To unpack the loyalty revolution, not just in the UK but across 24 countries in Europe, the Institute of Promotional Marketing (IPM) recently hosted an exciting webinar featuring experts from Mando, YouGov, and Ogilvy. This session examined two essential industry white papers starting with “What the British Want from Loyalty Programmes 4.0,” released in March 2024. This industry publication unearths British attitudes towards loyalty programs, revealing what Brits want and feel about these programs and their impact. The second paper, “Understanding Loyalty in Europe 2.0,” offers a broader overview of why loyalty perceptions vary significantly across countries like Poland, France, Norway, Spain, and Italy, providing fantastic case studies for inspiration. But before exploring these evolutionary whitepapers, let’s uncover the importance of behavioural science in creating and analysing loyalty programmes with insights from Madeleine Croucher of Ogilvy Consulting.
Psychology Behind Loyalty – Insights from UK and Europe
To unpack the loyalty revolution, not just in the UK but across 24 countries in Europe, the Institute of Promotional Marketing (IPM) recently hosted an exciting webinar featuring experts from Mando, YouGov, and Ogilvy. This session examined two essential industry white papers starting with “What the British Want from Loyalty Programmes 4.0,” released in March 2024. This industry publication unearths British attitudes towards loyalty programs, revealing what Brits want and feel about these programs and their impact. The second paper, “Understanding Loyalty in Europe 2.0,” offers a broader overview of why loyalty perceptions vary significantly across countries like Poland, France, Norway, Spain, and Italy, providing fantastic case studies for inspiration. But before exploring these evolutionary whitepapers, let’s uncover the importance of behavioural science in creating and analysing loyalty programmes with insights from Madeleine Croucher of Ogilvy Consulting.
“You might be asking yourself why behavioural science? Why is this relevant to me as a loyalty marketer? This is the way we like to frame it… If you were a heart surgeon, you’d have an in-depth knowledge and understanding of the heart. If you were a car mechanic, you’d have a really good understanding of an engine, and as a marketer, it’s crucial that you have a deep understanding of the brain.”
Madeleine Croucher, Ogilvy Consulting
Psychology Behind Loyalty
The psychological principles that make loyalty programs effective are deeply rooted in behavioural science, which helps marketers influence the subconscious part of the brain. According to Croucher, 95% of our decision making happens outside of our conscious awareness in a way that’s fast and automatic. By leveraging concepts such as the goal gradient effect, variable reinforcement, and appealing to consumers’ sense of self or ego, marketers can design programs that drive deeper engagement and loyalty. For example, pre-filling the first two stamps on a loyalty card can make consumers feel like they’re closer to reaching that end goal, already one step into the journey, and motivated to continue the behaviour. Beyond tangible rewards, loyalty programs can offer psychological rewards, like boosting self-esteem, providing a sense of status, and creating a shared social identity. Programs like Harley-Davidson’s HOG (Harley Owners Group) illustrate the power of promoting a lifestyle, not just a product, to foster community and brand loyalty.
“You might be asking yourself why behavioural science? Why is this relevant to me as a loyalty marketer? This is the way we like to frame it… If you were a heart surgeon, you’d have an in-depth knowledge and understanding of the heart. If you were a car mechanic, you’d have a really good understanding of an engine, and as a marketer, it’s crucial that you have a deep understanding of the brain.”
Madeleine Croucher, Ogilvy Consulting
Psychology Behind Loyalty
The psychological principles that make loyalty programs effective are deeply rooted in behavioural science, which helps marketers influence the subconscious part of the brain. According to Croucher, 95% of our decision making happens outside of our conscious awareness in a way that’s fast and automatic. By leveraging concepts such as the goal gradient effect, variable reinforcement, and appealing to consumers’ sense of self or ego, marketers can design programs that drive deeper engagement and loyalty. For example, pre-filling the first two stamps on a loyalty card can make consumers feel like they’re closer to reaching that end goal, already one step into the journey, and motivated to continue the behaviour. Beyond tangible rewards, loyalty programs can offer psychological rewards, like boosting self-esteem, providing a sense of status, and creating a shared social identity. Programs like Harley-Davidson’s HOG (Harley Owners Group) illustrate the power of promoting a lifestyle, not just a product, to foster community and brand loyalty.
“Loyalty is way more than just free stuff. We need to move beyond prizes to more psychological rewards. Whether that’s using scarcity to make things feel more exclusive, whether it’s giving people a sense of status, a sense of power or control, whether it’s boosting their self-esteem and their confidence, or helping them achieve a goal. There are lots of deep-rooted psychological rewards that we can give people on top of prizes.”
