The Point of Points

Chapter 1

Ms Chan: Hello everyone, and welcome back to Loyalty Unlocked! Before we get started, a quick note: this podcast is a little different. Both the script and the voices you’re hearing are created with AI. That doesn’t mean it’s robotic — in fact, it means we can experiment, play, and bring these loyalty stories to life in new ways. Think of it as loyalty storytelling, but supercharged by technology.

Mark Sage: Exactly. And today we’re digging into a fascinating case — Asda Rewards. A loyalty programme that shot out of the gates like a rocket, and then… fizzled out just as quickly.

Ms Chan: You mean the whole “Pounds not Points” thing? I remember the buzz when that launched. It was exciting because for ages they'd just refused to do loyalty at all, right? And suddenly—boom, six million users in a year, everyone’s talking about “cash in your pocket”, not confusing points. It sounded so simple and almost refreshing?

Mark Sage: Yeah, absolutely. They’d always been fiercely about price and very upfront about not doing loyalty - and then suddenly they go, “Right, we’ll do loyalty—but in our own way.” Not points. Just cash.

Mark Sage: It was a nice fit with their brand and gave them a way to stand out in the market - especially when everyone’s fighting over price at the supermarket.

Ms Chan: Right, the PR was all over it. But… didn’t it unravel—kind of fast? I remember seeing headlines praising this new model and then suddenly hearing about big changes, a new guy at the top, and people complaining the scheme was, um, basically dead?

Mark Sage: Thats true. By 2024, things started shifting. Marketing Week was still praising the scheme — linking it to a 5.4% sales uplift — but then leadership changed. Allan Leighton came back as Executive Chairman and basically said: “We don’t believe in two-tier pricing. Everyone should get the same price.”, and—just like that—the loyalty engine sputters. There was this push for democratisation: if you shop at Asda, you get the best price. No more special deals for loyalty club members. But here’s the thing—by doing that, they basically turned away from loyalty marketing altogether. Price becomes pretty much the only differentiator again... and price can be copied.

Ms Chan: Ah. So they effectively killed the whole “loyalty gives you better value” proposition.

Mark Sage: Yes. The mood music changed. By 2025, The Grocer was reporting customers calling it “all but dead”. ASDA kept the scheme running, but basically took all of the real value out of it - and customers noticed.

Ms Chan: Yeah, I mean, if you worked so hard to get everyone signed up, and suddenly there’s just… nothing special about being a member anymore, why bother engaging? It’s like the magic evaporates.

Mark Sage: Exactly that. And here’s what’s interesting: even with all that initial momentum—six million users—once they took away the sense of value and participation, the programme fizzled. So the lesson here? Simplicity's great, but you can’t ignore that “base value” thing.

Ms Chan: So let me challenge you, Mark. If Asda’s position is: “We win on price, not points,” isn’t that valid? Why spend on loyalty if customers only care about a 10% price gap?

Mark Sage: It’s valid in theory. Asda argues that a 10–15% price gap is the reason customers stay. But here’s the problem: you can’t always maintain that gap. And when you can’t, loyalty gives you a buffer.

Ms Chan: So loyalty is like an insurance policy.

Mark Sage: Not so much insurance, it's more another lever. Loyalty works alongside price to manage overall value perception - but it works differently, giving a competitive advantage.

Mark Sage: However, it really only works if people buy into the programme. When they don’t feel the programme is always working for them, not just when there’s a big promo, they switch off. As ASDA found out, it’s a slippery slope from PR darling to people complaining online, which, let’s face it, never ends well for a retailer.

Ms Chan: Yeah, and kind of a cautionary tale for anyone who thinks they can just ride the hype. Loyalty has to actually work for real people, not just the marketing department. Maybe shift over to what some of the other supermarkets did instead?

The Loyalty Crossroads: Price vs Programme

Mark Sage: Absolutely, let’s talk Tesco, because—total opposite direction. Instead of retreating when it got tough, they actually doubled down on Clubcard. Sure, they trimmed back on things like those massive four-times Clubcard Deals. It got some headlines, people grumbled. But they made the programme the core way to get value, with member pricing on thousands of products. They introduced challenges to stretch spend based on personal targets. Penetration went up, and so did their market share—what was it, 28.5% last year? Their highest in about a decade.

