Loyalty programs are a staple of the modern customer experience in almost all industries, from retail and travel to utilities and hospitality. And rightly so.
According to Acxiom’s 2025 CX Trends Report, 78% of people believe they should be rewarded for their loyalty to a brand, and the same proportion says they’re more likely to stay loyal if they are adequately rewarded. Six in ten (60%) even say they would choose to buy from a brand that offers a loyalty program over one that doesn’t.
The question is: Are brands actually getting the most from their loyalty programs? The report, which is based on a survey of more than 2,000 consumers and 200 brands in the U.S. and U.K., suggests this isn’t always the case.
Brands are keen to make loyalty initiatives work
Loyalty programs help brands achieve a variety of goals. According to the survey, brands say these are the biggest benefits of loyalty programs: boosting customer referrals through brand advocacy, increasing customer lifetime value, and improving customer retention. These are the main reasons 91% of brands offer some form of rewards or benefits to loyal customers.
On the surface, brands appear to be doing all the right things. When asked how they reward customer loyalty, their top three answers were:
- Exclusive discounts or offers
- Exclusive events or experiences
- Personalized recommendations
These align well with people’s expectations. When asked which loyalty benefits would make them more likely to consider a brand for their next purchase, the top three responses were:
- Exclusive discounts or rewards
- Offers tailored to individual preferences
- Early access to sales
Brands recognize the importance of exclusivity in keeping their customers loyal, with 72% feeling it’s beneficial to create a sense of exclusivity around their loyalty program, and 70% already using a tiered approach where their most valuable members receive the highest levels of reward.
They also appear to understand the necessity for personalization. Two-thirds (67%) use customer data to tailor benefits for individual members, and almost half of those (45%) use AI as part of the process. They understand that the use of data to generate deeper customer insights leads to more personalized experiences, which in turn can foster lasting loyalty.
As the Director of Customer Marketing at a U.K. retailer explains, “AI is helping us to accelerate decision making, both in terms of deciding which promotions we should give to each customer and ensuring this is more personalized for every individual. Whereas previously you might have given a promotion to lots of people all at the same rate, we can now use AI to distinguish which customers should get which promotion.”
But despite these promising trends, it seems brands are facing some key challenges with making loyalty programs work.
Where brands struggle with loyalty programs
The first area of contention highlighted by the report is defining what loyalty actually means to the brand, and therefore what type of behavior the program is designed to encourage and reward. The brands surveyed say they are most likely to define loyalty as customer lifetime value, but they may also be looking at customer engagement or range and frequency of purchases. Interestingly, only a third define loyalty on the basis of advocacy, despite referrals being cited as the most important benefit of setting up a loyalty program.
The next area of concern is measurement. When asked about their biggest challenges in running loyalty programs, difficulties measuring success are at the top of the list, followed by issues with maintaining programs in the long term. These challenges are inextricably linked. If brands can’t accurately define the kind of loyalty they’re aiming to foster and aren’t appropriately set up to measure the success of their initiatives, how can they possibly expect to keep these programs profitable for an extended period?
Part of the problem may well be technology. A surprisingly low 21% of the brands that offer loyalty programs say they’re using a loyalty platform to manage it. Among those that are using a loyalty platform, 45% report struggling because the platform isn’t effectively integrated with the rest of their systems.
Help is at hand
There’s little doubt that loyalty programs can be beneficial for both the customers that reap the rewards and the brands that rely on them for referrals, retention, and revenue. But if brands want to make the most of this now well-established trend in improving customer experience, the data suggests they’re going to need a little help.
Working with expert partners can help brands continue their quest for exclusivity by making effective use of AI to identify high-value customers and build tiered loyalty programs. It can help them implement sophisticated measurement capabilities to monitor program success on an ongoing basis and optimize performance against well-defined benchmarks. And it can help them seamlessly integrate data and systems so they can understand customers’ differing needs and drive personalized interactions that inspire lasting loyalty.
Read Acxiom’s 2025 CX Predictions Report, A Human-Centered Approach to Customer Experience, for more views from senior marketing professionals and consumers, along with expert guidance on how brands can use these insights to grow their business.
