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Why retail reward cards are making a comeback
Shoppers are spending more cautiously, favouring brands that deliver clear value and demonstrate a strong focus on customer needs.
Shoppers are spending more cautiously, favouring brands that deliver clear value and demonstrate a strong focus on customer needs.
Consumers are facing sustained pressure on household spending, with rising costs across essentials forcing more deliberate purchasing decisions.
Rising costs across food, energy, and fuel have placed increasing strain on household budgets, changing how and where people choose to spend.
As a result, shoppers are prioritising affordability and value, often trading down or switching brands in search of better perceived returns on their spend.
In this environment, retailers are under pressure to retain customers without relying solely on price reductions. This is where reward-based loyalty is regaining relevance.
When lowering prices is not sustainable, retailers need alternative ways to create value. Reward-based loyalty programmes provide a structured way to retain customers and influence purchase decisions without eroding margin.
Reward structures give customers a reason to choose one brand over another. Whether through points, offers, or tailored incentives. The effectiveness of these schemes depends on how relevant and practical the rewards feel to the customer.
For brands struggling to retain customers, demonstrating genuine understanding of customer needs is critical.
Customers expect a fair value exchange, not just pricing, but meaningful rewards for their continued engagement.
Consumers are more likely to spend with brands they trust, particularly those that combine strong customer experience with clear and consistent value through loyalty initiatives.
Considering the overall maturity of customer-centricity and loyalty marketing, it is encouraging to see many brands taking steps to create formal approaches to engaging and rewarding their customers.
Loyalty programs and discounts are extremely popular marketing methods that reward shoppers for purchasing products from a particular store. Retailers are conjuring new initiatives to build their loyalty programs and inspire customers to return.
However, not all programmes are equally effective. The difference increasingly lies in how well they align with customer expectations around value, simplicity, and relevance.
With the help of evolving new technology, loyalty programs are far more intricate and rewarding for both consumer and retailer. Consumers desire choice in their loyalty programs rewards, something that has long been dictated by the brand itself.
However, with the collection of POS data, retailers are able to effectively target and market additional products/services to their customers. This provides consumers with rewards that are more aligned with their desires or needs.
Discounts remain a dominant mechanism within many loyalty strategies. With more than $15 billion in rebates being issued in an average year in the US alone, it’s evident that discounts are an integral part of the loyalty and marketing strategy for retailers.
Just as the consumer wants choice in rewards they receive, they also want to choose how to redeem their points and in what fashion they're paid out.
It’s also important to offer rewards to customers following a transaction. Some customers may want to spend with you, but in this economic climate, have far less disposable income. Try keeping customer groups engaged with your brand by rewarding them via interaction, say by offering points to those who write product reviews or share your social media.
Getting your rewards right should be the priority for retailers' loyalty programmes. Understand what your loyalists and prospective customers really want and then start delivering tailored rewards to each individual; personalisation is key within a customer loyalty scheme.
Customers crave and expect an authentic and personalised customer experience. They need to feel like a VIP across each POS or interactive experience.
Data-driven insights are crucial in order to understand which rewards appeal most to your high-value customers.
The resurgence of reward-based loyalty is not a return to traditional models. It reflects a shift in how consumers evaluate value.
Retailers should focus on:
- Designing loyalty around perceived value, not just cost
- Keeping reward structures simple and easy to understand
- Using partnerships to extend relevance beyond a single brand
- Turning customer data into actionable insight, not just collection
Without this, loyalty programmes risk becoming another short-term promotional tool rather than a long-term driver of engagement.
We are witnessing a resurgence of customer loyalty as brands recognise the value they deliver to customers and their enterprise (driven by changing economic conditions and consumer priorities).
As a new wave of programs step into the market, the formats we're used to seeing will start to change.
The loyalty market is poised for continued growth, as brands commitment for loyalty program expansion is centred on adding a plethora of new features such as gamification, value-based rewards, family household help, multi-brand offers and UX rewards.
The most popular approach in B2C and B2B loyalty will be using one program structure to drive traffic and revenue to multiple brands - what's been coined as an “umbrella” approach, where two or more companies join forces to build an end-to-end ecosystem allowing customers to earn and redeem across all the participating brands.
Employing strategic partnerships, or 'co-branding', to create a stronger loyalty offering has surfaced in the market over the post-pandemic years - such as Dicks Sporting Goods and Nike, and food retailer Morrison's and Amazon.
If you are rethinking how loyalty fits into your wider customer strategy, explore more of our insights on customer experience, loyalty, and retail transformation.
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