Ms Chan: Yeah, and what a contrast with Asda, right? Because instead Asda chose to sideline loyalty—sort of just making price their whole strategy.

Mark Sage: Thats what's slightly ironic. Both supermarkets leaned into price as a primary driver of growth. But with Tesco they did it through a membership lens and with ASDA they decided to do it without. Yes this created two-tier pricing and I guess ideologically, this didn't sit well with ASDA as an EDLP retailer - but if your aim is to keep customers and keep them coming back, I think Tesco is on the winning side.

Ms Chan: I guess you can’t really do halfway. It’s either you strip loyalty away completely or go all in and turn it into this defensive moat.

Mark Sage: Yeah, and that defensive thing is really important. Loyalty isn’t always about growth, sometimes it’s about holding your ground. Tesco didn’t try to chase Aldi all the way down on price—they used Clubcard to lock in their base and keep those valuable shoppers close.

Mark Sage: Then, if you get the value exchange just right, loyalty does both—offense and defense. However, if you try to compromise, like run a weak programme or tinker with base value…well, it's almost always the worst of both worlds.

Ms Chan: It’s kind of funny, because I think people assume there is this perfect “middle ground.” But it rarely works that way. Either you decide loyalty is your lever, or it isn't.

Mark Sage: Thats true - and from a cost perspective, that's a strategic decision. Whether you’re funding 10% on key products or handing out 1% base points, either way, it's a big line on the P&L. The main thing is you want full value for it—you don’t want to be sitting in the middle, making no one happy.

Why Base Value Matters

Ms Chan: Now, this is where you get nerdy, and I love it. Talk to me about “base value.” — I know you feel strongly about it, Mark. What makes base points so important, especially when you’re trying to get real engagement, not just surface-level signup?

Mark Sage: The real magic of base points is in the consistency and simplicity. “Every basket counts,” as you said earlier. When you structure programmes around a base earn—like, one point per one dollar—it’s crystal clear. Nobody has to do mental gymnastics to figure out what they’re getting. It’s also really easy to add things on top. Double, triple points, flash bonuses—all on top of that foundation. Makes for much easier marketing, and the trust is there because the rule always applies.

Ms Chan: Right, and I love the comment about “reducing cognitive load” - that's the psychology bit right there! If people don’t have to spend time figuring out whether today is even worth participating, they’re just… in.

Mark Sage: Yep - too much choice just overwhelms people. There’s that classic jam study—the shoppers given too many choices actually bought less. Same thing with Alibaba’s eCommerce research. Too many offers or choices, engagement dropped off.

Ms Chan: Wasn’t there a detail about how even moving from two to three choices made people less likely to buy?

Mark Sage: That’s spot on. It’s behavioural science in action. As soon as customers feel they’ve got to hunt for value or that recognition is elusive, participation tanks. If your entire loyalty proposition is based around selected products, targeted offers, or complicated mechanics, it can unravel.

Ms Chan: Like with Woolies in Australia and their failed Orange Tickets?

Mark Sage: Yes - that was a case in point! It even made the national newspaper headlines at the time. The theory of it sounded great: more on selected products, most funded by suppliers. It was a case of the retailer having their cake and eating it - getting the benefit of loyalty behaviour and having someone else pay for it.

Ms Chan: Except they didn't pay for it - isn't it the case that suppliers didn't buy into it?

Mark Sage: Very true! Suppliers actually said it didn't make sense financially and so wouldn't fund it. This meant a lack of in-store offers and basket coverage, so people couldn't even work out how to earn - they couldn't find products, suppliers wouldn't fund them - so they gave up and, in less than a year, Woolworths had to pivot back to base points.

Ms Chan: Not every retailer totally got it wrong though—Carrefour’s model, with their “cashback” thing, kind of works, right? Even though, underneath, it’s not really that different from points?

Mark Sage: Yeah, Carrefour’s an interesting one. No base earn, but a range of 10% bonuses on key categories, very heavy on own-brand and fresh. And the “cagnotte”—the cashback—feels like actual money, so customers and suppliers get behind it. It’s smart.

Mark Sage: But crucially, if you look at the penetration, those models typically only reach as far as their natural market share. Whereas Tesco—with its base points model—penetrates beyond. The maths tells the story: If you want to grow, you want your loyalty participation to outpace your core sales share. That usually only happens with a base earn foundation.

Ms Chan: Okay, let’s bring the data back in. Because I know you love the numbers.