Madeleine Croucher, Ogilvy Consulting
“Loyalty is way more than just free stuff. We need to move beyond prizes to more psychological rewards. Whether that’s using scarcity to make things feel more exclusive, whether it’s giving people a sense of status, a sense of power or control, whether it’s boosting their self-esteem and their confidence, or helping them achieve a goal. There are lots of deep-rooted psychological rewards that we can give people on top of prizes.”
Madeleine Croucher, Ogilvy Consulting
UK Loyalty Landscape
Dylan Alderson, Senior Account Manager at YouGov, announces that membership and activity levels have significantly increased in the past two years, with 97% of respondents finding at least one loyalty program appealing and 79% of British consumers now being members of at least one program, a sharp increase from 70% in 2022. The cost-of-living crisis has made loyalty programs a savvy way for consumers to save money, with financial incentives like discounts and treats being the most valued. Experiential rewards such as exclusive events and personalized offers are also trending, while the most popular programs include Tesco Clubcard, Nectar, Boots Advantage Card and Amazon Prime. James Davies, Senior Strategist & Analyst at Mando, reveals that, on average, people are now members of six loyalty programs, up from four programs just two years ago. This increase in membership highlights the growing engagement of programs across various sectors, including supermarkets, retailers, pharmacies, mobile providers and more.
UK Loyalty Landscape
Dylan Alderson, Senior Account Manager at YouGov, announces that membership and activity levels have significantly increased in the past two years, with 97% of respondents finding at least one loyalty program appealing and 79% of British consumers now being members of at least one program, a sharp increase from 70% in 2022. The cost-of-living crisis has made loyalty programs a savvy way for consumers to save money, with financial incentives like discounts and treats being the most valued. Experiential rewards such as exclusive events and personalized offers are also trending, while the most popular programs include Tesco Clubcard, Nectar, Boots Advantage Card and Amazon Prime. James Davies, Senior Strategist & Analyst at Mando, reveals that, on average, people are now members of six loyalty programs, up from four programs just two years ago. This increase in membership highlights the growing engagement of programs across various sectors, including supermarkets, retailers, pharmacies, mobile providers and more.
“For the first time, we measured a 51% activity rate across loyalty programs in the UK, which is really exciting and challenges us as marketers to think about how we can engage the remaining 49%.”
James Davies, Mando
“For the first time, we measured a 51% activity rate across loyalty programs in the UK, which is really exciting and challenges us as marketers to think about how we can engage the remaining 49%.”
James Davies, Mando
Loyalty Across Europe
However, while it’s tempting to view Europe as a monolithic market, the data shows substantial variation. For instance, countries like Denmark, the Netherlands, and Turkey exhibit more hesitation, with only about a third of consumers viewing loyalty programs positively, indicating a need for brands to work harder to demonstrate their value. In contrast, Norway shows double-digit growth in loyalty program participation, while some markets like Bulgaria, Belgium, and Turkey saw modest declines. These findings highlight the importance of tailoring strategies based on market-specific challenges and appeal.
Loyalty Across Europe
However, while it’s tempting to view Europe as a monolithic market, the data shows substantial variation. For instance, countries like Denmark, the Netherlands, and Turkey exhibit more hesitation, with only about a third of consumers viewing loyalty programs positively, indicating a need for brands to work harder to demonstrate their value. In contrast, Norway shows double-digit growth in loyalty program participation, while some markets like Bulgaria, Belgium, and Turkey saw modest declines. These findings highlight the importance of tailoring strategies based on market-specific challenges and appeal.
“When we dig into those individual data points, we see significant variation by market. For example, 74% of Brits think that loyalty programs are a great way to reward customers, making Great Britain a high-appeal market with lots of loyalty fans. This is followed by Poland, Ireland, Germany and Slovakia.”
Charlie Hills, Mando
“When we dig into those individual data points, we see significant variation by market. For example, 74% of Brits think that loyalty programs are a great way to reward customers, making Great Britain a high-appeal market with lots of loyalty fans. This is followed by Poland, Ireland, Germany and Slovakia.”
Charlie Hills, Mando
Q&A Highlights
Charlie, with loyalty programs becoming ever more popular as shown in some of the data we’ve unpacked today, how do you see brands standing out in a crowded market, what do you think is next for loyalty?
One-size-fits-all programs don’t work. You need to stand out, especially in advanced markets like Scandinavia and Britain. Integrate your brand’s DNA into the program. Understand the behaviours and rewards that align with your brand. Don’t copy others. Find what works for you and draw broader inspiration. Coffee shop programs are being inspired by what petrol stations are doing. Grocers are getting inspired by fashion brands. Who would have thought that in a loyalty paper, I’d actually be talking about Formula One fandom and loyalty principles?
