reinstated) or Club Pret who have faced multiple challenges and a lot of consumer backlash every time they have changed the value their subscription model offers.

Tesco Clubcard set the tone for giving back value with Clubcard Prices “The Power To Lower Prices”

They claim to offer members up to £360 off the annual cost of their groceries. Since then many of the big programmes have followed suit including Nectar Prices, Boots Price Advantage, Co-Op Member Prices and more.

Member Prices are however, quite common-place now, in fact –the Mintel report flags that they might only have short-term impact as they can be found in so many schemes now – 45% of loyalty members now think that all loyalty/reward schemes offer the same benefits. It’s a real concern. They are also under investigation by the CMA; the review is currently in progress and due to complete by the end of the year.

So, what else can loyalty marketers do, beyond member pricing to offer real value to their members?

Here are 3 ideas to think about:

Offer rewards that are worth a lot, but cost you little.

Explore your own ecosystem to identify rewards that are hugely valuable to your members but cost you only a little.

Some classic examples include:

• Boots Advantage Card – now offers members 10% off own label products which are manufactured in-house and therefore have far higher margins than supplier products.
• QSR chains like to giveaway drinks rather than food items as the margin is higher, but the value to customers is also high.
• Cinema chains offer free or discounted cinema tickets at low volume periods, when the seats would otherwise be empty.
• Sky VIP offers its premium tier members (Diamond level) access to the best level of customer service and technical help with a dedicated phone line.
• Oracle Red Bull Racing “The Paddock” top tier members get exclusive access to a Discord Channel where they can chat directly with Red Bull.

Work with partners to co-fund or barter rewards for free, in return for exposure to your membership.

63% of Brits like it when a loyalty programme offers partner rewards.

Brand partner rewards are a brilliant way to give away higher value rewards, that cost you less or sometimes even nothing.

3 of my favourite partner rewards, currently on offer by loyalty programmes are:

• Confused.com – offers people who buy car or home insurance a choice of partner reward from Sainsbury’s, Paramount, Just Eat, Halfords or Greggs.
• VeryMe Rewards from Vodafone – offers members lots of rewards and treats from the partner brands they love most – from cinema to days out to money can’t buy experiences to discounts on their shopping.
• New Octoplus from Octopus Energy – offers members partner rewards including free drinks, cinema tickets and 25% off at selected restaurants.

Develop a short-term promotion that offers big prizes and rewards, but in limited quantities for a limited time.

Some of my favourite examples include:

• MyMcDonald’s Rewards Fry-anuary – where members who bought fries were given the chance to win a variety of prizes from holidays to cash.
• MyJohnLewis Members’ Week – where members are offered an exclusive arrange of discounts, events and partner offers for one week only.
• Lidl Plus Bakery Super Spin – where members received a ‘Spin of Surprises’ wheel at checkout where they could win bakery items with every spin.

Loyalty Marketers need to sit back and really think about how they can offer real value to their members, in new and interesting ways that work for their customers and their business.

Gamification in loyalty marketing has been around for a long time.

It started with simple collector mechanics and stamp cards and has evolved to complex promotions and gamified experiences that range from simple “spin the wheel” type mechanics to full-blown augmented reality fuelled treasure hunts across the nation.

Making the experience of the programme as good (or as fun!) as the rewards are, has become increasingly important.

According to YouGov, 30% of Brits think gamified loyalty programmes are fun, and 35% think gamified promotions are fun.

The Rise of Missions:

• Asda Rewards was arguably the first major British programme to include Missions as a core part of the programme DNA. Whilst others had experimented with it, or included promotions based on threshold spend, Asda was the first big programme to really go for it. They offer members 2 types of missions. Missions aimed to make your regular shopping more rewarding (by spending in different departments for example) and Milestone Missions where members earn extra Asda Pounds by hitting spend thresholds.
• Tesco Clubcard has just announced the launch of Clubcard Challenges leveraging the power of AI to create personalised challenges for members. Customers can complete up to 10 challenges, with a total of £50 of Clubcard Points up for grabs during the 6 week promotion – £100 if members spend those points with partners.

The Rise of Gamified Loyalty Mechanics:

• In its original incarnation, Virgin Red was one of the first loyalty programmes to be truly gamified – members played games and entered competitions to take part. When the programme relaunched this feature had been removed, in exchange for a more traditional earn and burn mechanic, so I was delighted to see gamified mechanics return to the programme this year. A “This or That” mechanic has been re-introduced – members play to win prizes or points, and Virgin Red gets valuable extra insight into what members love.
• KFC Rewards Arcade is a another mould-breaking gamified loyal programme. Members play classic arcade games to win finger-lickin’ rewards in an instant.

The Continued Rise of Games as Rewards:

• Gaming has long been a popular passion point for the loyalty industry and there are countless examples of video games, gaming kit or gaming experiences being offered as rewards and prizes- from the iconic early Lara Croft and O2 Priority partnerships right through to mega prize bundles including Oculus Rift kit, PS5s and more.
• O2 Priority has just launched a lovely brand partnership with The Telegraph offering a year of Telegraph Puzzles for free, and exclusive savings on year 2. It’s an interesting new take on games as a reward and I’ll be watching closely to see how it develops.

Loyalty Marketers should be thinking about they can use missions, gamified mechanics and games are rewards to bring some fun into their programmes.

During the pandemic the loyalty industry, alongside others, experienced a seismic shift in customer attitude towards CSR. Rewards that helped others, the planet or society rocketed to the top of the loyalty agenda as member demand peaked, engagement maxed out and donations to charities such as NHS Charities Together went full throttle.

As we’re settling into the ‘new normal’, CSR remains an important part of every loyalty strategy, though claim rates have dropped back nearly to pre-pandemic levels. 10.1% of Brits want rewards that help others and 6.2% want rewards that help the environment.

Some of my favourite examples of CSR in action in loyalty are:

• Costa Coffee Club whose rewards are twice as good if you demonstrate sustainable behaviour. If you use a Costa cup you have to buy 10 coffees to get a free one, if you use a reusable cup you only have to buy 5.
• MyWaitrose offers another good coffee example – free instore coffees are now only available in reusable cups.
• H&M members get rewarded for sustainable behaviours such as bringing their own bag, using the garment collecting programme and picking climate smart delivery options.
• M&S Sparks also has one of the best CSR Charity partnership portfolios – members can support different charities ranging from Lifeboats, to Cool Earth to Shelter to Great Ormond Street Hospital.

Loyalty Marketers need to work closely with their Masterbrand CSR team to understand priorities and then ensure the loyalty strategy is aligned and contributing. It matters more than ever for now, and for the future.

If you’d like to find out more about what’s new in loyalty marketing, what your target audience think about loyalty programmes and what matters to them then please get in touch. We’d love to help you develop and deliver a loyalty strategy that works!