New Research From the UK: The Significant Value of Promotions to Loyalty Programmes

Promotions are a much misunderstood and under-appreciated marketing discipline and they play a critical role within loyalty programmes. They have the power to attract new members, change member behaviour, engage and re-engage existing and lapsed members and even shift programme perception.

In the face of great change in Brits’ lifestyles, new research from YouGov and loyalty specialist partnerships and rewards agency Mando-Connect, shows Britons’ have a strong affinity for promotions. The new What The British Think Of Promotions report reveals that two thirds (66%) of the British population take part in promotions, with 80% of Brits believing they are a great way to reward customers and seven in ten (70%) thinking that all brands should offer them.

We were particularly interested to understand what role promotions can play for loyalty programmes and have identified 5 big insights from the report for loyalty programme marketers everywhere.

By: Charlie Hills

1) Loyalty Programme Members are even bigger fans of promotions than the average Brit

• 68% of loyalty programme members take part in promotions (vs 61% of non-members)

• 83% think promotions are a great way to reward customers (vs 74% of non-members)

• 74% think all brands should offer them (vs 65% of non-members)

This increased affinity makes sense, because what is a loyalty programme if not a long-term promotion? Promotions are defined in the report as “activities that create positive change by offering the target audience an incentive, usually over a fixed period of time”. Loyalty programmes are the same, just that that aren’t over a fixed period of time; they are a continuous investment by a brand in a long-term relationship with its customers.

Key Take-Out: Promotions will be very appealing to your loyalty programme members, and the majority will participate in them.

2) Future participation is looking very positive

• 71% of Brits who are members of loyalty programmes are likely to take part in promotion in the next 6 months (vs 50% of non members)

• When asked what impact the British government’s announcements about the easing of lockdown measures would have on their likelihood to participate in promotions, 50% of loyalty programme members didn’t know (vs 48% of non members). 34% think they are now more likely to participate in promotions (vs 23% of non members), and just 16% think they are less likely to participate in promotions (vs 29% of non members).

The future is looking bright for promotions in loyalty programmes; these highly engaged customers are open to promotions, keen to participate, and ripe for a good promotion.

Key Take-Out: Loyalty programme members have a high propensity to participate in promotions in the next 6 months. Consider what your marketing objectives are for the next 6 months; could a promotion help you achieve them?

3) There are 10 key types of promotional mechanics

We identified 10 types of promotion, prevalent in the UK market currently.

Chance to Win:

1. Prize Draw (take part for chance to win of a fixed number of prizes)
2. Instant Win (take part for a chance to win a prize)
3. Collect to Win (collect a number of tokens for a chance to win a prize)
4. Competitions (take part in a skill-based competition to win a prize)
5. Games (play a game for a chance to win)

Guaranteed Get:

1. Added Value Reward (including multi-buy, gift with purchase, free reward, free delivery)
2. Collect to Get (collect a number of tokens to claim the reward)
3. Money Off (discount or fixed amount)
4. Money Back (money or cash back)
5. Donation (money or support to others)

The UK is one of the most sophisticated promotional markets in the UK, with a long legacy of successful iconic promotions. The report called out 4 particularly interesting recent loyalty promotions, that cross 4 of the different types:

1) VeryMe Rewards from Vodafone — in February 2020, VeryMe offered its members a special promotion, themed to tie in with Leap Year, and the extra working day this brings, that is often unpaid. All members were invited to play for their chance to win ‘a day’s pay.’ This is a strong example of an Instant Win promotion (number 2), designed to engage existing programme members and attract new ones, linked to a strong lifestyle insight.

2) Lego VIP’s Limited Edition Barb from Stranger Things — in November 2020 an exclusive LEGO Stranger Things Barb minifigure was offered as a prize to VIP Members, in return for spending 50 points. It was the only way that LEGO fans could get hold of the character. This is an interesting example of Instant Win Promotion (number 2), adapted to integrate loyalty currency.

3) Amazon Prime’s Prime Day — a “special once-a-year savings event for Prime members.” In 2020 it took place on 13th to 14th October and it is estimated that Prime members saved over $1.4bn globally. This is a great example of a Money Off Promotion (number 8) done in a smart, brand appropriate way.

4) Shell Go+ Spin to Win — in January to March 2021, Shell GO+ offered its members a special multi-tiered promotion that cleverly combined instant and collect to win mechanics. Millions of prizes were up for grabs and everyone who played won. This is a fantastic example of a hybrid promotion, combining Instant Win (number 2), with Added Value (no 6) with Collect To Win (number 3), applied to a loyalty programme.

Key Take-Out: There are a broad range of different types of promotions available for consideration by loyalty marketers. The next generation of promotions combine these mechanics to develop hybrids that can be effective against a very broad range of marketing and loyalty objectives. Consider what types of promotion can help you meet your objectives.

4) Loyalty Programme members are motivated by savviness, rewards, and ease.

Brits are a nation of deal seekers: 64% utilise all sales, coupons, and deals when they shop; 71% do have favourite brands, but will switch if a different brand is on offer to buy that one instead.

So it’s no surprise that the top 2 promotional participation motivators for loyalty programme members are all about savviness: 31% of members participate because they are “getting something for nothing” and 30% do so because they “like to get a good deal.” After savviness, loyalty programme members are motivated by the rewards on offer (28%). Next comes ease and lack of effort: 22% of loyalty programme members participate because they “have nothing to lose” by doing so. Then it gets more positive: 20% find promotions exciting, 13% think they have a good chance of winning, and 8% just like the experience of taking part. Interestingly, only 3% “always feel lucky.”

Key Take-Out: Make sure your promotion offers great value, offers fantastic prizes or rewards and is easy to participate in. Make it exciting and ensure members have a great chance of winning.

5) Loyalty Programme members are more positively impacted by promotions than the average Brit

• Over three quarters (79%) are more likely to try and new brand that offers a promotion (vs 70% of non members)

• 74% will switch brands offering one (vs 68% of non members)

• Six in ten (60%) will shop more often with brands that offer promotions (vs 53% of non members)

• Almost half (49%) are more likely to recommend brands offering promotions (vs 51% of non members).

Loyalty programme members are more likely to engage, switch, increase their frequency of shopping and even recommend. Promotions are more effective when targeted at members of loyalty programmes rather than broad customer bases.

Key Take-Out: Promotions can have a significant positive impact on loyalty programme members, attracting new members, engaging existing ones, encouraging trial and switching behaviour, driving frequency and even driving recommendation.

Promotions are an essential part of any loyalty marketers’ toolkit. They are highly desired by loyalty programme members who are keen to participate in promotions and very positive towards them, more so than the average Brit and significantly more so than Brits who are not members of loyalty programmes. There a broad range of types of promotions and Brits are most motivated to participate in promotions by savviness, the appeal of the rewards, and ease/lack of effort. The positive impact of a promotion is particularly pronounced amongst loyalty members — they will even recommend brands more who offer promotions. Loyalty marketers should sit up, think about the value that promotions could make to their programme, and get cracking and offer some now — the time is right.

Charlie Hills is the Managing Director & Head of Strategy at Mando-Connect and a featured contributor to Wise Marketer. To download the full white paper please visit www.mando-connect.co.uk.

All figures unless otherwise stated are from YouGov PLC. Data sets: YouGov Profiles 7 March 2021 dataset (Total sample was 316,966 GB Adults aged 18+). YouGov RealTime Research. Total sample size was 2,403 adults. Fieldwork was undertaken between 10th - 11th March 2021. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).