The Loyalty Reboot: How Rewards Became Retail's Best Media
Updated: 6 days ago
Loyalty schemes have been reborn as data engines: programmes like Tesco Clubcard, with more than 20 million members, now power retail media networks — turning rewards into retailers' most valuable, highest-margin asset.
Loyalty's Second Life
The humble loyalty card has had a dramatic reinvention. What began as a way to give regular shoppers a discount has become the data foundation of a booming media business. Tesco, with more than 20 million Clubcard holders, has built an entire media platform for brands on that first-party data — and it is far from alone.
Marketing Minute's read: the discount was never really the point. The value is the data — knowing exactly who buys what, when and why — which turns a loyalty scheme into the targeting and measurement engine behind retail media.
From Cost Centre to Profit Engine
This reframing changes the economics. A loyalty programme used to be a cost — points and vouchers given away to drive repeat visits. Now that same programme generates high-margin advertising revenue, as brands pay to reach precisely-targeted shoppers using the retailer's data.
As Tesco's surging profits with 'Clubcard data in the driving seat' show, the loyalty scheme has become one of the most valuable assets a retailer owns — simultaneously driving repeat custom and funding a profitable media network.
Why It Matters for Brands
For brands, retailer loyalty data is both an opportunity and a dependency. It offers unmatched targeting and closed-loop measurement — the ability to see which ad drove which basket. But it also means handing budget and data leverage to the retailer, deepening reliance on their walled gardens.
The brands that use it well treat loyalty-powered retail media as a precise harvesting tool, while being clear-eyed that the retailer, not the brand, owns the customer relationship and the data underneath it.
The Lesson Every Business Can Borrow
You don't need Tesco's scale to apply the principle. The insight is that a loyalty programme's real value is the first-party customer relationship and data it creates — an asset no algorithm change can take away. Any business can build direct, permissioned relationships with its best customers.
A simple framework: use loyalty to build owned, first-party data; turn that data into better targeting and relevance; and treat the customer relationship as the asset, with rewards as the means, not the end.
Quick FAQ
Why are loyalty schemes so valuable now?
Because of the first-party data they generate — knowing who buys what and when — which powers retail media targeting and measurement, not just repeat-visit discounts.
How big is Tesco Clubcard?
Tesco has more than 20 million Clubcard holders, and has built a media platform for brands on that data.
What's the catch for brands using loyalty data?
It offers excellent targeting and measurement, but deepens dependence on the retailer, who owns the customer relationship and the underlying data.
The loyalty card was never really about the discount — it was always about the data. Programmes like Clubcard have turned rewards into retailers' highest-margin asset and the engine of retail media. The lesson for any business: your real prize is the first-party customer relationship, and rewards are just the means to earn it. — Daniel Nikolla, Founder of Merx Marketing
A loyalty scheme's true value isn't the points you give away — it's the first-party customer data you build, an asset no algorithm change can take from you.
Does your business treat loyalty as a discount or as a data asset? We'd love to hear how you use it.
If you would like to know more about this topic, please contact us on danieln@merxmarketing.co.uk
Sources: Marketing Week, Statista, Euromonitor, Decision Marketing.
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Written by Daniel Nikolla, Founder of Merx Marketing Ltd and Marketing Minute
