A view from Staff

Opinion: The Marketing Society Forum - Could digital technology breathe new life into loyalty schemes?

The marketing director of Nectar has raised the possibility that it could use mobile technology to send cardholders targeted offers based on their location within retail partners' premises.


Unfortunately, the answer to this question is not a clear-cut 'yes' just yet.

The proliferation of loyalty schemes over the past decade means brands have had to work much harder to capture the interest of consumers. Offline schemes have all moved online - the ability to personalise with little cost has created new levels of relevance and greater frequency of communication.

Digital has also brought greater interaction and instant gratification - both powerful levers in loyalty schemes.

However, this has come at a cost: irritation at intrusive emails; having to remember multiple passwords and user-names; and lack of human support has led many people to let those loyalty schemes with which they had a 'passive' relationship fall by the wayside.

Less has become more. Digital has enabled such schemes to have a deeper, richer engagement with consumers, but only where the consumer desires it.

So, for some loyalty schemes, digital has sounded the death knell; others have emerged stronger than ever, and for a few it's the only reason they exist.


As in other areas of life, digital channels are making a big impact on loyalty programmes. Nectar has 1m online users, Tesco's barcodes turn phones into virtual Clubcards and British Airways' Executive Club membership is managed online.

For 'new life', rather than channel add-ons to existing capabilities, it's digital's unique capability to engage and connect customers that's key, creating fresh ways to cement the loyalty bond.

This has been highly effective for some schemes. Take Boots' offering WebMD online medical advice to 15m Advantage Card members, or Best Buy creating exclusive online content.

Digital should be either useful or fun. Nectar has 2800 followers on Twitter and 2200 on Facebook; numbers for its primary earn/spend partner Sainsbury's are more impressive: 7100 and 48,000.

Usefulness and fun play their part in the disparity. Those getting it right are using digital for its strengths in deploying content that genuinely inspires or informs, not simply adding channel noise.


Digital is merely one way in which customers might engage with a brand, as opposed to opening mail, walking into a store or picking up the phone. As such, it creates no value for customers.

Creating incremental value for customers via a loyalty programme is the loyalty marketer's task, and here digital does have a large role to play.

Digital content, for example an app, a news snippet or a game, once created can be distributed millions of times for little cost, so it has a high perceived value but low cost. Similarly, use of social networks creates community value, which can increase perceived value from a brand relationship.

Strategy is key here, though, and is a priority for any successful scheme: work out what you want to achieve and how you are going to do it through loyalty or another type of marketing. Tactics can then be put in place, focusing on value creation for customers.

From Sun Tzu's The Art of War we learn that 'strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.'


This is Nectar recognising that there is a demographic who don't walk around with wallets full of plastic cards. It adds massive value and it will mean many more people sign up to Nectar because it makes the scheme more accessible to a digitally savvy socio-cultural group.

Digital has found it a new audience that otherwise would not have joined its loyalty scheme. Smartphones with location-based search, GPS technology and image recognition mean the world is becoming the internet. All retailers need to learn that very quickly.

Loyalty cards saved people money; price-comparison websites were the next generation of that. The ability to quickly compare price is therefore what makes digital natives retailer-agnostic, because they will go with the best price.

Yet cost saving isn't the only factor - the benefits are also circumstanceand time-related. People will go with what their device tells them they are geographically closest to.


The Marketing Society is the most influential network of senior marketers dedicated to inspiring bolder marketing leadership.