Inside the boardroom
Structuring Loyalty (Part 1) — Turning Infrastructure to Influence Part 2 — Proving the Value of Loyalty — Part 3
Mark Sage - 6 min read - 7/08/2025
Looking over Hong Kong, I had an almost 360 view. Victoria Bay to the front with it’s gleaming buildings of Kowloon and the clock tower at Tsim Sha Tsui — the sole remaining structure of the now gone Kowloon Station, which once served the British section of the Kowloon to Canton Railway. Victoria Peak behind with its modern visitor centre perched on top, but an area once the preserve of expats who took advantage of its slightly cooler temperatures during the hot summers. Moving across the bay were Star Ferries — still plying their trade after 135 years — and once owned by Jardine Matheson & Co, who’s office I was currently standing in.
At that moment — on a sunny April day in 2020 — I felt a strange mix of history and transformation.
Hong Kong has always been a dynamic city, with the new replacing the old at a rapid pace — yet it still has a connection to its past and origins. From the Hakka villages in the New Territories to the Tong Lau still nestled in the busy high-street, Hong Kong manages to remain attached to both the old and the new.
I was enjoying these views from the 46th floor of Jardine House, itself part of that history, with it once being the tallest tower in Asia when built in 1972, and a symbol of the legacy of Jardine Matheson itself, founded back in 1832.
We were there to present yuu Rewards to the Jardine Board — and it had a feeling of both stepping into a part of Hong Kong’s history, while also looking to add to its next chapter.
Yuu Rewards was to be something entirely new — not just for Jardines or Hong Kong, but globally. A digital-first, coalition loyalty platform designed to span banners, brands, and behaviour.
With just 68 days to launch, we were there to present our plans — and secure final financial approval to move forward.
Standing in the quiet lobby outside the boardroom, you could tell that process and tradition were not optional. For a company with almost 200 years of history, this was the way that things were done.
The meeting was chaired by Ben Keswick — the fifth generation Keswick to lead the company — and who was then Executive Chairman and Managing Director of Jardines. He was also the Taipan — a term originated in 19th-century China and used to describe the chief executive of a major foreign trading house, especially those in Hong Kong like Jardines. Though largely historical today, it still carries symbolic weight in legacy firms like Jardine Matheson.
So this wasn’t just another meeting. It was a moment that stitched together past and future — a boardroom steeped in legacy, now being asked to back something entirely new.
We weren’t there to pitch a campaign. We were proposing a structural shift with a platform that could connect Jardine owned banners, brands, and customers in a completely new way. Something that didn’t just serve marketing but had the potential to reshape the business and build another kind of asset — a digital one.
That kind of ambition though does come with a price tag.
It’s no secret that a loyalty programme can be a significant investment. In grocery retail this can 0.5% of value across 60–70% of total sales — not a small number. In other sectors like speciality retail the number can be much higher with programmes allocating anywhere from 1.5% to 5% of sales value, albeit with typically lower levels of basket penetration.
The setup costs for a new programme can also be significant. When you take account of product development, marketing, systems such as CRM, loyalty and their integration, customer research, brand development, training, etc. there are some pretty significant upfront capital expenses too. This can easily extend to $5-$10m USD for a medium sized national scale loyalty programme.
Of course, for smaller brands with smaller ambitions the costs can be a lot less, with these programmes typically having entry costs of around $500k to $1m USD. As a percentage of sales though, it’s still likely a large investment and so the challenges are the same.
Either way, standing in front of any board to present numbers like that means you need more than confidence in the upside. You need a plan.
So how best do you structure loyalty within the organisation? More importantly, how do you ensure buy in both across the organisation and from the board?
These were key questions we had to answer within yuu Rewards, and questions we had to answer on that day in April 2020.
Power of Orchestration
One of the most misunderstood ideas in loyalty is that the organisation running it must show a direct profit to justify its existence.
That logic might work for a brand, a banner, or a standalone P&L — but it doesn’t apply to a business like yuu Rewards. In a traditional business model, value is created by owners and operators; the owner holds the asset, and the operator runs it to generate revenue. But in a platform or coalition model, the most powerful role is often the orchestrator.
The orchestrator doesn’t need to own the product or operate the front line. Instead, it designs the system, sets the rules, connects participants, and enables value to flow between them.
Like Uber in transport or Visa in payments, an orchestrator like yuu Rewards creates scale and influence not by owning everything, but by coordinating everything — turning integration into impact.
This means, in a coalition program, it’s not a traditional profit centre. It’s something far more powerful — a value platform.
The typical question from finance is “How much revenue do you make?”
It’s intuitive. Tangible. Clean.
But for a coalition program owner, that question misses the point. The programme doesn’t operate stores or hold inventory, and its revenue line isn’t neatly tied to transactions at the till. If judged on direct profit alone, a coalition programme can seem like an overhead — a coordination layer with operating costs and little income.
But that is really the wrong lens.
A loyalty programme like yuu Rewards is not a margin taker, it is a margin maker.
Essentially, the programme acts as the infrastructure layer that connects participating brands, banners, data, rewards, and execution. It designs the rules of engagement, such as how points are earned, how promotions work, where investment flows, and how customer behaviour is nudged at every step.
This is the crucial point to understand — that position creates leverage. Not by owning the transactions, but by shaping the conditions in which they occur.
This is orchestration. And it’s far more scalable than ownership.
Take promotions. Without loyalty, retailers have to run deep discounts, with margin sacrificed at the moment of purchase. But through a platform such as yuu Rewards, brands can offer points instead.
And points don’t just feel better to the customer (they hit the brain differently, thanks to goal gradients and mental accounting), they also behave better for the business — both the loyalty business and the retailer.
Points become currency — and currency brings float, frequency, and framing power. Plus, with breakage they also get turned into margin for the platform.
In other words, as an orchestration platform, yuu Rewards takes what used to be cost and converts it into a financial instrument for leverage.
So far, we’ve looked at how loyalty, when treated as orchestration, becomes more than just marketing — it becomes infrastructure. Like Visa, it connects the network, sets the rules, and monetises its role. But understanding orchestration is only half the story. A coalition programme still needs to be commercially sustainable – and that means charging enough to fund itself without charging so much that partners walk away.
That balance is at the heart of platform economics – keeping the “clip” low enough to scale, layering in other revenue streams, and proving the uplift in partner PnLs. In Part 2, we’ll explore how that balance works in practice – and why a slim margin on each transaction can add up to a very big business.
Read part 2 now - Turning Infrastructure into Influence.