UK's loyalty operators face 220m breakage

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By: Wise Marketer Staff |

Posted on August 28, 2013

In the United Kingdom, despite consumers becoming far more aware of daily deals, bargains, rewards and discounts, shoppers are still missing out on millions of pounds worth of loyalty points and rewards, according to research from Plastic Card Services.

The company's annual 'Loyalty Pays' study found that a little less than 220 million worth of loyalty card points is going unredeemed every year, with a worrying 5% of card owners (representing some 2.24 million consumers) admitting that they never redeem their loyalty points when making a purchase.

This means that, despite three decades of the mainstream use of loyalty cards nationwide, and significant efforts among loyalty programme operators to drive both redemptions and increased member engagement, many consumers are still not reaping the benefits of the programmes they join.

However, the report did observe some signs of real improvement in this area, compared to previous years. While the country's loyalty operators face annual breakage of an estimated 220 million, that figure was much higher (351 million) one year earlier.

The study also found the overall number of store card users has risen by three percent in the last 12 months. Currently 90% of UK adults own at least one store card, while the average number in wallets and purses is four.

A typical shopper will use their loyalty cards eight times a month, and will save an average of 98.04 annually, down from 100.32 in 2012. But despite the drop, this still leads to an overall saving of 4.39 billion each year for smart shoppers.

"This report shows the massive savings made thanks to loyalty cards, but we are also able to highlight the fact that hundreds of millions of pounds are missed by consumers every year," warned Rob Nicholls, managing director for Plastic Card Services. "Loyalty cards have revolutionised how we shop but there is still a small but significant percentage of shoppers who do not use the cards they have. However it is also very interesting to note the big increase in the number of active loyalty cards; obviously more consumers are realising the real and every day benefits that come with owning one."

Two thirds of consumers told researchers they feel a greater sense of loyalty to the brands they own store cards for. Consumers typically gather 1,829 points before using them to make a purchase, but 25% cash them in when they earn 500 points or fewer.

The study also found that women tend to be the smarter shoppers in the family unit, as they are three times more likely than men to regularly use loyalty cards. The Boots Advantage card is the favourite store card for female customers, followed by Tesco's Clubcard and Sainsbury's Nectar card. For men the Tesco Clubcard was number one, just ahead of Nectar and the Advantage Card in third place. Men rated cash back as the most valuable reward, while women said they prefer discounts on products.

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