4 in 5 UK consumers use a loyalty programme
Published on 13/12/2022 by David Jani
When price and quality aren’t enough to keep customers loyal to your brand, you might want to consider a loyalty programme. To find out more, we surveyed 1,000 UK consumers about their user habits.
In this article
Every brand wants its customers to keep coming back after their first purchase. Offering the right goods and services at the right price is an obvious first step, but markets are competitive, and other brands will be trying to do the same thing.
Many businesses, therefore, have developed loyalty programmes to reward customers the more they shop. These generally fall into five categories:
- Points-based, where customers accumulate points for every purchase and spend them on rewards (e.g., supermarkets, frequent-flyer programs).
- Cash-back, where your spend translates to cash back to use with the retailer.
- Card stamp, where each purchase earns a physical or electronic stamp. When customers collect a certain amount, they get a reward such as a free coffee or menu item.
- Fee-based, where members pay up front for benefits that they can use anytime (e.g., Amazon Prime).
- Tiered loyalty programs, where a higher spend unlocks better rewards.
Knowing what people like and dislike about loyalty programmes will help small to midsize enterprises (SMEs) launch or refine their own. So, to understand more about how popular these programmes are in the UK, we surveyed 1,000 consumers in November 2022.
Scroll to the bottom of this post to view our full methodology.
The cost-of-living crisis has driven interest in loyalty programmes
Increasing inflation, a slow economy, and external geopolitical factors have led to sharp price rises in the UK — the fastest in forty years, according to the BBC. This phenomenon — known as the cost-of-living crisis — is causing shoppers to reconsider how much they are spending on everything, from luxury purchases to basics like food and energy.
55% of UK consumers in our survey say they have seen the negative impacts of inflation to the point where they have switched brands or started to buy less. Another 37% say they have noticed the difference in price but have continued shopping as before
It’s no surprise, then, that the vast majority of shoppers are looking to save money. 36% say this is always the case —crisis or not— but 58% say that inflation has pushed them to consider how they could spend less.
Loyalty programmes offer a compelling way for consumers to make the most of their shopping budgets. Of the people in our survey who already use one, around two-thirds (65%) said that the current inflation issues have made them more interested in these schemes.
Supermarkets dominate a vibrant loyalty market
Overall, loyalty programmes are widely used in the UK. More than four out of every five consumers we surveyed (81%) currently use a loyalty programme, while another 8% have used one in the past. 7% have never used one but are interested, leaving only 3% of consumers who are not interested in loyalty programmes at all. Moreover, most loyalty programme users subscribe to several schemes — 91% said they use more than one.
By far the most popular loyalty programmes are points-based ones, like those offered by supermarkets or airlines. 90% of loyalty programme users in our survey are subscribed to one —far ahead of other popular schemes like cashback programmes (used by 44% of loyalty programme customers), stamp cards (30%) and fee-based schemes (28%).
Supermarkets are also the most popular type of shop in the UK for loyalty programmes. A convincing 90% of loyalty programme users subscribe to a supermarket scheme, far ahead of the next most popular industries, which were clothing/shoes at 29% and bars/restaurants at 27%. But in general, most other industries have a healthy proportion of customers subscribed to their loyalty programmes.
Further reinforcing the interest in supermarket loyalty schemes, 72% of those interested in joining a programme said they would consider one from a supermarket —again the most popular industry.
What do consumers like (and dislike) about loyalty programmes?
Overall, users of loyalty programmes are happy with them. 74% in our survey said they were somewhat (57%) or extremely (17%) satisfied.
Good value was a recurring theme when we asked about customer loyalty in general —look out for more on this in part 2 — and it proved to be the biggest cited advantage of loyalty programmes. 78% said regular discounts were what they were looking for when they joined these schemes, and a significant proportion (39%) also wanted free shipping. But many were also looking for something extra from their membership. 51% said they wanted to see exclusive offers, and 32% were looking for personalised offers.
When it came to the biggest benefits they actually get as members, value was again top of the list. 72% said they get discounts, 70% said they get rewards such as coupons, 33% said they get free gifts like meals, and 28% get premium treatment like free shipping. Less tangible benefits —in this case building a relationship with the brand and feeling part of a community— were much lower on consumers’ agenda.
Negative aspects of loyalty programmes include a perceived lack of value. 41% said that they have to spend a lot to get good rewards and 19% said the rewards were useless. Consumers also dislike the mental clutter that can come with these programmes. 30% said they get too much spam mail, and 19% said they have too many cards, so they get lost in their wallet.
Consumers largely happy to provide their data for loyalty programmes
Some brands that run loyalty programmes use them to collect data about customer purchases. The idea is that by gaining a better understanding of what a customer likes to buy, the brand can offer personalised offers either as a reward or as an incentive to try something new. Some consumers are wary of brands doing this, but the proportion in our survey was relatively low. 26% of loyalty programme users, for example, say that having their shopping behaviour tracked is a disadvantage.
Of the current loyalty programme users that have stopped using a programme from another brand in the past, behaviour tracking was a minor factor in their decision to quit. Only 8% cited this as a reason, far behind the fact that the rewards were useless (52%) and the fact they had to spend a lot to get good rewards (51%).
Even among those who are not interested in loyalty programmes point blank, data tracking is not the biggest issue. 29% of those consumers say they don’t want to be tracked, and 50% don’t want to share personal data, but they are just as likely to cite other reasons for not wanting to subscribe. Again, these centre around value: 59% said ‘I don't shop often enough at the same brand for it to be worth it’ and 50% said ‘The rewards are not good enough’.
Furthermore, customers are not particularly suspicious about brands’ motivations for running loyalty programmes. They mostly see these as pragmatic attempts to retain customers and increase sales— nearly two thirds (62%) thought this was the main motivation. 21% thought that the main reason was to collect customer data, and 17% thought that brands wanted to give something back because they care about their customers.
In the second article in this series, we will explore more data from the survey, with a focus on brand loyalty in general, including:
- What attracts customers to a new brand, and what drives them away from their existing ones
- The biggest drivers of customer loyalty— according to customers themselves
- The two things brands must get right if they want to increase customer loyalty
Data for Software Advice’s Loyalty Program Survey 2022 was collected in November 2022. Results comprise responses from 1,000 UK participants. The criteria to be selected for this study are as follows:
- UK residents
- Aged 18 or older
This article may refer to products, programs or services that are not available in your country, or that may be restricted under the laws or regulations of your country. We suggest that you consult the software provider directly for information regarding product availability and compliance with local laws.