Loyalty Card Marketing: How It Works and the Benefits for Retailers and Brands

As the cost of living crisis continues, it is becoming increasingly harder for brands and retailers to establish a sense of trust and loyalty with their customers. Our field marketing insights have found that consumers are often looking for the best deal, rather than having allegiance to any one brand or retailer - so what can be done to combat this?

Fortunately, it's not all doom and gloom - loyalty card marketing provides brands and retailers with numerous opportunities to stay afloat in a vast sea of competitors and lucrative discounts.

If you’re a retailer or an independent business that has not yet ‘reaped’ the benefits of deploying a quality loyalty card system, you’re in luck! Our experts over at Reapp can help you build a loyalty programme boosted by a treasure trove of first-party data. From loyalty stamp cards to prize draw giveaways, let us help you engage your customers by creating a clever rewards system that ensures that they remain loyal shoppers along the way.

Now, let's get to the nitty gritty and delve into the why of how loyalty card marketing can transform your business…

Loyalty card marketing: What is it and how does it work?

Loyalty programs are a brilliant marketing strategy that brands and retailers can adopt to encourage repeat purchases, gain valuable consumer data and maintain a relationship with their shoppers. When a shopper chooses to opt into their desired scheme, they will essentially be rewarded for their loyalty over time. It’s a clever system that aims to keep shoppers coming back for more, long into the future!

These programs typically involve accumulating points or rewards based on purchases or other desired customer behaviours. Many of these schemes work by enabling shoppers to redeem these points for

• Discounts
• Free products
• Exclusive offers
• Or other incentives

This helps create a mutually beneficial relationship between the business and its customers.

What are some examples of successful loyalty programs?

Some iconic loyalty card schemes that we’re sure you’re already aware of include the Morrisons More card and Sainsbury’s Nectar card, enabling customers to earn 1 point for every £1 they spend. These schemes are great and can help shoppers gain some serious savings.

However, with the market being so oversaturated at the moment, it’s vital that brands and retailers focus on innovation and personalisation - two factors that will ensure they stand out from the crowd. Supporting this, Sender recently reported that ‘…after a personalised shopping experience with a brand, 60% of shoppers think they will become repeat buyers’. Additionally, 76% of shoppers said personalisation is essential in enhancing their consideration of a brand.

Two brands that have taken this approach on board are Tesco and Asda. Tesco recently unveiled its Clubcard challenges, utilising existing customer data and AI to gamify the shopping experience. Clubcard Challenges (which will see individually personalised points challenges rolled out to Clubcard holders), offers customers the opportunity to earn up to £50 in Clubcard points. Similarly, Asda’s Rewards app sets shoppers' ‘missions’ to earn cashback when they buy the products or ranges suggested in the app. Once you hit the target, you will be given a cash bonus.

It's not just the big-name retailers though - convenience stores are also seeing the benefits too! Convenience stores have the benefit of locality when it comes to their customer base, and they also possess the ability to draw in a significant amount of loyal shoppers - approximately 55% of them visit a convenience store (over a big-name retailer) to ‘top-up’ their weekly shop.

Local retail wholesaler, Booker, recently announced that it launched a trial of a Tesco Clubcard-like loyalty scheme in their Premier, Londis and Budgens stores, which has helped increase footfall in participating sites.

The four stages of loyalty: Rewards in action

After many years of experience in the retail game, we’ve noticed that loyalty programs usually follow four stages. This isn’t exclusive to all loyalty schemes, but it forms a basis of the typical structure you can normally expect from such a program!

These four stages are part of the customer lifecycle and include the following steps:

1. The acquisition stage: Customers are enticed to join the program through attractive sign-up offers. This could be money off their next shop or the incentive of boosted points when they first make use of the scheme.
2. The engagement stage: This involves keeping customers active in the program by offering personalised rewards and in-store promotions. Retailers will do this by diving into the treasure trove of data that they have gained from the shopper over time. Looking at what they usually buy, how much they spend, and how frequently they’re making use of the available discounts can make all the difference.
3. The conversion stage: This focuses on encouraging customers to redeem their accrued rewards, thereby increasing sales and fostering loyalty. This could be by sending customers coupons through the post or even by sending push notifications to their phones to remind them of their current discounts.
4. The retention stage: This ensures customers continue to choose your brand over competitors by consistently providing value through ongoing rewards and incentives. This may be the hardest stage for retailers and brands to achieve, but through innovation and sending shoppers the right discounts at the right time, it's surely possible.

