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It’s been nearly 30 years since loyalty schemes first hit the UK high street. How do the first steps into a previously unknown territory compare to the leaps and bounds loyalty schemes are making today? Clearly Humans are complex beings, their buying behaviour can be hard to pin down and with the concept of loyalty being so tied to emotion how do we understand its complexities to better understand our business? This eBook lists the loyalty schemes we think should be mentioned in this years top ten. Alongside some major players we have some lesser known schemes, all listed for their success or ingenuity. How do the major players maintain customer engagement and loyalty? What are the new loyalty strategies businesses are using to engage and retain customers? As we move into an age where omni-channel is vital, where does loyalty place itself? Read on to find out about the schemes, the companies and what they’ve been offering.

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A notable name on the loyalty circuit, Nectar is owned by global loyalty leader Aimia with the goal to be the largest loyalty programme in the UK, which it has succeeded in doing. This success saw rapid growth from 4 to 14 partners in just two years. Its evolving brand and focus on simplicity meant consistent growth and success for the scheme, one that shows no signs of stopping any time soon. More partners are joining and opportunities are opening all the time. Recently Nectar formed a ground-breaking partnership with Oxfam to reward those donating to the charity. Aimia explain that their fundamental success with Nectar has been because of their focus on consumer data and “how [they] gain insight from it, how [they] use it to communicate with members. Data fuels everything [they] do.”

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• UK’s largest loyalty programme with over 19 million members • Given out £2billion in its 11 years of existence • Had four initial founders of Sainsbury’s, Debenhams, BP, and Barclaycard (now replaced with American Express) - now has 17 partners involved in the service • Over last 10 years, Nectar cards have been swiped 24 times a second • Customers gain points at two per £1 spent and can be redeemed at various partners both in-store and online at over 500 shops.

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Launched in 1995 by Dunhumby, and then having had a re-launch and rebrand in 2005, Tesco Clubcard is one of the major players in the loyalty card sector. Tesco say this is due to placing understanding communication with their customers at the forefront of their marketing strategy. Its customer-centric approach helped them realise that loyalty alone isn’t enough to retain a customer, they want rewards instead. Clubcard holders get awarded one point for every £1 spent, and this can be doubled on special offers. Redeeming points in store also makes them worth four times their value, allowing for a hefty discount on a shop. Because of its success, Tesco has now unveiled a free-to-use streaming service known as Clubcard TV that makes use of Tesco’s BlinkBox video streaming platform.

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• By 2012, scheme had 15 million members • Clubcard is listed as the main reason for why customers shop there over other brands • Total value of points redeemed in 2012 amounted to £780m • Clubcard has made Tesco one of the biggest online grocers

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Launched earlier this year, ‘Fun Finder’ asks about your interests and then suggests tickets that are relevant to you and hey presto, tickets found. Orange gets to build a database of customer information and preferences through such a service and is therefore invaluable to gauging what’s hot in customers’ minds. This kind of scheme provides Orange with the type of brand awareness that is vital to customer retention. This direct link to entertainment means Orange look ‘fun,’ converting well into customers wanting to be involved with the brand.

• Builds on the success of 2-4-1 Wednesday (previously Orange Wednesday) • Provides discounted tickets for a wide range of events including theatre, music, and comedy • Available to non-Orange customers too • Not a traditional loyalty model, but certainly works in encouraging customer loyalty to the Orange/EE brand

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Launched in 2007, the Boots Advantage Card is one of the most generous loyalty systems on the market. Boasting one of the ‘most advanced technological sources of customer information available today,’ Boots can tailor its products and offers to meet customer needs. While the Advantage Card may offer plenty of points per pound, they can’t be redeemed in store as part payment. Luckily new changes have kept this card up-to-date by offering personalised promotions from till receipts and a really easy to use interface in the online store ‘Treat Street’ – an online shopping service that boasts over 100 retain brands. It works too as over 60 per cent of sales are to Advantage Card members, members also spend an average of 60 per cent more per-transaction. There‘s also tailored channels for over 60’s and parents.

• Seventy per cent of all Boots transactions involve an Advantage Card • Third-largest retail loyalty scheme in the UK • Currently has 17.9 million cardholders • First ‘smart’ loyalty card that enabled the card to react and read cardholder purchase history • One point equals 1p and you get four points to every £1 spent

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A brilliant example of a loyalty app for UK fashion retail. Customers can use their smartphones to access everything they need to know about their account, as well as using their loyalty card. As a platform it’s perfect for letting them create direct and personalised links to their customers, letting them capitalise on a strong omni-channel approach to loyalty. Users can choose to be given alerts or app-only promotions and, by using a mobile phone, there is no need to print out plastic cards – thus saving on production costs and waste.

