Loyalty programs must evolve beyond discount-based incentives to build authentic customer relationships
Most loyalty programs today are lazy. They hand out points and discounts like it’s still 1995. That approach worked when customers had fewer choices and less noise. But things have changed. Consumers are bombarded with options. If your loyalty program isn’t offering more than a quick coupon, it’s going to get ignored, or worse, abandoned.
Eric Beane, Chief Analytics and Data Officer at VML, made it clear: loyalty initiatives still operating like old punch card systems are missing the entire point. The critical difference now is the relationship. Customers want to feel seen. They want relevance. They want value that goes beyond the transaction. If your brand can’t deliver that, someone else will.
This isn’t about stacking up more perks. It’s about rethinking the experience. What matters is the emotional connection, the feeling that a brand understands them and cares enough to engage beyond a sale. If you can deliver that with precision, you’re not just giving customers a reason to return, you’re giving them a reason to stay loyal when the discounts stop.
For executives, the takeaway is simple: stop measuring loyalty in points. Start measuring it in relevance and retention. With 70% of consumers joining programs primarily for perks, according to Epsilon data cited by Marketing Dive’s Peter Adams, there’s a clear window to draw them in, but if you can’t offer more than a discount code, they’ll leave just as fast.
The opportunity here is direct and measurable, better retention, stronger brand equity, and more valuable customer data. But it’s not automatic. It needs deliberate action, better insight, and a smarter program that treats consumers like humans, not numbers in a spreadsheet.
Effective use of loyalty program data is compromised by internal data silos that disconnect customer experiences
Most companies collect an enormous amount of customer data through their loyalty programs, and then fail to use it effectively. The problem isn’t a lack of information. The problem is fragmentation. When loyalty data sits isolated within separate teams or systems, it loses its value. The right hand doesn’t know what the left hand is holding.
Tamara Oliverio, Vice President of Loyalty and Customer Experience at Epsilon, addressed this directly. She pointed out that loyalty data is one of the most valuable sources of first-party insight brands have. Especially now, as third-party cookies phase out and privacy rules tighten, first-party loyalty data should be the cornerstone of smart targeting. But when it’s locked inside departmental silos, it’s inefficient, and often completely wasted.
For executives, this should raise a red flag. You’re paying to collect data, through discounts, rewards, and engagement costs, but only realizing a fraction of its potential. The fix is not just technical. It’s organizational. Teams must align on data strategy, systems must connect, and insights must flow across channels. When loyalty data is centralized and activated, it doesn’t just support marketing, it enhances product, sales, and customer service in measurable ways.
Oliverio also noted that better loyalty data integration reduces waste and unlocks smart targeting capabilities. That doesn’t just mean better ads. It means improved ROI across campaigns, more effective personalization at scale, and faster response times to customer behavior. It also sets the foundation for cross-functional partnerships, where customer insights can fuel innovation in other verticals of the business.
The message is simple: if you want to future-proof your customer strategy, break the barriers around your loyalty data. Use every insight you collect, and make sure every team that needs it can act on it, without delays or disconnects. The upside is immediate, better performance, clearer visibility, and stronger alignment with what today’s customers actually want.
Cross-departmental collaboration is key to convert loyalty data into actionable, personalized marketing insights
Good data stuck in the wrong workflow is useless. That’s the situation many brands are in right now, solid customer data, strong loyalty program insights, but no shared strategy across teams to actually use it. Collaboration isn’t optional here. It’s the foundation for turning loyalty signals into performance.
Eric Beane, Chief Analytics and Data Officer at VML, was direct about this. Internal silos create friction. Teams don’t align. Data moves slowly or not at all. When departments hold on to their systems and insights without sharing, it makes every effort to improve customer experience feel divided and inefficient. As Beane said, “those legacy walls… make sharing data feel more like a negotiation than collaboration.”
That kind of internal disconnect is a risk. For leaders, this becomes both a cultural and operational problem. You can have high-performing technology and still miss the impact because your organization behaves like separate businesses under the same brand. To really harness loyalty data, the organization has to act as one unit. That means marketing, data science, analytics, product, sales, and customer service must align on objectives and share access to the same intelligence.
Breaking these silos is more than a tech fix. It needs executive commitment to integration, tools, processes, and ownership. It also requires clarity in roles. Every function needs to understand how loyalty data can enhance its priorities. When this happens, brands move faster, customers receive better experiences, and reporting becomes clearer across the board.
It’s important for decision-makers to solve this now. As more consumers expect hyper-personalized interactions and faster response times, companies that can’t coordinate across teams will fall behind. The data is there. The technology exists. What’s missing in many cases is the internal alignment to turn loyalty signals into real growth. Fixing that is what will separate high-performance organizations from the rest in the years ahead.
Economic pressures necessitate innovative loyalty strategies that offer more than just immediate financial incentives
When markets tighten and consumer budgets shrink, people naturally look for value. That’s why loyalty program enrollment often spikes during periods of economic uncertainty, consumers want tangible savings. But what brings customers in isn’t always what keeps them. If your loyalty program is based entirely on discounts, you’re building short-term participation, not long-term retention.
Tamara Oliverio, Vice President of Loyalty and Customer Experience at Epsilon, made this distinction clear. While 70% of consumers initially join loyalty programs for discounts and perks, they won’t stay if there’s no deeper benefit. Consumers evolve, and as inflation eases or confidence returns, loyalty driven by financial perks alone becomes a weak retention tool. What matters then is the total experience, how personally useful your brand feels to them over time.
This is a moment of opportunity for leaders in less mature loyalty markets. For instance, the restaurant industry has already figured this out, especially during the COVID-19 shift to online ordering, where digital interaction allowed deeper engagement. But in sectors like consumer packaged goods, loyalty still hasn’t been fully activated. The gap is clear, and the potential value is high.
Business leaders should treat this as a strategic inflection point: extend beyond transactional perks and use loyalty programs to build brand engagement that holds up when discount culture fades. That means structuring programs to drive emotional affinity, cross-channel consistency, and strong feedback loops based on behavior, not just purchases.
There’s also a risk in standing still. As more companies deploy loyalty strategies, the field is becoming crowded. A standard points-based system won’t distinguish your brand. What will set it apart is how well it connects with the customer’s identity and values, and how intelligently it adapts over time using the right signals.
The path forward is execution. Use the data consumers give you. Build value around relevance and experience. Offer more than savings. That’s how loyalty becomes durable, even when financial pressure eases.
Main highlights
- Move beyond discounts to build lasting loyalty: Brands relying solely on perks are losing long-term engagement. Leaders should prioritize emotional relevance and meaningful brand interaction to strengthen retention and differentiate in crowded markets.
- Eliminate data silos to unlock full loyalty value: Loyalty data often sits unused due to poor cross-team access. Executives must enable integrated data systems and processes to improve targeting, reduce waste, and enhance customer experience.
- Force alignment between teams to activate insights: Disconnected departments kill speed and consistency. Leaders should break down organizational silos and align teams around shared data strategies to turn loyalty signals into real business velocity.
- Rethink loyalty strategy in response to economic shifts: Short-term incentives attract users, but won’t secure long-term retention. Decision-makers should evolve loyalty programs to focus on engagement, personalization, and sustained brand value to stay ahead in volatile markets.
