Will Barclaycard’s rewards scheme truly engage?

Barclaycard’s retail rewards scheme is a “game changing” proposition that will shake up the loyalty market but the credit card brand faces a number of challenges engaging both consumers and retailers, according to loyalty experts.


“Freedom”, which Barclaycard claims will be the UK’s “broadest” rewards scheme, was launched on Monday (25 January). The credit card company has invited 30,000 retailers – small, medium and large-sized – to take part and aims to ensure that there will be at least 200 participating retailers within five miles of where a cardholder lives.

Eight million Barclaycard customers will earn “reward money”, about 1% of the transaction, when they use their card at participating retailers and can choose to redeem some or all of their reward money towards that transaction or at a later date.

Barclaycard hailed the scheme as “groundbreaking” and a boost to all retailers, large and small “at a time of difficult trading conditions”.

Mark Sage, loyalty specialist at Carlson Marketing, says the inclusion of small and medium merchants is a potentially “game changing proposition for credit card loyalty schemes”.

“This provides the customer with much greater choice in terms of earning opportunities and also allows them to shop locally,” he says.

Barclaycard has positioned itself as an innovator in payment technology. It is currently testing a mobile contactless payment initiative and recently launched an account management system, called mybarclaycard.

Sarah Alspach, marketing director of the brand, says Freedom represents the next stage in the journey.

“We have an ongoing strategy to simplify and add innovation”, she says, adding “there is so much we can do to innovate in the loyalty space”.

Jon Ingall, partner at Archibald Ingall Stretton, says such innovation will serve Barclaycard well by simplifying the loyalty process for consumers.

“It creates a simple but effective way to encourage customers to use their Barclaycard instead of one of the other credit cards in their wallet, adding “it requires very little effort” by the customer.

“No second cards to carry around, no looking online to see what they’ve got or can get and a simple choice get a discount now or save for the future,” he says.

However, others have questioned whether the lack of defined rewards and instant rewards could prove to be its Achilles Heel as well as its biggest selling point as it will mean less engagement with the Barclaycard brand.

Observers suggest “pounds and pence” instant rewards are less engaging and flexible than points-based supermarket loyalty programmes that send paper vouchers to consumers.

Guy Keeling, managing director of Maximiles UK, says Barclaycard is “missing a trick” by standardising the amount of return.

“The great thing about points is that they have no fixed value and, as such, can be altered to make specific offers, affording retailers a greater flexibility in terms of offers and promotions,” he says.

The credit card space is becoming increasingly competitive with supermarkets and other non-bank brands entering the market, forcing established financial service brands to up their game.

Scott Andrick, director and financial services expert at Chordiant, says Barclays’ move is a response to the competition.

“The Barclays loyalty card is likely to increase the bank’s customer base, however it remains to be seen how Barclays will use the card to increase customer retention.”


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