Mark Sage: This is where comparisons matter. Carrefour’s “Le Club” has 14 million members in France. But France has 67 million people. That’s 21% penetration, which basically mirrors Carrefour’s market share of 20%. They haven’t really stretched beyond their natural base.

Ms Chan: So loyalty didn’t expand their reach.

Mark Sage: Exactly. Tesco, by contrast, has 23 million households on Clubcard in a similar-sized UK population. That’s 34% penetration against 28.5% share — an over-index of 20%. Nectar goes further: 18 million members in the UK, or 27% penetration, against Sainsbury’s 15–16% share. That’s a 70–80% over-index.

Ms Chan: So coalition loyalty, like Nectar, massively stretches reach. Tesco’s base points model stretches too. But Carrefour’s cashback? It just kinda holds even.

Mark Sage: Yes - it's kinda running flat and not giving extra advantage. Now compare that with yuu Rewards. Hong Kong has 7.5 million people. yuu has 5 million members. That’s 67% penetration. Wellcome’s grocery share is around 31%, so yuu is over-indexing on grocery by 110%.

Ms Chan: Wow. That’s huge. More than doubling the natural footprint.

Mark Sage: Yes. And it comes back to participation. Base points made every basket count across all partners - helping to engage light buyers and heavy. Offers and challenges layered on top gave extra engagement. The foundation was simple; the engagement came from variety.

Ms Chan: And that has real implications for how you design these programmes. It’s not just about making the CFO happy by getting manufacturers to fund bonuses. It’s about reach, consistency, and making sure every shopper actually feels the benefit.

Mark Sage: You can sum it up by saying that points aren’t really the point. Participation is. You want loyalty that’s designed for participation that creates habit. That’s what keeps customers coming back.

Building for Participation (Lessons from yuu Rewards)

Ms Chan: Lets talk more about yuu Rewards and how you designed it for participation. Because honestly, as someone who actually uses yuu, I always thought it just worked in the background. I get my base points, sometimes I see offers or challenges in the app, but the foundation is really clear. How did you land on that structure? Was it always obvious?

Mark Sage: So, no, it wasn’t always obvious. We debated all sorts of models around bonus points and gamification. What wasn't a question though was whether we had a base currency.

Mark Sage: When you’re designing something like yuu Rewards—which had to stitch together so many brands and categories across Hong Kong—having a core base points currency was just… necessary. It’s what links it all together. 1 point per $1 —no confusion. Once you've got that base, you layer on all the engaging stuff: targeted offers, challenges, missions. But the entry ticket is simple. And, by making every basket count, we knew we could maximise reach.

Ms Chan: The numbers you quoted still kind of shock me - 67% of Hong Kong now in the programme - it must be pulling in a ton of those “light” buyers who just do small missions, or shop non-grocery partners.

Ms Chan: And what you said about “participation over points” is pretty huge. If it was just about racking up a currency, I’d lose interest. But when you get habits forming, and all these little touchpoints—offers, challenges—layered on top, it really adds up. Like you said, coalitions just let you reach a bigger pool of users, more than a standalone grocer programme ever could.

Mark Sage: Totally right. And, that’s the big learning here: loyalty isn’t really about the points or even the reward, it’s about forming a habit. You want customers to feel the programme’s always working for them, every single time. Then, when you bring in the extras, engagement just grows. I think if there’s one thing from the whole yuu journey, it’s this: base points get you in the game, but it’s participation that makes you a winner.

Ms Chan: I think that’s the perfect note to end on. Asda shows what happens when you strip loyalty away. Tesco shows how to defend with it. Nectar shows the power of coalition. And yuu proves you can design participation into the very DNA of a programme.

Mark Sage: And all of it comes back to the same truth: keep it simple, make it consistent, and focus on participation.

Ms Chan: Love that, Mark.

Ms Chan: So - next episode we’ll get into how those engagement loops actually get built, and maybe even geek out on some of the psychology behind what makes these programmes stickier—and even, dare I say, fun? Mark, thanks for sharing all your stories.

Mark Sage: Always a pleasure. You know I can’t resist a good case study and a tangent or two. Thanks for teeing up all the great questions—see you next time!

Ms Chan: See you! And for everyone listening - don't forget to subscribe, keep those questions coming and, you know, go earn a few base points—just don’t overthink it. Bye!