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Customer Loyalty and Reward Schemes - UK - June 2018

“Retailers need to increasingly evolve their loyalty schemes so that they are not just focused on points and monetary rewards, but on engaging emotionally with customers by offering them unique experiences or services. Given that membership of rewards schemes is currently skewed towards consumers aged 45 and over, this is key to engaging with younger shoppers who are most attracted to exclusive offers.”

- Tamara Sender, Senior Retail Analyst

This report will look at the following areas:

  • How can loyalty schemes appeal to younger consumers?
  • The rise in subscription models
  • What are loyalty schemes doing to attract members?

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this report
      • Executive Summary

          • The market
            • Consumer confidence on the rise
              • Figure 1: Consumer confidence tracker, Jan 2016 – April 2018
            • Companies and brands
              • Tesco Clubcard dominates
                • Amazon Prime
                  • Bink integrates loyalty schemes onto card payments
                    • The consumer
                      • 84% belong to loyalty schemes
                        • Figure 2: Membership of customer loyalty scheme and paid subscription pass, April 2018
                      • Tesco Clubcard most popular
                        • Figure 3: Membership of customer loyalty/reward schemes, April 2018
                      • Dissatisfaction with personalised offers
                        • Figure 4: Satisfaction with customer loyalty schemes, April 2018
                      • Under-35s keen on exclusive offers
                        • Figure 5: Factors that most attract consumers to consumer loyalty/reward schemes, April 2018
                      • Amazon Prime most popular subscription scheme
                        • Figure 6: Membership of paid subscription/delivery passes, April 2018
                      • Delivery the most important factor for consumers
                        • Figure 7: Factors that most attract consumers to paid subscription/delivery passes, April 2018
                      • Online offering important
                        • Figure 8: Attitudes to customer loyalty/reward schemes, April 2018
                      • What we think
                      • Issues and Insights

                        • How can loyalty schemes appeal to younger consumers?
                          • The facts
                            • The implications
                              • The rise in subscription models
                                • The facts
                                  • The implications
                                    • What are loyalty schemes doing to attract members?
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • Consumer confidence on the rise
                                            • Online financial data concerns may prove to be a barrier
                                              • Discounters continue to rise
                                              • Market Drivers

                                                • Consumer confidence on the rise
                                                  • Figure 9: Consumer confidence tracker, Jan 2016 – April 2018
                                                • Smartphone ownership above 80%
                                                  • Figure 10: Ownership of mobile phones, January 2012-December 2017
                                                • Online security concerns
                                                  • Figure 11: Online account security concerns, April 2018
                                                • Sharing data concerns
                                                  • Figure 12: Concerns over sharing data with companies, by data type – NET, December 2017
                                                • Consumers have noticed price increases
                                                  • Figure 13: Attitudes to supermarkets, September 2017
                                                • Discounters continue to rise
                                                  • Figure 14: Leading grocery retailers’ share of sector sales, 2012-17
                                              • Companies and Brands – What You Need to Know

                                                • Company loyalty schemes
                                                  • Paid subscription models
                                                    • Bink integrates loyalty schemes onto card payments
                                                      • Co-op expands membership scheme to electricals
                                                        • Nectar spends the most on advertising
                                                          • Amazon Prime – Little Horse
                                                          • Company Loyalty Schemes

                                                            • Tesco Clubcard
                                                              • Nectar
                                                                • Boots Advantage Card
                                                                  • myWaitrose
                                                                    • Morrisons’ More Card
                                                                      • Co-op Membership Card
                                                                        • M&S Sparks Card
                                                                          • My John Lewis
                                                                            • Superdrug Health & Beautycard
                                                                              • IKEA Family card
                                                                                • Debenhams Beauty Club
                                                                                  • ASOS A-List
                                                                                    • H&M Club
                                                                                      • B&Q Club
                                                                                      • Paid Subscription Models

                                                                                          • Amazon Prime
                                                                                            • Tesco Delivery Saver
                                                                                              • Asda Grocery delivery Pass
                                                                                                • Sainsbury’s Grocery Delivery
                                                                                                  • Morrisons’ Delivery Pass
                                                                                                    • ASOS Premier
                                                                                                      • Next Unlimited
                                                                                                        • New Look Delivery Pass
                                                                                                        • Launch Activity and Innovation

