Reconceptualising the strategic role of loyalty schemes

Abstract: Purpose – The purpose of this paper is to report a case study analysis of the major retail loyalty scheme, Tesco Clubcard, with a view to exploring how loyalty schemes can be used to add brand value. Design/methodology/approach – The paper provides a literature review that establishes the limitations of the present research on loyalty schemes and thereby establishes the rationale for this article. The methodology section explains the case study approach adopted and the reasons for focussing on the specific case, Tesco Clubcard. A content analysis of a recent book which “tells the story” of the development of Tesco Clubcard is used to surface and explore a number of key characteristics of the scheme and its development. Findings – Key characteristics of Tesco Clubcard are summarised under the following headings: commitment and championing, being integral to business processes, innovation and evolution, multi-dimensional reward design, alignment with brand strategy and values, customer contract and value, and customer focus in information systems design and use. Research limitations/implications – Further research is needed to explore the complexities associated with designing loyalty schemes that work for different organizations with a range of different types of interactions with their customers. Originality/value – The article suggests that current research on loyalty schemes is too preoccupied with the relationship between loyalty and loyalty schemes and the design of rewards. Through a case study analysis of the reward scheme of a major UK retailer the article demonstrates the way in which loyalty schemes can be used to enhance and tailor an organisation's offering, and thereby enhance customer value and loyalty