How Brands Grow (with Loyalty)

Ms Chan

Hello and welcome to Loyalty Unlocked, the podcast where we dive deep into the strategies that really move the needle in customer engagement, loyalty and brand growth.

Ms Chan

For full transparency, the script and voices within this podcast are completely AI generated, based on chapters from the forth coming loyalty book from my co-host, Mark Sage.

Ms Chan

Okay, so this is something I’ve been dying to ask—loyalty programs. Are we using them wrong? Because the way I see it, many marketing teams push them to bring in new customers. Isn’t that the whole point?

Mark Sage

You know, it’s a common assumption. But actually, loyalty programs aren’t really made to bring in *new* customers. They’re much more effective in capturing the ones you already have and then, you know, encouraging them to come back and spend more.

Ms Chan

Wait, wait. So, they’re not for acquisition?

Mark Sage

Not in the way most people think. Let’s take the yuu Rewards launch in Hong Kong, for example. There was a massive marketing push—you couldn’t go anywhere without seeing an ad. But, here’s the twist—it wasn’t to acquire new customers for the retailers. It was to get existing customers to join the loyalty program.

Ms Chan

Seriously? And all that effort wasn’t to attract new shoppers?

Mark Sage

Exactly. The advertising wasn’t geared toward brand acquisition but towards building awareness for the program. By the time customers were at the checkout counter, we wanted them to already know the name “yuu Rewards” and feel that little FOMO nudge to join right there on the spot.

Ms Chan

Ah, the power of FOMO. But, like… wouldn’t targeting new customers with loyalty make sense too? Get them in and hook them early?

Mark Sage

It sounds reasonable, but it rarely pans out. New customers usually make their first purchase for reasons like price, convenience, or sheer necessity—not because of loyalty rewards. Loyalty steps in *after* that initial purchase to turn one-time transactions into longer-term habits.

Ms Chan

So, what you’re saying is loyalty is more about keeping customers locked in for the future?

Mark Sage

Precisely. I often describe loyalty marketing as a “future value” initiative. Once someone has already decided to spend with your brand, loyalty captures their behaviors, nudges them to spend more, and helps secure their long-term commitment.

Ms Chan

Huh, okay. That’s making sense now. But isn’t acquisition still tied to loyalty in some way? Like, there’s got to be overlap, right?

Mark Sage

There’s a connection, sure, but not how most people think. Loyalty operates on top of acquisition. Once the customer is in your ecosystem, loyalty drives engagement and maximizes their lifetime value. Take the yuu example—it was designed to attract existing shoppers from the partner brands, not bring in brand-new ones. The goal was penetration of the program, not the retailers themselves.

Ms Chan

Got it. So, loyalty isn’t about getting you new customers—it’s about amplifying what you already have.

Mark Sage

Yes. Instead of being the front door, loyalty is the anchor that keeps them grounded in your space. And that’s where its real power lies.

Ms Chan

Okay, so if loyalty is about amplifying what you already have, doesn’t that tie into things like market share? And, uh, market penetration—they’re not the same thing, right? I kinda thought they were just different ways of saying the same thing.

Mark Sage

Oh, no no, they’re very different. Think of it this way—market penetration is all about how many people are shopping with you at least once within a given timeframe. It’s like, how far you’ve reached of the total people in the market.

Mark Sage

Market share, on the other hand, is about how much of their spending you’re capturing. It’s the value you’re bringing in compared to your competitors, out of the total market value.

Ms Chan

Ahh, okay. So one’s about the people, the other’s about their wallets. Got it. So how does a brand even grow penetration? Like, what actually works?

Mark Sage

Well, penetration growth often comes down to physical availability—basically, being there when and where customers need you. Take Aldi in the UK as an example. From 2014 to 2018, they opened hundreds of new stores. That increase in locations brought them to more people’s radar and, naturally, created more first-time shoppers. Penetration shot up.

Ms Chan

Ah, so it’s about being visible, like constantly available to people. Makes sense. But then loyalty—where does *that* fit into all this? Does it help with penetration too?

Mark Sage

Not really. Loyalty does an amazing job helping to build market share but not penetration. It’s about consolidating spend from people who are already shopping with you, not finding brand-new ones.

Mark Sage

For example, in grocery your market share with a single customer is likely around 40% to 50% - so loyalty might get a customer to spend a little more with you and a little less with your competitor, but it’s not gonna suddenly create a shopper out of thin air.

Ms Chan

Oh wow, so loyalty’s kinda like... locking down what you’ve got.

Ms Chan

So, if loyalty’s really about locking in existing customer habits, does it end up focusing mostly on rewarding the big spenders—the VIPs bringing in the cash? That’s kinda how I’ve always seen it.

Mark Sage

It’s a common view, sure, but actually, no. Focusing only on those top 20% of customers—the heavy buyers—isn’t the whole story. They’re definitely important, but they’re not the only piece of the puzzle when it comes to growth.

Ms Chan

Wait, really? Then who else is in the game?