• Launches this year and a first for the brand • Loyalty card can be stored digitally on a mobile app, allowing for ease of access and account information • Integrated into Facebook, Twitter for easy offers sharing and redemption • Based on customer feedback

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One of the most traditional loyalty schemes on the market, British Airways Loyalty Scheme runs from Bronze Tier club members, through Silver and up to Gold. Being part of the frequent flyers club offers users the usual bonus of frequent flyer miles, upgrades and a range of discounts and in-lounge spa treatments. The higher your tier, the more points you gain and therefore you’ll be rewarded far more frequently. The introduction of Avios points helped create a new image for the brand as general product purchases could be used towards gaining points for use with British Airway’s scheme. The rebrand also helped create a closer bond between BA and their customers as you no longer had to pay a premium for their rewards service.

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• Seven members of the same household can collect and share points • Long-standing scheme that was re-launched in 2012 with a new look • Introduced Avios points in 2012 to help revitalise the image and create brand engagement • Introduction of a Bronze Tier to make it more accessible to all with a lower cost

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A benchmark for all loyalty cards looking to bring gamification to their loyalty strategy. Tapping directly into their consumers natural desire for competition, achievements, status, self-expression, and altruism, the GAME Reward card encourages customer interaction by emulating the same stimulus they get in the games they play. Trading in purchases, buying pre-owned games, using online to purchase products, these all give ‘accolades’ that come with a lump sum of points – essentially doling out free money. These one-time offers also encourage users to try something they may not have done before, thus boosting GAME’s business in new ways.

•2% of purchase value is given in points and every 400 points is a £1 in reward points •Perfect example of gamification and tapping into the key traits of their customers • Lets users track their GAME reward balance, see accolades, trade in values, store locations and more • Digitally focused and works in store too • Allows users to receive lump sums of reward points for interacting with the store through simple actions • Near instant payout to receive discounts from games as soon as a customer has £2.50 of points on their card

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Offering personalised invitations to exclusive events and offers, House of Fraser laud the card as “one of the most generous reward programmes offered by any UK department store group.” In providing their customers with a flexible and easy-to-use loyalty scheme, House of Fraser is staying ahead of the curve. Collecting rewards online and offline is what’s important and it’s reported a sales rise of 6.4 per cent like-for-like.

• Launched earlier this year

• Comes in a MasterCard and ‘normal’ reward card models • Collect points either online or in-store • 1 point for every £1/ €1 spent – MasterCard has 19.9% APR

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Despite getting a complete overhaul in July to celebrate its 10th anniversary, with the introduction of free Internet access worldwide, a quicker progression to Elite status for those on the lower tiers, more ways to earn points for Elite status – such as reward nights now counting and your points counter continuing upwards to Platinum instead of resetting – Intercontinental Hotel Group’s Priority Club Rewards is one of the best around. Situated worldwide, and therefore a cheeky entry into our list, this rewards system really gives back to its members. While Priority Club Rewards has been a wonderful service for customers, IHG Rewards Club should be even better.

• No black out dates for redeeming points at hotels • Incredibly flexible and redeemable whenever • Tons of offers available around the world at any IHG hotel • Access to 4,600 hotels across nearly 100 countries

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Designed to capture customer details and insight into what people are ordering, as well as provide feedback as to what they would like Starbucks to offer, the My Starbucks Rewards scheme has been very lucrative for the coffee company. The mobile app allows customers to not only order drinks, but check their balance in a Starbucks mobile wallet and loyalty points. It’s wonderfully simple and that’s its big selling point. They’re even aiming to double membership though new features. By the end of the fiscal year they expect to have 9 million members, compared to the 4.5 million at the end of October 2012.

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• Every drink purchase grants you one star, with every 15 stars you get yourself a free drink • Gaining 50 stars places you into the ‘golden tier’ of customers where benefits such as free shots or syrups regularly occur. • Mobile app allows customers to purchase via mobile, thus reducing the time needed to queue and wait • Adds around 80,000 new members a week • Money loaded onto cards – through new activations and card reloads – increased 32 per cent over Q2 2012.

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Costa uses the Coffee Club card to collect demographic data, contact information, and purchasing information from its customers. They use to help tailor their marketing campaign at specific customers and regions, therefore firing out a wide range of offers to each customer segment. Offers are tailored using a unique set of algorithms that measures customer characteristics including spend and frequency of visits.

• Every nine purchases results in a free drink for the 10th • Adaptable so Costa can either reward people with double or triple points or give bonus points on certain purchases • Customers receive a free coffee just for registering online • Every four in 10 transactions involves the loyalty card • Cardholders spend significantly more than non-cardholders

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Do you want to better understand, engage and retain your customer? If so, then you need to be at Loyalty World Europe, part of Europe’s Customer Festival, this September in London. Europe’s Customer Festival looks in detail at how top brands from retail, telecommunications, financial services, airlines and utilities industries can create a truly customer-centric approach. If you represent a retailer or are involved in the retail industry and are interested in sponsoring this event, please contact Oliver Healy on: +44 (0) 207 092 1175 or Oliver.healy@terrapinn.com

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