                                                                                                          • New launches
                                                                                                            • Tesco overhauls Clubcard points and makes cards contactless
                                                                                                              • Figure 15: Tesco contactless Clubcard
                                                                                                            • Sainsbury’s trials new Nectar scheme
                                                                                                              • Morrisons launches new-style Morrisons More card amid overhaul
                                                                                                                • Figure 16: Morrisons More card
                                                                                                              • Spar launches loyalty scheme and app with Zapper
                                                                                                                • Feelunique launches next-day delivery pass
                                                                                                                  • New Look launches unlimited delivery pass
                                                                                                                    • H&M launches loyalty scheme in the UK
                                                                                                                      • Personalised schemes
                                                                                                                        • Waitrose scraps ‘pick your own offers’ loyalty scheme
                                                                                                                          • Digitisation
                                                                                                                            • Bink integrates loyalty schemes onto card payments
                                                                                                                              • New offers
                                                                                                                                • M&S trials one-hour delivery for loyalty card holders
                                                                                                                                  • Amazon Prime expands delivery speeds and network
                                                                                                                                    • Amazon Treasure Truck
                                                                                                                                      • Figure 17: Amazon Treasure Truck, December 2017
                                                                                                                                    • Co-op expands membership scheme to electricals
                                                                                                                                    • Advertising and Marketing Activity

                                                                                                                                      • Nectar spends the most on advertising
                                                                                                                                        • Figure 18: Recorded above-the-line, online display and direct mail total advertising expenditure by leading loyalty schemes, delivery passes and paid subscription models, 2015-18
                                                                                                                                        • Figure 19: Recorded above-the-line, online display and direct mail total advertising expenditure by leading loyalty schemes, 2015-18
                                                                                                                                        • Figure 20: Recorded above-the-line, online display and direct mail total advertising expenditure by leading delivery passes and paid subscription models, 2015-18
                                                                                                                                      • Direct mail the most popular way to advertise
                                                                                                                                        • Figure 21: Recorded above-the-line, online display and direct mail total advertising expenditure on expenditure by leading loyalty schemes, delivery passes and paid subscription models, by media type and advertiser, 2017
                                                                                                                                      • Campaign highlights
                                                                                                                                        • Nectar: A Nation of Individuals
                                                                                                                                          • Tesco Clubcard Partners and Money off
                                                                                                                                            • Amazon Prime – Little Horse
                                                                                                                                              • Nielsen Ad Intel coverage
                                                                                                                                              • The Consumer – What You Need to Know

                                                                                                                                                • 84% belong to loyalty schemes
                                                                                                                                                  • Tesco Clubcard most popular
                                                                                                                                                    • Dissatisfaction with personalised offers
                                                                                                                                                      • Under-35s keen on exclusive offers
                                                                                                                                                        • Amazon Prime most popular subscription scheme
                                                                                                                                                          • Delivery the most important factor for consumers
                                                                                                                                                            • Online offering important
                                                                                                                                                            • Membership of Loyalty and Paid Subscription Schemes

                                                                                                                                                              • 84% belong to loyalty schemes
                                                                                                                                                                • Figure 22: Membership of customer loyalty scheme and paid subscription pass, April 2018
                                                                                                                                                              • Membership of paid subscription skewed to under-35s
                                                                                                                                                                • Figure 23: Membership of customer loyalty scheme and paid subscription pass, by age group, April 2018
                                                                                                                                                            • Membership of Customer Loyalty Schemes

                                                                                                                                                              • Tesco Clubcard most popular
                                                                                                                                                                  • Figure 24: Membership of customer loyalty/reward schemes, April 2018
                                                                                                                                                                • Recent usage of loyalty schemes
                                                                                                                                                                  • Figure 25: Usage of customer loyalty/reward schemes in the last 6 months, April 2018
                                                                                                                                                                • IKEA loyalty scheme draws youngest members
                                                                                                                                                                  • Figure 26: Active members of loyalty schemes who have used them in the last 6 months by age and socio-economic group, April 2018
                                                                                                                                                                • Frequency of usage of loyalty schemes
                                                                                                                                                                    • Figure 27: Frequency of usage of customer loyalty/reward schemes, April 2018
                                                                                                                                                                  • Multiple membership of loyalty cards
                                                                                                                                                                    • Figure 28: Membership of customer loyalty/reward schemes, April 2018
                                                                                                                                                                    • Figure 29: Repertoire of usage of customer loyalty/reward schemes in the last 6 months, April 2018
                                                                                                                                                                • Satisfaction with Customer Loyalty Schemes

