LOYALTY SCHEME TIPS

It’s not just stores that have rewards schemes... now others are joining the bandwagon too

SUPERMARKETS and retailers dominate when it comes to rewarding customer loyalty. But banks and insurance companies are now waking up to the challenge. Here, SALLY HAMILTON uncovers the financial companies trying hardest to keep you – and how you can cash in on recommending the best of them to friends.

1 INSURANCE

THE Duchess of Cambridge is in line to receive a ten per cent ‘loyalty’ discount off her medical bills for giving birth to her second child at the private St Mary’s Hospital in London. It’s an indication that the commercial sense of retaining customers is spreading beyond the supermarket aisles.

For ordinary mortals, private hospital birth discounts are unlikely to be a sought after incentive. But those with private health insurance can pick up attractive loyalty benefits along the way. The most active provider to reward loyalty is Vitality – formerly known as PruHealth and PruProtect. The insurer has two types of deal: ‘active’ and ‘status’ rewards given to buyers of its life and health insurance.

Active rewards apply where a customer exercises and builds up points in return for ‘free’ perks such as a cinema ticket or a cup of coffee. So a trip to the gym earns up to ten points, nine of which can be spent on a free cinema ticket. Run or walk ten miles in a week and that will pay for a latte.

The status rewards are also given to couch potatoes who receive discounts – such as up to 40 per cent off the cost of UK or Continental British Airways flights.

To encourage a get-fit culture – and reduce claims too – Vitality offers discounts worth 50 per cent at Virgin Active gyms that can save up to £600 a year at a central London location.

Bupa’s health insurance customers who register for its scheme get discounts from various retailers, travel agents and on events and theatre productions sent to them by email. And insurer AXA provides similar offers on its health insurance but they will be overhauled next month.

Aviva’s ‘Advantages’ scheme is for customers of all types of policy – from health and motor cover to pensions – and provides money off a range of deals, including half price MOTs and 20 per cent off tyre purchases. One of its most popular offers is a free Caffe Nero hot drink every Monday for those who download and register their policy details on the My Aviva app.

Some schemes actively encourage customers to spend more. Aviva has a multi-car insurance policy that promises to save a motorist up to a third on the cost of additional cars insured at the same address.

Admiral and Direct Line offer similar incentives, while Churchill provides a ten per cent premium discount for one year on a second car, reducing to five per cent in the second year. Until the end of next month, all new policyholders receive a free nodding dog that utters the ‘Oh yes’ advertising catch phrase.

2 BANKING

BANKS fare poorly when it comes to appreciating longstanding customers, according to a recent report by market research group Mintel.

But there are signs they are beginning to pull up their socks in the face of tough competition – from old rivals and challenger banks.

Since a hassle-free seven-day account switching guarantee was introduced in September 2013, 1.75million people have moved their account to a new bank. Many have been wooed with cash bribes – between £100 and £125 is dangled by First Direct, £125 by Halifax and £150 by Clydesdale and Yorkshire banks.

Barclays has shed thousands of current account customers over the past nine months. But it is now fighting back with its Blue Rewards programme.

For a fee of £3 a month, customers who pay at least £800 a month into their current account, set up two direct debits and use online banking will receive cash bonuses worth £7 a month. After the fee the cashback is worth £48 a year. Those who also have a Barclays mortgage or home insurance will get more rewards.

Guy Anker, managing editor of consumer website Money Saving Expert, says things are looking up for banking customers.

He says: ‘There are better accounts out there now, including Santander’s 123 deal and Club Lloyds, plus offers from TSB and Nationwide Building Society. They all pay decent interest, though on some, greater returns are only paid on a limited balance. It is possible to play the system and earn the best interest by having multiple accounts so long as you follow each bank’s rules.’

With the Club Lloyds scheme, for example, people can earn up to four per cent interest on their credit balance and get other benefits such as a 0.2 per cent initial discount on a mortgage and ten per cent off home insurance costs – so long as they credit their account with at least £1,500 a month (or pay a £5 monthly fee).

Customers can also opt for a free magazine subscription or – the most popular option over the last year – annual membership of the Gourmet Society with its discounts on restaurant meals.

