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Across the Ocean Blue

Updated: Jul 1, 2020

The differences between European and American loyalty programs and what drives the success of each

Loyalty programs have been a staple of North American customer strategies for more than two decades, having successfully penetrated a variety of sectors, including airlines, hotels, banking and retail. European programs, on the other hand, have had a slow start and, in some areas, still lag behind North America in participation and innovation. Many European programs are a copy of American programs applied globally. Some, however, are following an altogether different philosophy about relationship marketing, delivering brand loyalty and claiming true competitive differentiation. Here, we’ll compare and contrast the two strategies.

Understanding the history European programs took root in the early to mid-1990s (roughly 10-15 years after American loyalty programs) with the launch of frequent flyer programs such as Iberia Plus, Swissair’s Qualiflyer and British Airways Executive Club. Programs from hotels such as Accor and Sol Meliá followed shortly thereafter. This pattern has continued and today, there is a tre-mendous push in the European region to implement loyalty programs in sectors other than travel, for example SNCF’s Grand Voyageur rail program; Germany’s retail Payback program; Belgium’s Carte Plus by retailer Delhaize, Italian retailer Esselunga with Fidaty, UK’s Nectar and Tesco Clubcard, as well as European versions of Air Miles in the UK, Netherlands and Spain. Arguably, European programs (particularly in the UK, Germany and France) tend to have a strong focus on the customer proposition whilst US programs are ahead in terms of number of members.

However for traditional loyalty programs both regions are approaching maturity and saturation. The average affluent North American consumer belongs to seven programs; the European consumer belongs to four. Eighty percent of European consumers say they have at least one loyalty card or belong to a loyalty program; for American consumers, that number rises to three. Both regions also report significantly more memberships than population. US loyalty programs collectively have more than 1.8 billion members, European programs, 900 million. As well as being less promiscuous than their US counterparts, the European consumer also claims to be less influenced by loyalty programs. 80 percent of North American respondents said they always show their loyalty card when shopping, com-pared to 50-60 percent in Europe. However, significant numbers of additional respondents accross both regions reported using their card frequently, which shows an overall engagement level not to ignore in either market.

Different appraoches to communication

Results from ICLP studies on cross industry B2C programs from Europe and North America show that one of the most apparent differences between programs in each region is communication with members. European loyalty programs are typically marketed through below-the-line (BTL) methods and are seen as ‘relation-ship building’ exercises to develop long-term customer profitability. Because of this they tend to have a strong focus on personal and targeted communications.

 • see full report in the Loyalty Management Magazine

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