Value is paramount now, but looking ahead 3-5 years, it may not be the top priority. We need to consider corporate social responsibility, engagement, fun, and the potential of AI in loyalty programs. Don’t get too focused on value alone. Two years ago, the focus was on helping others. Just because value is crucial now doesn’t mean it will always be.
Q&A Highlights
Charlie, with loyalty programs becoming ever more popular as shown in some of the data we’ve unpacked today, how do you see brands standing out in a crowded market, what do you think is next for loyalty?
One-size-fits-all programs don’t work. You need to stand out, especially in advanced markets like Scandinavia and Britain. Integrate your brand’s DNA into the program. Understand the behaviours and rewards that align with your brand. Don’t copy others. Find what works for you and draw broader inspiration. Coffee shop programs are being inspired by what petrol stations are doing. Grocers are getting inspired by fashion brands. Who would have thought that in a loyalty paper, I’d actually be talking about Formula One fandom and loyalty principles?
Value is paramount now, but looking ahead 3-5 years, it may not be the top priority. We need to consider corporate social responsibility, engagement, fun, and the potential of AI in loyalty programs. Don’t get too focused on value alone. Two years ago, the focus was on helping others. Just because value is crucial now doesn’t mean it will always be.
Madeleine, if loyalty is behaviour change, what resources would you recommend for marketers and brands wanting to understand behavioural science?
Excellent question. A good place to start is Rory Sutherland’s book “Alchemy,” which explores the power of ideas that defy conventional logic. It aligns with the idea that behavioural science is about asking different questions and approaching problems from unique angles. For a more theoretical and tactical perspective, “Nudge” is an excellent resource. Although it’s been around for a while, it remains one of the most accessible foundational texts in behavioural science. There are also various frameworks to get started, such as MINDSPACE and the EAST framework. Sharing the one-pager that outlines different tactics against the four bonds would also be a helpful cheat sheet for marketers.
Madeleine, if loyalty is behaviour change, what resources would you recommend for marketers and brands wanting to understand behavioural science?
Excellent question. A good place to start is Rory Sutherland’s book “Alchemy,” which explores the power of ideas that defy conventional logic. It aligns with the idea that behavioural science is about asking different questions and approaching problems from unique angles. For a more theoretical and tactical perspective, “Nudge” is an excellent resource. Although it’s been around for a while, it remains one of the most accessible foundational texts in behavioural science. There are also various frameworks to get started, such as MINDSPACE and the EAST framework. Sharing the one-pager that outlines different tactics against the four bonds would also be a helpful cheat sheet for marketers.
Charlie, if you were launching a loyalty programme today in retail, is there anything you would avoid compared to traditional programmes?
Great question. We were part of the team that launched Lidl Plus a couple of years ago, which was the first grocery program to launch without a plastic card. This decision was driven by corporate social responsibility, cost considerations, and the need to digitally engage customers. If I were launching a program today, I wouldn’t just copy what my nearest competitor is doing. Five or six years ago, many brands copied the biggest programs, added their logo, and launched, but that strategy doesn’t work anymore. My advice is to avoid copying others and instead create a program tailored to your brand. I always recommend looking at the best in-store communication strategies too. Visit Tesco, Boots, The Co-op, and Sainsbury’s. Analyse how they communicate their loyalty programs in-store and what makes them effective. Each of these brands has very different approaches.
Charlie, if you were launching a loyalty programme today in retail, is there anything you would avoid compared to traditional programmes?
Great question. We were part of the team that launched Lidl Plus a couple of years ago, which was the first grocery program to launch without a plastic card. This decision was driven by corporate social responsibility, cost considerations, and the need to digitally engage customers. If I were launching a program today, I wouldn’t just copy what my nearest competitor is doing. Five or six years ago, many brands copied the biggest programs, added their logo, and launched, but that strategy doesn’t work anymore. My advice is to avoid copying others and instead create a program tailored to your brand. I always recommend looking at the best in-store communication strategies too. Visit Tesco, Boots, The Co-op, and Sainsbury’s. Analyse how they communicate their loyalty programs in-store and what makes them effective. Each of these brands has very different approaches.
Will the webinar slides and resources be available to attendees?
Yes, if you’re an IPM member, you’ll have access to the full webinar in the members’ area on our website. This includes all the insights discussed during the webinar. Both the British and European whitepapers are available to download. Attendees will receive an email with links to all resources discussed, including details about our next webinar on managing promotional risk.
Will the webinar slides and resources be available to attendees?
Yes, if you’re an IPM member, you’ll have access to the full webinar in the members’ area on our website. This includes all the insights discussed during the webinar. Both the British and European whitepapers are available to download. Attendees will receive an email with links to all resources discussed, including details about our next webinar on managing promotional risk.
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