Mark Sage

The light buyers. Believe it or not, they make up about 80% of your customer base but typically contribute around 50% of your revenue. They’re a massive opportunity just waiting to be tapped into.

Ms Chan

Huh, 80%? That’s wild. So how do they even fit into loyalty programs if they’re not spending much?

Mark Sage

Great question. Loyalty programs shouldn't just exist to reward the high spenders. They’re actually perfect for nudging occasional shoppers—these light buyers—to spend just a little bit more each time they shop or to shop more often. It’s about consolidating their spend.

Ms Chan

Consolidating? Okay, you lost me. What does that even mean here?

Mark Sage

It’s simple. Think about someone who shops at, say, three different grocery stores. They spend a bit here, a bit there. A loyalty program can encourage that person to shift more of their spending to one store—yours. Even pulling in just one extra visit per quarter can mean a huge bump in revenue when scaled across all those light buyers.

Ms Chan

Wow, just one more visit? That tiny change really makes a difference?

Mark Sage

Absolutely. Small shifts in behavior, when multiplied across a large audience, add up fast. That’s the magic of loyalty—it turns potential into action. With light buyers, we’re not trying to make them heavy spenders.

Mark Sage

Instead, we wanna just remind them we're there, so they're more likely to think of us when they're ready.

Ms Chan

Ohhh, I see it now. So loyalty’s, like, maximizing what’s already there instead of chasing big flashy changes.

Mark Sage

It is. It’s about efficiency. Instead of just chasing “new” customers, loyalty helps you get more out of the ones already familiar with your brand. And frankly, that’s where the sweet spot is.

Ms Chan

So what you’re saying is loyalty programs aren’t just about throwing points and discounts around—they’re more like these powerful marketing tools, huh?

Mark Sage

Exactly. A well-designed loyalty program isn’t just about counting transactions. It’s about deepening engagement, staying top of mind, and keeping your brand relevant in customers’ lives. Think of it as a tool to create behavioral triggers—those little nudges that make people choose you over someone else.

Ms Chan

Oh, like when I see a “limited-time double points” offer and suddenly I’m there spending more than I planned?

Mark Sage

Yes! It’s not just about the discount, though—it’s the psychology behind it. It builds what Byron Sharp termed “mental availability.” You’re reminding your customers that you’re there and worth their attention, which is huge in today’s noisy world.

Ms Chan

Right, but keeping people active in the program seems like the tricky part. I mean, you can sign them up easily with flashy offers, but what keeps them coming back?

Mark Sage

And that’s the million-dollar question. Phil Hawkins, former COO of Flybuys famously said, “Getting customers to join is easy. The hard part is keeping them active.”

Mark Sage

Loyalty programs thrive when they consistently engage their members. It’s about weaving the program into their everyday habits.

Ms Chan

But how do you do that without overwhelming them? Like, I don’t want fifty emails screaming “Spend more points now!”

Mark Sage

Good point. It’s all about relevance and balance. You need to understand your customers—use the data they give you to tailor offers and reminders that actually matter to them. It’s less about bombarding them and more about staying present. Like a helpful nudge when they’re already thinking about buying groceries or booking a flight.

Ms Chan

Ah, so the “helpful nudge” approach. That sounds way more strategic than just spamming everyone.

Mark Sage

It is. And here’s where marketers often get it wrong—they think loyalty programs are only about transactional benefits. But really, it’s a blend of emotional and rational triggers.

Mark Sage

Customers need to feel rewarded, yes, but also, they need to feel a reason to shop - they need to feel the brand is relevant to them.

Ms Chan

So it’s like… you’re building a relationship, not just handing out freebies?

Mark Sage

Not so much Relationship. I'd say instead you're helping to build brand affinity and connecting the brand to key occasions or customer needs - in essence building mental availability. This is what keeps people coming back, more than any discount could.

Ms Chan

Wow. Okay, so final takeaways for someone like me—a marketer figuring out loyalty strategies. What’s the biggest myth we need to drop?

Mark Sage

The biggest myth? That loyalty programs can increase market penetration - that they can bring new customers to the brand. They can't.

Mark Sage

Loyalty is about maximizing the value of the customers you already have. It’s about capturing behaviors, making them consistent, and creating incremental value through incremental mental availability over time. In that way, loyalty programs can play their part in contributing to increasing market share.

Ms Chan

Right—loyalty’s more than points. It’s a strategy for connection and market share growth. Got it. Mark, this has been so eye-opening! I’m definitely rethinking how I look at loyalty programs now.

Mark Sage

Glad to hear it. Loyalty isn’t just a tactic—it’s a way to engage, retain, and grow with your customers. And the best part is, it keeps evolving, so there’s always something new to explore.

Ms Chan

Ah, so exciting! On that note, we’ve gotta wrap it up. Mark, thanks so much for sharing all your wisdom. This has been incredible!

Mark Sage

It’s been a real pleasure.

Ms Chan

And that’s all for today on Loyalty Unlocked. Remember to subscribe if you want to learn more.

Ms Chan

Until next time—stay curious, everyone!