Winning new customers is hard. Keeping them? Even harder. That’s where customer loyalty schemes come in.
For UK businesses looking to stay competitive in a noisy, price-driven world, a well-designed loyalty program can do more than just improve repeat purchases. It can turn casual buyers into lifelong advocates—delivering measurable gains in customer lifetime value, deeper engagement, and stronger brand differentiation.
In this guide, we’ll walk through how customer loyalty schemes work, the business case behind them, the different types to consider, and how to design one that actually delivers on its promise. We’ll also show how Edenred Payment Solutions can support your loyalty strategy—especially when it comes to flexible, branded reward mechanisms like flexible physical & digital gift cards.
What are customer loyalty schemes?
At their core, customer loyalty schemes are structured programs designed to reward repeat customers for their continued business. They encourage behaviour that benefits the company—whether that’s spending more, visiting more often, or referring friends.
You’ll have seen them in many forms: supermarket clubcards, hotel points, coffee shop stamps, even airline miles. But increasingly, businesses are using smarter, embedded tools to create personalised, branded loyalty experiences that go beyond points and discounts.
The goal isn’t just repeat transactions. It’s building a relationship—one where the customer feels recognised, rewarded, and emotionally invested in your brand.
Why loyalty programs matter for your business
Let’s be blunt. Acquiring new customers is expensive. In fact, it can cost five to seven times more to attract a new customer than to retain an existing one.
Here’s what a well-executed loyalty scheme can do for you:
- Improve customer retention – Encouraging customers to stay longer and spend more.
- Increase sales and order value – Incentivising bigger baskets or more frequent visits.
- Build brand loyalty – Creating emotional ties that reduce switching.
- Generate rich behavioural data – Helping you personalise future offers.
- Encourage advocacy – Turning customers into brand ambassadors.
One increasingly popular tactic? Offering branded gift cards as rewards or incentives. With solutions from Edenred Payment Solutions, you can issue your own gift cards—physical or digital—directly linked to spend thresholds, seasonal promotions, or customer tiers.
Types of loyalty programs (and how they work)
Not all loyalty schemes are created equal. Some work brilliantly in retail. Others are better for hospitality, e-commerce, or services. Let’s look at the most common types:
1. Points-based programs
Customers earn points per transaction, redeemable for products, discounts, or perks. Simple, familiar, and scalable.
Example: Boots Advantage Card gives points on every shop, with easy redemption in-store or online.
2. Tiered schemes
Users progress through levels (e.g. Bronze to Gold) based on behaviour. Higher tiers unlock better rewards—creating a sense of aspiration.
3. Paid loyalty programs
Customers pay to join—usually in exchange for premium benefits like faster delivery, exclusive access, or higher rewards.
Example: Pret’s subscription offers daily drinks as part of a fixed monthly fee—building habitual engagement.
4. Cashback and credit rewards
Instead of collecting points, customers get a percentage of spend back—either as cash or store credit.
5. Coalition schemes
Customers collect and spend points across partner brands. Useful for expanding perceived value and reach.
6. Gift card–based loyalty rewards
A growing trend is using gift cards—either for your own brand or as multi-retailer options—as loyalty incentives. These are immediate, familiar, and flexible.
Edenred Payment Solutions offers tailored gift card services that can power this approach. You can create digital or physical gift cards that match your brand, load them with specific reward values, and distribute them securely at scale. It’s a seamless way to incentivise spending and retain control over reward spend.
What makes a loyalty scheme effective?
It’s easy to bolt on a loyalty feature. But making it meaningful? That takes care and design. Here are five critical elements to get right:
1. Simplicity and clarity
If customers don’t know how it works, they won’t engage. The rules for earning and redeeming must be obvious, and the rewards easy to access.
2. Genuine value
A £1 voucher after 10 purchases of £30 won’t cut it. Think: “Is this worth it?” If the answer isn’t an obvious yes, rethink the reward.
3. Omnichannel experience
Whether your customer shops online or in-store, the scheme should follow them. That means integrated POS, CRM, app, and payments.
4. Personalisation
Data allows you to offer rewards or products tailored to preferences. It could be a targeted birthday gift card or spend-based offer on a favourite product.
5. Frictionless delivery
Modern schemes integrate directly into payment and digital systems. In sophisticated user-friendly programs, gift card rewards can be delivered in real-time via SMS, email or in-app—no postage delays, no admin headaches.
Common challenges (and how to avoid them)
Even the best ideas can fall short. These are the usual suspects:
- Lack of engagement – Often due to weak value or poor communication.
- Unmanageable cost – Overly generous schemes can eat into margins if not carefully controlled.
- Disjointed systems – Loyalty data split between tills, CRMs and apps creates poor UX and bad reporting.
- Fraud and misuse – Without proper controls, loyalty points or rewards can be gamed.
One way to tackle all of the above? Use prepaid gift cards as your reward mechanism. With Edenred Payment Solutions, you can set expiry dates, cap usage, and monitor redemptions—helping you strike the right balance between generosity and control.
Where embedded finance meets customer loyalty
Today’s customers don’t want to jump through hoops. They want instant, intuitive recognition. That’s why embedded finance is changing how loyalty is delivered.
With Edenred Payment Solutions, you can:
- Integrate loyalty rewards directly into the customer’s payment journey
- Issue branded prepaid gift cards, instantly redeemable and cost-controlled
- Deliver rewards that work across digital and physical channels
- Use transaction data to drive automated, personalised incentives
- Offer flexible spend options while keeping funds within your ecosystem
It’s loyalty—streamlined, measurable, and fully brand-aligned.
Loyalty is more than just rewards
At its heart, a great loyalty scheme isn’t about the free stuff. It’s about showing your customers that they matter. That they’re seen. That they’re worth investing in.
If you can do that—consistently and meaningfully—you’ll build not just retention, but real, long-term brand advocacy.
Edenred Payment Solutions offers the tools to make that happen—from branded gift cards to embedded loyalty infrastructure. Whether you’re launching from scratch or levelling up an existing program, now’s the time to turn loyalty into a real competitive edge.
Level up your gift card solution
If you're ready to launch or optimise your gift card program, explore how Edenred Payment Solutions can help you get there faster and with full confidence.
