dm is Germany's largest drugstore chain with 2,000+ German locations and no traditional points loyalty programme. Instead, dm uses its app to deliver personalised offers and digital coupons based on individual purchase history - a CRM-first loyalty strategy rather than a points-first one. The approach has made dm one of Germany's highest-retention drugstore brands despite the absence of a formal earn-and-redeem mechanic.
What Is dm Doing?
dm's loyalty strategy is the most unusual in German retail. Most major German chains either use Payback, DeutschlandCard, or a proprietary points programme. dm uses none of these. It uses a CRM.
The dm app is the delivery mechanism for what is functionally a personalised loyalty programme without points. Members who download the app and activate their account at checkout give dm permission to record their purchase history. That history feeds an offer engine that generates personalised digital coupons specific to each member's buying patterns.
A member who regularly buys dm's baby product range receives dm Baby Bonus offers - a targeted sub-programme for parents. A member who regularly buys organic cosmetics sees organic category promotions. A member who buys diabetes care products receives diabetes-relevant health promotions. The offer each customer sees when they open the app is, in theory, specifically relevant to them.
The programme also includes digital receipts, purchase history visibility, and occasional sweepstakes-style prize draws for active members. No points. No earn rate. No redemption threshold. Just relevant offers that make the app worth opening.
The strategic logic: dm believes that a coupon for a product you actually use is worth more than a hundred generic loyalty points. A 20% discount on the specific shampoo you buy every month is immediately valuable. A generic "earn 1 point per euro" accumulation requires calculation, patience, and eventual redemption - all friction that reduces perceived value.
Why Does It Work?
The behavioural lever is personalisation effect combined with habit.
Personalisation works because it feels considerate. A customer who opens the dm app and sees an offer for the specific product she buys every three weeks experiences something qualitatively different from opening a generic discount catalogue. The app appears to have noticed what she needs. That feeling of being noticed - of being a specific person rather than a general customer - creates a brand relationship that generic programmes cannot replicate.
The habit driver is dm's dominant market position in Germany. With 2,000+ locations and everyday pricing that positions it as a routine shopping destination rather than a specialist destination, dm captures repeat visits through proximity and price as much as through the loyalty programme. The programme reinforces a habit that already exists; it does not need to create it from scratch.
Germany's GDPR and data protection culture also shapes dm's CRM approach. German consumers are among Europe's most privacy-conscious, and dm's opt-in model - where members actively activate their app account to receive personalised offers - is perceived as more respectful than opt-out data collection models. The transparency of "you gave us your data and we use it to offer you relevant products" aligns with German consumer expectations.
The 3-Tier Reality: Paper, App, Wallet Pass
dm's model sits in an unusual position in the loyalty hierarchy. It is more sophisticated than a paper card and more privacy-aligned than a data-intensive branded app. But for an SMB, the relevant comparison is different.
The worst option is a branded app built by an SMB. dm's app works because dm has the development budget, the data infrastructure, and the personalisation engine to make it genuinely useful. An SMB's "personalised offers" app would, in practice, be a notification channel for generic promotions - the same content as a push notification but with more friction. Roughly 83% of branded apps are uninstalled within 30 days. dm avoids this through scale and genuine personalisation quality.
The middle option is a paper stamp card. For a Drogeriemarkt-style independent beauty or health shop, paper works for the repeat-purchase habit. A regular who buys their vitamins, cosmetics, and hair care from you monthly will carry a stamp card. But paper has no personalisation capability, no targeted offer engine, and no re-engagement channel. You cannot send a push saying "Your preferred moisturiser is back in stock."
The best option is a wallet pass on Apple Wallet and Google Wallet. For most German SMBs, a wallet pass combined with a simple CRM approach delivers the dm model at small-business scale. The pass records purchases. After 3-5 visits, you know which categories the member buys. Your monthly push highlights an offer in their preferred category. That is dm's logic in a wallet-pass wrapper.
GDPR compliance is built into a well-designed wallet-pass programme: members actively add the pass (opt-in), can remove it at any time, and the data is held securely by the programme operator. This aligns with German privacy expectations.
What Can a German SMB Copy on Monday?
Three moves from dm's CRM-loyalty approach translate to a smaller German business.
Record category preferences from visit 1. When a member signs up and makes their first purchase, note the product category. After three visits, you have a preference pattern. Use it: your next push should reference their category. "This week: 20% off your usual category for members" is personalisation that requires no algorithm, just observation. A shop assistant who notices that a regular always gravitates to natural cosmetics can record that in your wallet-pass CRM and set the offer accordingly.
Replace broad discounts with targeted offers. dm does not run "20% off everything" events. It runs "20% off your specific product" offers. The targeted offer has a lower gross cost (fewer customers qualify) and a higher perceived value (it feels specific to me). An SMB that sends 10 different targeted offers to 10 different customer segments delivers more value per push than one that sends the same offer to everyone.
Use purchase history to trigger re-engagement. If a member buys a specific product every 6 weeks and it has been 8 weeks since their last visit, that gap is a re-engagement signal. A push saying "It has been a while - your usual [product category] is waiting for you, plus a member-only discount this week" catches the customer at precisely the moment they are likely considering a restock. This is dm's CRM logic at micro-scale.
| Approach | dm (Germany) | Payback partner | Wallet pass (personalised) | Paper card |
|---|---|---|---|---|
| Points programme | No | Yes | Optional | Yes |
| Personalised offers | Yes (purchase history) | Generic | Manual or algorithmic | No |
| Re-engagement push | Yes (app) | Via Payback | Yes (wallet pass) | No |
| Data ownership | dm owns data | Shared with Payback | SMB owns all data | None |
| GDPR alignment | Yes | Yes | Yes | N/A |
The Limits of No-Points Loyalty
dm's approach works because dm has scale. Millions of German transactions provide the data foundation for genuine personalisation. The offers feel relevant because dm has enough purchase history to make them relevant.
Most SMBs do not have that data density, at least not initially. A Kosmetiksalon with 150 active members and 2-3 visits per member per month has modest data. Personalisation based on six total purchases per member is limited.
The recommendation for most German SMBs is not to copy dm's no-points model directly. Copy the principle - make offers feel personal and relevant - but use a points programme as the foundation that builds the habit while you accumulate the data. After a year of programme operation, you will have enough purchase history to layer genuine personalisation onto the points foundation.
According to available loyalty programme statistics, personalised offers generate 3-5x higher redemption rates than generic promotions. Start with points. Add personalisation. Then ask whether points are still necessary - as dm did, and answered "no."
Build your wallet-pass programme with CRM capability at LoyaltyPass. Start with points. Add personalisation from month three.
See also: REWE loyalty programme Germany, loyalty programme ideas for German retailers, and what the best loyalty programmes have in common.
