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The rise of loyalty schemes

Forget the flimsy cards of the past, loyalty schemes just got serious.

Loyalty schemes offering exclusive benefits, early access to new collections and luxury experiences are emerging as the antidote to today’s persistent discount culture. The idea is to woo consumers who, jaded with severe discount fatigue, want to feel valued by retailers.

The latest in a list of loyalty packages to launch over the past six months is Asos A-List. The scheme, which went live in February, rewards Asos.com shoppers five points for every £1 spent. Get to 500 points and you receive a £5 voucher (box, below). Structured in three tiers, points give shoppers access to Sale previews, exclusive discounts and events.

“It’s something we’ve been exploring for a while, because our customers have been asking us for it,” explains brand director Eve Williams. “We’ve spent the last couple of years shaping it, testing it in beta and refining it to what it is today. We didn’t want to rush out something for the sake of it.”

The idea behind Asos A-List is to reward shoppers with offers and free delivery, alongside a voucher-based system. The site has an integrated dashboard that displays the shopper’s points balance and how far away they are from the next tier.

The scheme is a step up from the original Asos Rewards programme, which was trialled on 500,000 UK customers for a year in 2014. Trial customers received points for shopping, bonus points offers and vouchers, although there were no tiers, which Williams believed was a natural next step.

“The customer who shops with us short term still gets those extras on top of just coming to the site to buy a dress,” Williams adds. ”We still want those customers to get access to the best offers and promotions, and we know that flash Sales are still super-popular, so we’d never take these away. We want everyone who shops at Asos either once a year, or once a week, to feel like they are part of the Asos community.”

Verdict Retail consultant Rebecca Marks believes the launch of Asos A-List ties in with the shopping habits of today’s savvy consumers: “If you look at someone like Asos, who stocks well-known high street brands, a loyalty scheme where you receive a greater level of rewards the more you purchase may entice shoppers to purchase products from the likes of New Look or River Island on Asos instead of those retailers’ own websites.”

Luxury department store Harvey Nichols is hoping to capitalise on the same strategy with its Rewards app, unveiled in June 2015. Based on the belief that luxury shoppers are more interested in receiving experiences than discounts, the programme rewards customers with a redeemable treat every three months (box, below).

Work started on the app in September 2014, and everything was ready to launch within nine months.

“We took an agile approach to product and programme development, testing every facet and feature of the programme with our customers,” explains Jimmy Davis, Harvey Nichols’ loyalty propositions manager.

“The luxury sector is more competitive than ever and our customer has a plethora of choices of where to shop. So it was imperative we brought this product to market as quickly as possible.”

The app is fully integrated with in-store point-of-sale technology, the ecommerce site and email database, helping the team garner rich customer insight to deliver targeted communications and monitor the popularity of the different rewards.

“We’re delighted with the positive feedback we’ve received from customers and from the data we’re collecting,” says Davis. “The programme is impacting positively on a range of our key customer KPIs and we have surpassed our year one business case metrics in under nine months.”

Similar success is being experienced at Marks & Spencer, which now has 3.7 million members – or around one-tenth of its 33 million customers – signed up to its Sparks card (box, below). Launched in October, Sparks members collect points as they shop to earn tailored offers, priority access to seasonal previews and Sales, as well as invitations to exclusive events.

Going forward, all promotional activity at M&S will include a special element for Sparks customers, explains global director of loyalty, insight and customer analytics Nathan Ansell: “We did lots of work with our customers who are very familiar with loyalty schemes, and they didn’t want a traditional ’spend-and-burn’ proposition – they wanted to be part something special.

“The uptake has been incredible. As we get to know their shopping behaviour, we can give them tailor-made offers and share content on things they might find interesting. Most people signed up through stores in October and we’ve seen a lot of people recommending Sparks to friends and family. We are planning another in-store acquisition drive halfway through the year.”

In the etail space, the success of Amazon Prime Day on July 15 last year exemplifies the way loyalty and discounting can work hand in hand. An average of 398 products were bought by Amazon Prime members every second, a total of more than 34.4 million products. The one-day Sale boosted the etail giant’s revenue by 2% in the three months to September 30.

‎”Amazon has invested hundreds of millions of dollars in technology that understands your shopping habits and gives you personalised offers, and it has done brilliantly with regards to great prices and service,” notes Robert Browne, pricing expert and partner at KPMG’s strategy group.

“Shoppers are still looking for service and experience, and to a certain extent have moved back from discounting. Retailers are also starting to think more creatively about what they’re trying to do with the promotion, whereas during the recession it was all very short-term thinking.”

Whether it is VIP events, exclusive benefits or personalised offers, Marks believes loyalty schemes will help retailers entice consumers to shop with them over the competition: “Now we’re through the other side of the economic downturn and consumer spend is picking up, retailers are better able to invest in propositions like loyalty schemes, and not just rely on discounts and promotions.

“With easy opting-in capabilities it is likely that the number of consumers using loyalty schemes for fashion purchases will increase.”

Take three: loyalty schemes

 

Asos A-List

Asos A-List

 

Launched: February 2016

How it works: Shoppers receive five points for every £1 spent. Each 500 points entitles them to a £5 voucher, valid for six months. The scheme is arranged in a tiered system.

Level 1 (400 points): two double-points days, 15% off for your birthday, one free next-day delivery, as well as competitions and offers.

Level 2 (1,000 points): four annual double-points days, two free next-day delivery days and advance warning of Sales.

Level 3 (3,000 points): four triple-points days, three free next-day deliveries, 20% off for your birthday and 24-hour-early access to Sales.

 

Marks & Spencer Sparks

Marks & Spencer Sparks

 

Launched: October 2015

How it works: Positioned as a personalised members’ club giving tailor-made offers, priority access to seasonal previews and access to events. To join, shoppers pick up a Sparks card in store and register online through their M&S.com account.

Customers earn 10 sparks (points) with every shop and also get 10 sparks for £1 spent. Members receive 25 sparks when they write a review and 50 sparks every time they drop off unwanted clothes as part of the Shwopping scheme.

Three thousand sparks enables early access to new season previews, while 5,000 sparks gives customers early access to Sales. Acquiring 14,000 sparks triggers invitations to special events like catwalk shows, while 17,000 sparks enables shoppers to take part in other high-end events, including personalised styling sessions.

 

Harvey Nichols Rewards App

Harvey Nichols Rewards App

 

Launched: June 2015

How it works: This free app allows shoppers to collect one point for every £1 spent in store, online or in a Harvey Nichols bar/restaurant. Shoppers simply show the app at the till or scan their receipt to unlock rewards based on their quarterly spend. To redeem, the user goes into the App store or Google Play to update the app and browse the selection of rewards, which are tiered as follows:

Silver: style concierge in store, gift wrapping, special offers, complimentary samples and a Sale preview

Gold: member days, basic alterations, own make-up artist, free smoothies and coffees

Platinum: express alterations, private shopping events, exclusive launch access, first look at new collections and beauty tutorials

Black: express returns, secret Sales and an at-home stylist

 

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