‘Jewel in the crown’: Brands on using loyalty as an ‘extra layer of differentiation’

When engaging with a brand in 2025, one of the first things you may encounter is that they have a loyalty scheme offering perks and prices you simply ‘can’t get elsewhere’.

Data from the Competition and Markets Authority last year found loyalty pricing, specifically in grocery, is becoming an even bigger part of the customer experience. Some 97% of shoppers are a member of a least one scheme.

The data showed the average saving on products with loyalty pricing ranged from 17% to 25% across the five supermarkets examined.

Although grocery is a sector perhaps more commonly associated with loyalty, the same principles apply for wider retail and energy – sectors where brands are aiming to stand out in a crowded market.

According to AJ Bell head of financial analysis, Danni Hewson, loyalty programmes have become a way for brands to “prove their value chops” at a time when customers are still struggling with the cost of living.

She explains modern loyalty programmes are seen as giving “that little bit extra” to customers, so much so shoppers may pay “over the odds” if they can get points to convert to other perks.

Loyalty schemes are “part and parcel of retail landscape now”, says Hewson, particularly as the data they provide to retailers is “worth their weight in gold”.

Once you feel like you’ve started on a journey, you don’t want to waste that progress. So, give people this illusionary start.

Richard Shotton, Astroten

One retailer making a prominent return to loyalty is Asos with the launch last month of Asos World, the brand’s first new loyalty scheme since its A-List programme closed in 2018.

Head of loyalty Macy Hong says the new iteration is based on customer testing and research on schemes inside and outside fashion. The goal was to ensure the scheme “resonated with the masses”, while also “delivering value” for customers and meeting business objectives.

Asos World offers early access to edits and collections, priority back-in-stock alerts, invites to exclusive events and early access to sales. Run through a tiered system, shoppers can move up to different levels once they’ve reach a specific annual spend.

Calling the back in stock notifications a “money can’t buy benefit”, Hong cites the example of one Asos shopper who sleeps with her phone beside her pillow to receive the alert.

She describes Asos World as an “extension of the overall Asos brand” and a way to push “the brand USP of being fashion-first”, while offering “an extra layer of storytelling and differentiation”.

On re-entering loyalty, the aim for Asos is to work towards “deepening engagement” and “brand connection” with loyal shoppers to become even “higher tenured and more valued by customers”. Customer feedback will frame how the programme evolves, the intention being to make the scheme more personalised.

Asos is measuring success through engagement and customer purchasing behaviour, alongside overall satisfaction with the brand.

Backed by science

Recent data from product development provider EPAM conducted with 2,300 British and Irish consumers, found 75% of respondents say discounts and rewards are the main motivation to join a programme, while 45% value different ways to earn points. Tesco Clubcard was the most actively used loyalty programme by 550 participants.

Marketing Week columnist, behavioural scientist and author of upcoming book ‘Hacking the Human Mind’, Astroten’s Richard Shotton says when brands are looking at loyalty schemes they should focus on consumer habits, citing Tesco Clubcard as an example.

“People are very influenced by immediate pleasure and pain,” says Shotton, referencing work by Professor Liam Delaney, head of the psychological and behavioural science department at LSE.

When applying this thinking to Tesco, this means customers value the instant price reductions they see as a Clubcard member on the shelves and the ability to use discounts immediately. However, this kind of loyalty-based pricing strategy may alienate non-members who feel the pricing is “unfair” to them, Shotton points out.

Brands looking to launch a loyalty scheme need to take into account how savvy consumers are, he says, which is where behavioural science comes in.

Brands are cottoning on that they can’t just do that one big television advert anymore and expect that is going to talk to their customer. They have to find a way to link all of those things together.

Danni Hewson, AJ Bell

Amazon Prime’s “sunk costs” scheme, for example, works effectively because consumers “go to a logical length” to feel their monthly membership fee hasn’t been wasted.

“Hypothetically, if there was a chance to get a book tomorrow for £8.99 on Amazon or a book tomorrow from WHSmith for £7.99, most people would still get the Amazon one because they’ve invested that money. They want to get the bang for their buck,” says Shotton.

He advises brands to consider variable rewards versus fixed offers, and rewards which make customers feel they are “progressing their journey” with the brand quicker. An example would be offering a stamp card at coffee shops with two stamps already filled in.

“Once you feel like you’ve started on a journey, you don’t want to waste that progress. So, give people this illusionary start,” explains Shotton.

Asos looks ‘beyond just shopping’ with loyalty launch

Ovo decided to launch its rewards programme Ovo Beyond last year after finding customers in the energy market didn’t feel “rewarded”. For director of brand and marketing, Alice Tendler, it was an opportunity to look at loyalty differently.

Ovo Beyond offers customers instant rewards and future savings, which recently included the option to earn EV miles over time, as well as the instant reward of two hours free energy.

Through customer research, the brand found its customer base wanted that instant reward, a valuable insight when tackling loyalty in the energy sector – which Tendler admits is a “low interest category in many ways”.

“It feels like a valuable something Ovo can do to give money back straight away to support customers. We had over 100,000 customers sign up for [two hours of free energy],” says Tendler. 

Success and evolution

She argues the loyalty landscape in 2025 is characterised by the fact customers have more choice than ever. As a result, earning trust is a key mission for Ovo, which comes with the “challenge of differentiation”.

“There are lots of schemes and they can seem quite similar. So, how do you stand out and how do you do something that’s truly different, and actually makes a mark?” asks Tendler.

“The danger is that we are just a bill that lands in your inbox or on your doorstep once a month and actually providing a platform where we can engage with people in a really positive way – and much more regularly outside of that contact – is quite unique.”

The hope is Ovo Energy will be able to start conversations around sustainability and greener living through the scheme.

There are lots of schemes and they can seem quite similar. So, how do you stand out and how do you do something that’s truly different, and actually makes a mark?

Alice Tendler, Ovo Energy

As of 4 August, the Ovo Beyond scheme had attracted 717,000 customer sign-ups – almost 20% of the customer base – banked 20 million free EV miles and 57,000 customers had opted into summer savings and benefits each week.

Although the “freebies” are a key benefit, Tendler argues it’s not the most important element of the scheme. She believes it’s up to marketers to understand the role their brand plays in a customer’s life and shape the benefits accordingly.

For Ovo, success is also measured through brand awareness, consideration and engagement, with the scheme offering an opportunity for the energy firm to discuss its proposition.

“Beyond is the jewel in the crown for us in terms of the propositions that we choose to talk about,” says Tendler.

“We continue to see Ovo Beyond as central to the way we talk to customers and also the way we talk to non-customers as well, and helping them see Ovo is the brand that rewards loyalty.” 

She argues loyalty has a place in the wider marketing strategy as a tool for “differentiation”, that allows for “spikes in engagement” from advertising to be backed up by conversation about the scheme.

Hewson agrees brands are becoming more aware of loyalty’s importance as part of a wider brand strategy.

“Brands are cottoning on that they can’t just do that one big television advert anymore and expect that is going to talk to their customer. They have to find a way to link all of those things together and that’s why loyalty cards play a great part, because the data helps inform that,” she explains.

Overall, she claims loyalty schemes are only going to become an “even more valuable tool” in the future, as data and targeted buying tactics progress. That said, brands need to cater to today’s “incredibly sophisticated” consumer, who knows when things are being introduced “to cover something else which is being taken away”, Hewson adds.