Nationwide also tries to make loyalty pay with savings accounts. Someone who has been a member more than 15 years can earn 1.2 per cent on its Loyalty saver account, 0.7 percentage points more than its nearest equivalent standard instant access saver account at 0.5 per cent.

Anker adds: ‘More important in banking than a few gimmicks is good value products and service.’

3 PLASTIC CARDS

WE SPEND so much time in shops and supermarkets, it isn’t surprising that their branded loyalty schemes grab our attention more than banks’ loyalty programmes.

The nation’s wallets and purses burst with retail loyalty cards because members receive ‘tangible and frequent rewards’, according to

Mintel. Anker says that used correctly, these schemes can pay off handsomely. He says: ‘Take Tesco Clubcard, which is huge with 16million members. A shopper earning 500 points can convert that into £5 worth of shopping. But with a few tricks using the card’s points-boosting options they can turn that into £20 by using them in a restaurant.’

The Clubcard scheme could be at risk as Tesco reviews every asset of its business after last week announcing record losses of £6.4billion.

Even Nectar, another loyalty card scheme, which recently announced it has halved the points that can be earned shopping at Sainsbury’s – from two to one per £1 spent – is still worth considering. Until May 10, motorists can get ten rather than the usual one point on a litre of fuel bought at Sainsbury’s petrol stations. Those who save 500 Nectar points can turn that into £2.50 of spending but periodic bonus point promotions mean that can be as much as quadrupled.

Popular cashback credit cards – where spending earns a percentage kickback each year for cardholders – are under threat, however.

Card provider Capital One announced this month that cashback will be no more from June for new customers and reduced for some existing cardholders. The company claims it has been forced to act because of new European Union rules capping the fees paid by retailers to card issuers. RBS and NatWest are axing their schemes from July 1, citing the same reasons.

Other cards still offering cashback include American Express Platinum, where for a £25 fee, cardholders earn five per cent cashback on purchases in the first three months (worth a maximum £125) then 1.25 per cent. Santander’s 123 card, with a £24 annual fee, gives shoppers three per cent cashback on petrol and transport, two per cent on department store spending and one per cent on a supermarket shop.

Cashback may vanish or reduce in the future, so make hay while the sun shines. But Anker warns: ‘Shoppers must make sure they pay off the card’s monthly balance in full or the benefit of cashback is lost.’

4 RECOMMENDING IS REWARDING

CUSTOMERS who get a good deal might prefer to keep their good fortune to themselves. But it can pay off in hard cash to share such money-saving secrets with others.

By recommending a friend, forwarding a special offer or simply telling them about a purchase you can make annual savings of £177, according to new research conducted by card company American Express.

Psychologist Simon Moore, who carried out the survey, says: ‘Consumers face information overload so using recommendations from family and friends is an effective way of navigating efficiently through the many choices.

‘It can cut anxiety and those making the recommendations can gain pleasure that their opinions are valued by others.’

Simon Staniland, 31, an events manager from Streatham, South London, certainly enjoys finding a good deal and ‘passing it on’.

Among the regular deals he recommends is the Uber taxi app service. He says: ‘When I recommend it to someone, both of us get credited with a free taxi fare. I know someone who accumulated £200 of credits for their Uber account in this way.’

Simon, who is married to Ethne, 32, and has a ten-month-old daughter, Amelie, says: ‘As well as recommending restaurants, films and holidays to friends I benefit from their suggestions too.’

Testimonials can sometimes go wrong, Simon says: ‘A tiler did a bad job for me but he lost out because my friend then stopped recommending him.’

He has even had a mortgage arranged for free by his long-standing financial adviser. Simon says: ‘I’ve recommended him to several people and when I needed to move my mortgage to a different property he offered to do it for free.’

As an American Express Gold Charge Card holder, Simon has also earned thousands of reward points while spending. But the company also tops these up if he recommends someone who goes on to sign up for the card.

He has earned enough points this way for a ten-day holiday to Nice with Ethne, using the points to buy British Airways flights and a stay at a Hilton hotel.

He adds: ‘I’m really interested in loyalty schemes and always look at the website head for points, which is great for explaining them.’