Barclaycard is to launch what it
calls ‘the broadest retail rewards scheme the UK has ever known’ to
over eight million cardholders on 17 March. Customers will receive
1 percent cashback on most transactions at more than 30,000
participating stores without having to do or pay anything to join.
Douglas Blakey
reports.
The UK’s largest credit card issuer, Barclaycard, has
released details of its keenly anticipated Freedom loyalty
programme, an innovative rewards scheme for its 8 million UK
cardholders which brings together merchant, acquirer and
issuer.
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The cards unit of Barclays has invited more
than 30,000 retailers to be partners in the scheme, with the aim of
offering a rewards coalition of unprecedented size and scope.
Cardholders will not need to register for the
programme, and will automatically earn what the bank calls “reward
money”, effectively cashback of 1 percent on most transactions.
To kick-start the loyalty initiative and
promote its online channel, Barclaycard will offer double rewards
of 2 percent for the first two months of the scheme to cardholders
who have signed up to use the issuer’s internet platform.
Cardholders will see the value earned from
participation in the Freedom programme, in cash, during each
purchase and consumers have the option to use the rewards money as
a cash discount or carry forward the balance for a future
purchase.
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By GlobalData“Customers told us they do not like the
complexity of vouchers or coupons and they do not like waiting for
rewards,” said Sarah Alspach, marketing director for Barclaycard
Freedom.
“The system is based on what customers want –
it is a simple scheme which happens at the point of sale,
expressing rewards in pounds and pence and not loyalty points.”
Simplicity also extends to cardholders not
relying on carrying a loyalty card as Freedom will be built into
the existing chip on the credit card, while retailers will also
avoid the need to install additional IT.
She told RBI: “Cardholders will earn
in two ways. In addition to the 1 percent reward, we are working
with our retail partners on special offers for cardholders of up to
20 percent, so that we can create multiple ways customers will see
the value of the Freedom programme.”
The fact that Freedom enables small and medium
retailers to participate gives the programme a breadth that
Barclaycard contends no loyalty programme to date in the UK can
match. But doubts remain if the UK’s biggest grocery retailers such
as Tesco and Sainsbury’s – given their support for their existing
loyalty programmes, Clubcard and Nectar respectively – will join up
(see VRL loyalty roundtable, RBI
624).
“It is fair to say we are doing what we can to
get the big players signed up – we will be making announcements
between now and the launch about who is on board,” she said.
The acquiring angle to the programme is also
expected to benefit Barclaycard, allowing it to promote the scheme
not only to its cardholder base but also to prospective merchants
in a highly-competitive acquiring market.
A faster, simplistic programme
While Barclaycard has promoted
rewards schemes in the past – such as its short-lived participation
in the Nectar platform – Alspach is adamant that the launch
of
Freedom is well-timed.
“We have learned many things from past
[rewards] programmes. Given the current economic background, a lot
of people are looking for extra value and many loyalty programmes
have reported an increase in redemption,” she said. “Of course it
is cheaper to keep an existing customer than gain a new one. We are
focused on giving something back to our cardholders.”
Between now and the launch, an integrated
marketing campaign will gather steam incorporating signage and
branding within participating stores, with £12 million ($19.2
million) earmarked to support retailer’s marketing efforts.
Above the line activities will incorporate
press, TV and online with www.barclaycard
freedom.co.uk already up and running. Existing cardholders are
scheduled to receive direct marketing to flag up the March
launch.
As for the IT platform supporting the loyalty
scheme, Alspach complimented technology partner Welcome Real-time’s
participation.
“They brought to the party the fact they have
put similar schemes in place in other countries and gave us the
ability to see that in operation. That gave us confidence in the
technology solution they are providing – it was a tremendous
benefit,” Alspach added.
Francois Dutray, CEO of the France-based
vendor told RBI: “Welcome Real-time was the only supplier
offering the ability to interact with cardholders in real time at
the point of sale, as well as providing added-value applications
such as behavioural analysis and real-time customer relationship
management capabilities.
“While the scale of the deployment sounds
complex, our technology is very straightforward to implement and is
already being used to run successful merchant-funded programmes for
banks and other organisations of all sizes across Europe, Asia and
the Americas.”
Early analyst comments about Freedom’s
prospects have been positive, although Alspach acknowledged some
critics had suggested the programme might encourage use of credit
instead of debit cards.
“That is not our intention – it is not about
getting people to spend more – it is about encouraging multiple
cardholders to get their Barclaycard out of their wallet first,”
she said.
As for the future, she did not rule out a
possible extension of the programme to Europe and beyond, nor is a
possible loyalty plan for the bank’s debit cardholders off the
radar.
“As you would expect, we will be talking about
such matters at Barclays’ group-wide level and as with any global
player, we will talk about where we might take it next… but for now
we are focused on making this a huge success in the UK,” she
said.
