Learning from Freedom's failure

Learning from Freedom’s failure

Barclaycard's decision to scrap its Freedom loyalty programme is no great shakes really. At its launch it was heralded as the future of loyalty programmes - driven by point-of-sale technology and playing heavily on Barclays Merchant Services' ability to sign up retailers.

It was said at the outset that there would be 200 participating merchants within five miles of any cardholder. So far, so good. But when the programme was up and running, it quickly became clear that it was not the game changer it promised to be.
The rewards themselves were pretty underwhelming; 1% cashback is not necessarily to be sniffed at, but it is not going to set the world alight.
The programme is particularly interesting when you consider Barclaycard Freedom in the context of the issuer’s other major focus in recent years – contactless.
The drive towards NFC says very clearly: ‘we want low-value, high-volume transactions’. In the UK, where debit card usage is healthy and credit is still very much associated with high-end purchases, cardholders need to change their habits considerably to get on board with that.
But that fact aside, the Freedom programme didn’t seem to be working in the same direction. Being able to watch, in real-time, as your balance rises 0.2 points (valued at £0.02) every time you buy a coffee won’t bring those Barclaycards top of wallet.
So there is one of a number reasons why the Freedom programme has been shut down. But never fear, says Barclaycard, there is something bigger and better on its way. Well… what is it?
We are told two new programmes are in development that will "provide tailored and valuable offers from thousands of retailers and allow participating consumers to earn freedom rewards on all spending, both at home and abroad".
From this fairly woolly statement, you could be forgiven for wondering what is really going to change. It sounds pretty much as though we are looking forward to the launch of ‘Freedom 2’. And that is, I’m sure, how they want cardholders to feel. Where there will be changes is on the back end.
The lack of involvement from any of the UK’s major retailers is one of the big reasons put forward for Freedom’s failure. And that exposes the fundamental weakness – the programme is being run by a single issuer, tied exclusively to a single acquirer. In a sense, the worst of both worlds.
Going forward towards Freedom 2, Barclaycard is in a very strong position. The data underpinning the old programme is solid, and shows that loyalty does work. But, the replacement scheme has got to learn the lesson on the acquiring side.
The same bank launched Pingit and swiftly made it available to its competitors customers. The same kind of open approach could work very well here too.