Twelve Loyalty Schemes Do Not Add Up to Loyalty

The British loyalty market is becoming crowded enough to expose a basic misconception: membership is not commitment.

American Express research reported this month that 90% of UK adults belong to at least one loyalty scheme and that the average participant belongs to 12. Meanwhile, the DMA’s latest customer-engagement research finds that the share of consumers who stick to brands, shops and websites they know for everyday purchases has fallen from 76% in 2024 to 67%.

Those findings are not contradictory. They describe a consumer who is willing to join, compare and redeem, but increasingly unwilling to grant a brand the comfort of habitual choice.

For retailers and consumer brands, this changes the job of loyalty. A large member base may still be commercially useful, but it is a poor proxy for preference. The real question is whether the scheme gives people a meaningful reason to choose the business again on a specific shopping occasion.

Key takeaways

• Stop treating enrolment as evidence of attachment. Measure whether members choose the brand more often, across more occasions, than comparable non-members.

• Build propositions around missions, not generic retention. The reasons someone returns for a weekly shop, a lunchtime meal or a major purchase are materially different.

• Use rewards to clarify value. Points and prices should make the next decision easier, rather than require customers to decode another layer of rules.

• Separate loyal behaviour from deal-led behaviour. A customer who responds only to increasingly costly offers may be valuable, but is not necessarily becoming more committed.

• Research the switching moment. Ask what customers considered, where else they looked and what finally made the alternative more attractive.

The loyalty dashboard can look healthier than the relationship

Loyalty programmes produce an appealing volume of evidence: sign-ups, active members, points issued, redemption rates, open rates and visits. Much of it is useful. But it is also inward-looking. It tells a business what registered customers did within its own estate, not what they considered outside it.

That distinction matters when consumers hold a portfolio of schemes. A customer can scan a card at the till, use a personalised voucher and still allocate more of their spending to a rival. They may be loyal to the convenience of rewards rather than the brand supplying them.

The DMA’s research adds a further warning. It found a marked gap between marketer confidence and consumer behaviour: 70% of marketers believe loyalty towards their brand has increased, while stated attachment to familiar providers for everyday purchases has declined. That should prompt some humility about the measures being elevated in campaign reviews.

A rise in app activity or redemptions can indicate a stronger relationship. It can also indicate that customers have become more practised at extracting value from a competitive marketplace. The commercial interpretation depends on what happens to frequency, basket, margin and share of category spend after the reward has been used.

Everyday loyalty needs a sharper value exchange

The number of schemes a person holds reflects more than a taste for points. It reflects the fact that everyday spending is now a sequence of active value decisions. Supermarket rewards, restaurant offers, cashback, member pricing and partner benefits all invite consumers to assemble their own deal.

That does not mean price is the only answer. It means value has to be legible.

A good loyalty proposition makes a practical difference that the customer can recognise before they spend: a lower regular price on relevant items, a genuinely useful service, priority access, a faster experience or a reward that fits the occasion. It should not rely on customers accumulating a distant future benefit while navigating exclusions, thresholds and expiry dates.

This is particularly important for brands with a premium position. If a scheme makes the normal price appear arbitrary, it can train customers to wait for a deal. The better use of rewards is to reinforce a distinctive advantage: superior convenience, better choice, relevant recognition or access that competitors cannot easily copy.

The test is simple. If the scheme disappeared tomorrow, would members still have a clear reason to choose the brand? If the answer is unclear, the programme may be subsidising transactions rather than building preference.

Research the occasions where habit breaks

The falling tendency to stick with familiar brands should lead insight teams away from broad questions about satisfaction and towards the moments when routines are reopened.

Those moments are often mundane: a product is unavailable, a price changes, a customer sees a rival offer, a delivery window fails, a colleague recommends an alternative or an app makes comparison easier. They are not always visible in a conventional loyalty dataset.

Research should therefore combine observed behaviour with direct enquiry. Transaction data can show a reduction in frequency or a narrowing basket. It cannot reliably explain whether the cause was a price comparison, a service frustration, a change in household need or simple experimentation. Qualitative work can reveal the decision logic; well-designed surveys can show how widely it applies; external market data can indicate whether spend has moved to a named competitor or out of the category altogether.

That is a more demanding task than counting members, but it produces better commercial choices. It can show which customers are genuinely at risk, which incentives are simply expensive and which parts of the proposition deserve investment.

The loyalty market is not short of cards, apps or rewards. It is short of programmes that understand the next choice customers are trying to make. In a market of 12 schemes per person, the brands that earn repeat custom will be those that make that choice feel noticeably more worthwhile.