Cashback schemes drive double-digit growth in UK loyalty programmes
Loyalty schemes in the UK are expected to record their fifth year of double-digit growth in 2024, continuing a strong trend of increasing uptake since 2019.
A major industry report from Research and Markets shows that UK loyalty programmes recorded compound growth of 11.7% per year between 2019 and 2023.[1]
When the analysis is completed for 2024, this year is also predicted to come in at double digits, with a forecast of 10.2% annual growth.
This will take the UK loyalty programmes market to an estimated value of just over $9 billion (£7 billion), which is expected to rise at 8.5% per year in 2024-28 to pass $12.5 billion (£9.8 billion).
According to the report, the UK loyalty schemes market “is characterised by rapid evolution, driven by technological advancements, changing consumer preferences, and regulatory shifts”.
It goes on to outline some of the key trends shaping UK loyalty programmes for 2025 and beyond.
2024 trends in UK loyalty programmes
With the loyalty landscape changing rapidly, retailers need to be aware of what patterns are emerging over the short and long term, in order to adapt loyalty schemes to suit shoppers’ habits.
5 of the main trends identified in the report from 2024 include:
- 1. Cashback: Some consumers prefer the instant gratification of loyalty-based discounts and cashback, rather than collecting points to use later
- 2. Diversity: In addition to cash discounts, loyalty apps and cards provide an increasingly diverse range of experiences and offers from partner businesses
- 3. Personalisation: Like many industries, the loyalty sector is using data analytics to provide a more personalised experience to users
- 4. Technology: Mobile loyalty apps and digital platforms are being integrated into more loyalty schemes, allowing users to track their balance in real time
- 5. Uptake: Adoption of loyalty cards and apps has accelerated in recent years in the UK, partly due to the higher cost of living
All of these trends, the report says, are part of “a shift towards more engaging and meaningful loyalty programmes that resonate with British consumers’ evolving expectations”.
UK supermarket loyalty schemes embrace cashback and personalisation
Cashback schemes and membership-based discounting are not new to the UK retail landscape, but recent years have seen them offered in new ways and to a greater extent by the main supermarkets.
Asda Rewards
Asda’s Rewards app promises “pounds, not points”. This includes a combination of single-use instant-redeem coupons, accumulated saver cashpots, bonus items and spin-to-win promotions.
The app was rolled out across all Asda stores in August 2022[2] and will reach its 2.5-year anniversary in early 2025.
Nectar
Nectar is owned by Sainsbury’s and offers a single loyalty scheme spanning businesses such as Argos, British Airways and Esso, in addition to the supermarket itself.
A recent revamp to the Nectar card and app made it easier to redeem points and added more personalised offerings to the scheme[3], along with Nectar Prices which offer an immediate discount on certain products.
Tesco Clubcard
Tesco Clubcard has been around since 1995, but recently the retailer has started to offer cheaper prices to cardholders (including app users) on a wide range of products at the point of purchase.
Prior to this, Clubcard operated as a conventional points-based loyalty programme, with cardholders able to redeem points for money-off coupons and partner promotions.
Why is cashback so effective?
It’s not hard to see why consumers appreciate cashback in loyalty programmes. With the cost of living rising rapidly in recent years, point-of-sale discounting has an immediate impact on shoppers’ disposable income.
A 2024 report from Mintel[4] found that 80% of consumers in the UK are now members of at least one loyalty or reward scheme, and that most people believe their membership saves them money.
“Usage and membership of schemes have naturally grown during the cost of living crisis,” Mintel said. “The value they offer shoppers has been reinforced by most leading schemes now adopting some form of membership pricing, tapping into the demand for more instant gratification in rewards from such schemes.”
This in turn encourages shoppers to return for future purchases. Mintel’s report noted that consumers’ expectation is that a loyalty scheme will help them to save money, while for retailers, the chief expectation is that it will increase shoppers’ frequency of visits.
However, with cashback now a common feature of many leading loyalty programmes, consumers have come to expect it as standard, and many are already looking for the next innovation in member rewards.
How to offer cashback and loyalty schemes
Loyalty and reward programmes are versatile. They’re suitable for B2C and B2B businesses alike. If you have customers, you could stand to benefit by rewarding their loyalty.
Points-based loyalty scheme
A conventional points-based loyalty scheme gives customers a points balance based on their purchases, which can later be redeemed for a discount, free gift or other reward.
MRM’s online dashboard ensures that customers see your loyalty scheme as modern and easy to manage, with 24/7 access to check their points balance and redeem their rewards.
Tiered loyalty programme
A tiered loyalty programme adds (for example) silver, gold or platinum status to the customer’s account, with more generous rewards for higher tiers.
This offers many benefits, directly encouraging customers to spend more to reach the upper tiers, while enabling you to offer more personalised rewards at each level.
Cashback promotions
Cashback promotions can be part of a loyalty scheme or offered as a standalone incentive. In the latter case, MRM can take care of validating cashback claims and issuing payments, with rapid turnaround even on campaigns with very high volume of transactions.
We have found cashback to be an excellent way to improve brand loyalty, and would be happy to discuss your options to offer this compelling incentive to your customers in 2025.
Get in touch
To speak to a member of our team about your loyalty programmes for the year ahead, contact MRM today. You can fill in our online message form or call us on 01858 410510.
[1] https://www.researchandmarkets.com/reports/5585257/united-kingdom-loyalty-programs-market
[2] https://corporate.asda.com/newsroom/2022/08/16/asda-confirms-shoppers-nationwide-can-now-access-its-loyalty-programme
[3] https://www.researchandmarkets.com/reports/5585257/united-kingdom-loyalty-programs-market
[4] https://store.mintel.com/report/uk-customer-loyalty-in-retailing-market-report