But how can customer loyalty programs benefit you?

The adoption of a quality loyalty card scheme can yield numerous benefits for brands and retailers when implemented the right way.

These benefits range from enhancing the customer experience all the way through to driving measurable business outcomes full of data-rich insights.

Let’s dive in and take a look…

1. Boost the customer experience

Loyalty programs can often make customers feel valued and appreciated. Loyalty is something that has to be earned, and retailers and brands need to understand that they should be rewarding shoppers for their time and money and hopefully, their repeat business.

Because the market is so over-populated at the moment, the rise of discount stores has been welcomed with open arms. This has been heightened with the cost of living crisis, which has meant that shoppers are looking to keep their spend low, without sacrificing too much on the quality of their items. Supporting this, Nationwide recently reported that discount store spending has jumped 41%, as Brits are now offsetting the cost-of-living crisis by bagging bargains.

Providing shoppers with helpful discounts that they can use frequently in their shops will boost overall customer satisfaction, also improving brand/retailer perception in the long run. Personalised consumer rewards and exclusive offers tailored to the preferences of your customers not only encourage repeat purchases - they also foster a positive emotional connection with your brand.

2. Measurable data in one handy package

As mentioned before, one of the significant advantages that loyalty programs possess is their ability to provide valuable actionable customer data. By tracking customer behaviours and preferences, brands and retailers can gain important insights into consumer trends, purchasing patterns, and product preferences. This data can help to refine your field marketing strategies, optimise your inventory management, and make informed business decisions.

However, businesses must be transparent about their use of customer data - especially if they’re selling that data onto other companies who may benefit from the information. Sainsbury’s got in trouble for this in 2023, so transparency is a must!

3. Conversions, conversions, conversions!

A well-executed loyalty program has the potential to drive conversions by incentivising customers to increase their spending or the frequency of purchases to earn rewards in a discreet way. This approach not only boosts sales in the short term, but also establishes long-term customer relationships that are more resistant to competitive offers. Supporting this, PYMNTS recently reported that 27% of consumers will spend more money with brands they currently hold loyalty cards with.

Top tips for creating a successful loyalty marketing programme

As we've seen, loyalty card marketing can be extremely beneficial for brands and retailers, but what do you need to consider to make sure your programme is a success?

1. Know your audience

Understanding your audience inside out is crucial if you want to offer incentives that are actually meaningful. What good is a loyalty scheme if the incentives you offer aren't actually what your customers want? Field marketing helps massively with this, allowing you to understand your customers and their shopping habits.

2. Market your programme

As with any launch, marketing your new loyalty programme is key to getting the word out and encouraging your customers to take advantage. Make sure you push the benefits of your programme and tell customers how your scheme differs from those offered by your competitors.

Leverage digital marketing channels like email campaigns and website pop-ups, but don't forget the importance of in-store marketing, too. This is where field marketing strategies like retail merchandising can come in handy!

3. Review and make changes

It's rare to get things completely right the first time - and that's okay! Monitor how your loyalty card scheme performs and make any changes based on what you see and any feedback you receive from customers. Insights can be gleaned from your customer loyalty programme software, or by calculating the programme participation rate.

Reap the rewards with Reapp Loyalty!

Loyalty card marketing is an effective tool for brands and retailers to use if they’re seeking to cultivate customer loyalty and drive profitability. At Dee Set, we understand the nuances of customer engagement and loyalty, offering our clients customised solutions that align with their brand's objectives, resonating with their target audience.

Now is the perfect time to get closer to your customers by building the perfect loyalty program and capturing first-party data, all at the same time. Reapp’s Retailer Rewards platform will make the whole process a walk in the park! Using Reapp Loyalty, you can collect demographic information with the use of sign-up forms that will reveal specific information about your customers, including their geolocation, product preferences, age, gender, email and more.

If you’re looking to supercharge your current loyalty card scheme, you can leverage our business capabilities to create meaningful connections with your customers, drive sales growth, and differentiate your brand in the competitive marketplace.

Contact us today to explore how we can help you ‘Reapp’ the rewards of a well-executed loyalty program.

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