                                                                                                                                                                  • Dissatisfaction with personalised offers
                                                                                                                                                                      • Figure 30: Satisfaction with customer loyalty schemes, April 2018
                                                                                                                                                                    • Low satisfaction with ease of use online
                                                                                                                                                                      • Superdrug Card has the highest level of satisfaction
                                                                                                                                                                        • Figure 31: Percentage point differentiation with overall satisfaction with customer loyalty schemes by the main loyalty schemes used in the last six months, April 2018
                                                                                                                                                                        • Figure 32: Percentage point differentiation with satisfaction with customer loyalty schemes by the main loyalty schemes used in the last six months, April 2018
                                                                                                                                                                      • Retailers need to prioritise personalised offers
                                                                                                                                                                        • Figure 33: Key drivers of overall satisfaction with customer loyalty/reward schemes, April 2018
                                                                                                                                                                        • Figure 34: Overall satisfaction with customer loyalty/reward schemes - key driver output, April 2018
                                                                                                                                                                    • Factors that Attract Consumers to Loyalty Schemes

                                                                                                                                                                      • Young want money off products, while old like accumulating points
                                                                                                                                                                          • Figure 35: Factors that most attract consumers to consumer loyalty/reward schemes, April 2018
                                                                                                                                                                        • Under-35s keen on exclusive offers
                                                                                                                                                                          • Promoting partnerships with different businesses
                                                                                                                                                                          • Membership of Paid Subscription/Delivery Passes

                                                                                                                                                                            • Amazon Prime most popular subscription scheme
                                                                                                                                                                              • The rise in subscription models
                                                                                                                                                                                • Loyalty scheme vs subscription/delivery pass
                                                                                                                                                                                  • Loyalty schemes
                                                                                                                                                                                    • Subscription schemes/delivery passes
                                                                                                                                                                                      • Figure 36: Membership of paid subscription/delivery passes, April 2018
                                                                                                                                                                                    • Most consumers only use one subscription scheme/delivery pass
                                                                                                                                                                                      • Figure 37: Repertoire of membership of paid subscription/delivery passes, April 2018
                                                                                                                                                                                  • Factors that Attract Consumers to Paid Subscription/Delivery Passes

                                                                                                                                                                                    • Delivery the most important factor for consumers
                                                                                                                                                                                      • Exclusivity valued
                                                                                                                                                                                          • Figure 38: Factors that most attract consumers to paid subscription/delivery passes, April 2018
                                                                                                                                                                                      • Attitudes Towards Customer Loyalty/Reward Schemes

                                                                                                                                                                                        • Online offering important
                                                                                                                                                                                          • The impact of GDPR and concerns over personal data
                                                                                                                                                                                            • Rewards for sharing on social media
                                                                                                                                                                                              • Figure 39: Attitudes to customer loyalty/reward schemes, April 2018
                                                                                                                                                                                            • Charity donation popular with young people
                                                                                                                                                                                              • Figure 40: Attitudes to customer loyalty/reward schemes, by demographics, April 2018
                                                                                                                                                                                            • Loyalty schemes influence consumers to shop at certain retailers
                                                                                                                                                                                              • Figure 41: Attitudes to customer loyalty/reward schemes, by membership of customer loyalty/reward scheme, April 2018
                                                                                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                              • Abbreviations
                                                                                                                                                                                                • Consumer research methodology
                                                                                                                                                                                                • Appendix – Key Driver Analysis

                                                                                                                                                                                                    • Interpretation of results
                                                                                                                                                                                                      • Figure 42: Overall satisfaction with customer loyalty/reward schemes - key driver output, April 2018
                                                                                                                                                                                                      • Figure 43: Satisfaction with customer loyalty/reward schemes, April 2018

                                                                                                                                                                                                  Customer Loyalty and Reward Schemes - UK - June 2018

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