The past 10 years have not been smooth sailing for British retailers. The Great Recession, tougher employment regulations and the economic fall-out from the Brexit vote have all served to raise costs and cut income for many UK businesses.

At the same time, brand loyalty has been challenged by rapid advancements in consumer technology. With a world of information in the palm of their hands, today’s shoppers can find and claim the best deals within a matter of seconds. For many, this has rendered previous allegiances with retailers obsolete, with price and ease of access overtaking loyalty in consumers’ list of priorities.

There is, however, good news for retailers. While it might have compromised customer loyalty, the digital revolution has also created new opportunities for consumer engagement – with apps, programmes and portals all offering new ways of doing things. If brands can embrace this kind of technology and use it effectively, they can capture and maintain customer loyalty like never before.

Cards on the table

Retailers have traditionally rewarded faithful customers with loyalty cards. With benefits that included discounts, store credit and exclusive insider deals, these cards quickly became a regular fixture in wallets and purses across the nation.

In fact, it was once nearly impossible to enter a store without hearing the swish or beep of a freshly-scanned loyalty card, but this has changed in recent years. While nine in ten British consumers own at least one loyalty card, with the average owning three, Britons are among the least likely in the world to actually use them. Perhaps more surprisingly, one in five British shoppers fail to use any of the points accumulated on their loyalty cards either.

Although it might not be obvious, the declining effectiveness of loyalty cards is having a real commercial impact. Recent developments in Britain’s supermarket industry can be seen to validate this. Where the sector was once dominated by the ‘big 4’ of Asda, Morrisons, Sainsbury’s and Tesco, recent years have seen low-price retailers such as Aldi and Lidl disrupting the market and taking up a larger portion of the overall market share. Declining customer loyalty has no doubt contributed to this development, as shoppers once glued to their Nectar Cards have since abandoned Sainsbury’s in favour of whichever retailer offers them with the best value for money deal.

Recognising change and taking charge

Times are clearly changing, and businesses need to consider how best to upgrade their loyalty strategies.  To do this successfully firms will need to adapt to the world around them, and embracing technology is essential to this. By offering more opportunities to interact with customers than ever before, digital mediums grant retailers an unprecedented opportunity to connect with consumers -in any place, at any time.

By providing users with flexible access to online and mobile shopping, the latest mobile apps allow businesses to fulfil customers’ growing demand for convenience, whilst also appealing to their wallet with special deals for repeat customers.  Moreover, when customers have a good experience with an app, they are likely to use it on a regular basis, which in increases the time a customer engages with a brand and successfully build loyalty.

Web-based portals also offer another alternative for businesses looking to engage with their most loyal customers. Modern shoppers, especially millennial customers, like to have the option of selecting their own rewards online. While one shopper might choose a free trip to the cinema as a reward, another might opt for a discounted weekend break. For other customers, a simple discount on their weekly shop would suffice. By creating a self-service rewards scheme that includes options for everyone, retailers can give their customers the experiences, prizes and discounts that they value the most.

An additional benefit to providing these new forms of loyalty schemes is that a business will be able to acquire greater detail about the individual customers. In the past, a loyalty card provided insight into the shopping behaviour of customer, however, by analysing a loyal scheme’s dashboard and paying particular attention to redemption data and trends, it is likely to uncover behavioural insight that was previously untapped.

The importance here isn’t in the specific details, but in the fact that customers are given flexibility and choice in their rewards packages. By delivering a personalised approach that allows consumers to take charge of their rewards, online portals grant retailers the power to nurture lasting customer relationships.

Adapt and thrive

Consumer loyalty may be important for retailers, but customers are becoming more and more likely to shop around. Given the benefits that stable custom can provide to a business, brands need to address this disconnect now and find new ways of rewarding those customers who stand by them. Most retailers are already doing this, but not well enough.

To effectively reward loyalty in an ever-changing consumer landscape, retailers will need to take the initiative and recognise the growing significance of technology and personal engagement. By incorporating both of these factors into their updated loyalty schemes, more and more retailers will be able to attract new customers, whilst also keeping hold of their most loyal fans.

Chris Baldwin

Chris Baldwin


Chris Baldwin, Director of Consumer Programmes, Sodexo Benefits and Rewards Services