Loyalty Programs 101: How Brands Can use Loyalty to Win New Markets
By the M+C Saatchi Performance Insights team
In the first blog, available here, the M+C Saatchi Performance Insights team examined the importance of loyalty models for business growth. In this article, they examine how loyalty can play an important role in market expansion, how apps are vital to loyalty programs, and how to prevent customer churn.
Today, loyalty is less about rewarding past purchases and more about influencing the next decision. The most effective programs reduce switching by making the brand easier to choose through convenience, relevance, and everyday utility
Karan Kumar, Senior Strategy & Insights Exec, M+C Saatchi Performance
TLDR Summary:
- How loyalty schemes can help brands gain a foothold in new markets
- Why mobile and app campaigns are the ideal vehicle for loyalty programs
- Tactics to prevent customers switching
- Example: Rodd & Gunn’s Loyalty Day
How can loyalty schemes help gain a foothold in new markets?
Loyalty schemes can play an important role in helping brands enter new markets and develop a localized user base quickly by making the value proposition feel local, immediate, and harder to replace while also letting brands borrow reach and trust through partnerships. How?
1) Growing adoption by offering a clear, “day-one” reason to choose the brand.
Deloitte’s cross-market loyalty research shows that what convinces customers to opt in to a loyalty program can differ sharply by country (so tailoring the loyalty value exchange is critical). For example, in India, around half of consumers would pay a fee for loyalty programs that offer enhanced services; in Brazil, 80% say nonfinancial benefits (experiences, upgraded services, expedited delivery) are important; and in the US, consumers are 9% more likely to pay for fee-based loyalty in 2024 vs 2022.
Loyalty can be the “local fit” layer that makes an unfamiliar brand feel worth trying. However, to be truly effective, having clear local knowledge on the ground is essential. The overall loyaly scheme can be established at a Global level, but having local nuance and variations in place is essential.
2) The power of distribution and partners
In new markets, partnerships make loyalty available, and reduce the friction of building engagement from scratch. Deloitte finds nearly three-quarters of consumers expect brands to offer benefits beyond their own products, which supports coalition and partner-led loyalty as a market-entry tactic. Partnering with high-frequency local brands (for example, payment, mobility, grocery, delivery, telco partners) can create more “earn and redeem” moments quickly, boosting perceived value and early retention.
For example, the Delta SkyMiles and Starbucks Rewards partnership lets members link accounts and earn 1 mile per $1 spent at Starbucks, plus double Stars on Delta travel days, effectively connecting a low-frequency category (air travel) to a high-frequency daily habit (coffee) to increase program touchpoints. A similar partnership-led utility play is British Airways Avios and Nectar, extended to 2028, which enables customers to convert points across ecosystems (for instance, 400 Nectar points to 250 Avios, and Avios back into Nectar for everyday spend), increasing flexibility and making rewards feel more valuable across both daily and aspirational purchases.
3) Localizing value across regions
Boston Consulting Group’s multi-country survey shows the US is more driven by tangible value, with 85% ranking points/cash back/promotions among top benefits vs 75% in Europe and 55% in Asia-Pacific.
In some markets, discount/value mechanics may be the fastest foothold; in others, partnerships, exclusive services, or ecosystem convenience may matter more. Loyalty helps win new markets by acting as a localized value contract (tailored benefits), a distribution strategy (partner ecosystems), and a cultural fit mechanism (different regions prioritize different types of loyalty value).
Why mobile and app campaigns are the ideal vehicle for loyalty programs
Mobile apps are effective for loyalty programs because they allow brands to deliver rewards, communication, and personalization continuously and in real time, making loyalty part of everyday behavior rather than an occasional promotion.
1) Apps increase engagement through always-on interaction.
Mobile enables continuous interaction through notifications, point tracking, reminders, and gamified features. Deloitte’s 2024 Consumer Loyalty Survey shows that around three-quarters of Gen Z and Millennials consider a high-quality digital experience essential in loyalty programs, and BCG (2024) finds that younger consumers are particularly drawn to loyalty programs with digital and mobile engagement and personalized benefits.
2) Apps enable real-time personalization using first-party data.
Loyalty programs generate customer behavior data such as purchase history, preferences, and frequency. McKinsey (2024) reports that personalization informed by customer data can deliver 2–4 percentage-point improvements in gross margin dollars compared with mass offers. Mobile apps are the most practical channel to deliver these personalized offers instantly.
3) Apps make redemption immediate, which improves perceived value.
Being able to view rewards, redeem points, or receive offers at checkout reduces friction in earning and using benefits. Easier redemption strengthens participation and repeat behavior, while delayed or complicated redemption contributes to disengagement.
4) Apps support multi-brand ecosystems and partner rewards.
Deloitte (2024) finds nearly three-quarters of consumers expect benefits beyond a brand’s own products. Mobile apps allow brands to integrate partners such as payments, travel, or delivery so customers can earn and redeem rewards across multiple services within a single interface.
Reducing Switching: Tactics That Keep New Customers Loyal
Switching pressure is increasing, so loyalty programs need to reduce friction and raise differentiation. BCG (2024) finds consumers are 5% to 10% more inclined to consider switching to another loyalty program in the same category than two years ago, and 35%+ plan to cancel some memberships in the next year (rising to **50%+ among ages 18–34). Deloitte also reports younger generations are more than twice as likely to switch to a competitor’s loyalty program.
Tactics that reduce switching:
Personalize rewards and timing so the program feels uniquely relevant, raising the perceived cost of switching.
Make value easy to access and redeem so customers experience benefits quickly and consistently.
Differentiate beyond points with benefits that are harder to copy (exclusive access, experiences, and high-fit partner perks).
Use tiering and progress so switching feels like giving up earned status and momentum.
Win service recovery moments because service experiences strongly influence retention. Gartner research cited by Epsilon reports an 82% probability of repurchase/renewal when customers feel they received value in a service interaction, even if given the option to switch.
Contact us to find out how we help clients achieve long-term growth through loyalty programs.
Sources: bcg.com, delloite.com, epsilon.com bcg.com, deloitte.com,bcg.com, mckinsey.com, businesswire.com, businesstraveller
