Trends Shaping Retail Rewards In 2025

As CTO of Engage People Inc. Len Covello helps companies differentiate loyalty programs to deliver a better experience for their customers.

From Sephora to Wayfair to Jollibee, 2024 ushered in another wave of loyalty program revamps and launches. As consumer preferences continue to evolve, so do loyalty program strategies, which we saw on full display.

In 2024, experiential loyalty, AI-driven capabilities and paying with loyalty points at the point of sale (POS) have become cornerstones of successful programs. That’s because consumers continued to value tailored, seamless experiences and flexibility. This resulted in more loyalty program engagement and an enhanced overall shopping experience for members.

In 2025, I expect consumers to increasingly demand personalized loyalty rewards based on their shopping behaviors, patterns and overall lifestyles—and I think we’ll see some of the trends taking hold in banking and payments carry over to the retail environment. For retailers, this ongoing evolution in loyalty presents an opportunity to retool their rewards programs to keep consumers engaged and feeling valued and, well, loyal.

Below are a few other loyalty program trends we can expect to see over the coming months. These trends could influence and even reshape how new loyalty strategies are implemented, ushering in another wave of loyalty program revamps. Retailers take note.

2025 will be the year of loyalty point ubiquity.

Loyalty points used to be synonymous with aspirational purchases like airline tickets or hotel stays. However, that perception is rapidly changing as consumers increasingly seek opportunities to take advantage of lower point balances for everyday spending. As micro-redemptions take hold, so will the demand for having the ability to spend loyalty points like cash or card at checkout.

As a few companies look to lead the adoption of points as currency, like Mastercard and Xsolla through their recent in-game payments solution, continuing to establish a low barrier for entry and industry standards for interoperability between programs is key. Establishing these standards will simplify the process for consumers and make it easier to use points across multiple merchants.

Similarly, deploying a POS system that integrates rewards programs smoothly with payment networks via standardized, lightweight APIs will also support a seamless customer experience and could lead to increased use of points at checkout.

Though some consumers remain unaware that they can use their points as currency, ongoing education about the value and benefits of paying with points, paired with the infrastructure for broader usage among retailers, can help bridge this gap and inspire engagement. This is something we expect to see take hold in 2025.

The focus will increase on consumer data protection efforts.

As a loyalty technology provider, Engage People sees broad requests come through related to security when forming new partnerships. That’s because consumer data and loyalty programs go hand in hand, and it’s paramount to handle this data with care.

Consumer data protection doesn’t just come down to specific laws and regulations, though retailers should keep pace with any changes. When it comes to loyalty programs, data protection means using data responsibly, with permission, to amplify individual member satisfaction.

2025 will bring a renewed focus on balancing privacy and convenience. Retailers have access to, and the ability to use, customer data to increase convenience and remove friction; however, they must weigh the benefits and risks, whether actual or perceived. Some of the benefits include more personalization and an amplified customer experience by introducing frictionless checkout flows, but it can come with the risk of not being compliant—especially if a retailer isn’t confident in the current regulatory environment.

For retailers to really double down on consumer data protection practices and reduce or eliminate risks, consider seeking out the right partner for the job. Compliance is one area where it can pay to find a partner who specializes in getting this right rather than trying to bring it in-house, where other responsibilities can cause distractions.

For consumers to confidently participate in retail loyalty programs, they need to know their data is safe and that it’s being used to their benefit.

The intersection of technology, customer expectations and loyalty will create new opportunities.

As mentioned earlier, I believe the trends that have been taking hold across the banking and payments industries will find their way to loyalty programs over the coming months, presenting new opportunities for retailers to engage with consumers.

These include digital wallets that incorporate loyalty point balances to aid in ease of redemption as well as the growth of embedded payments, which will allow consumers to redeem in non-traditional environments. Of course, real-time payments will power instant refunds and reward redemptions. We live in a world of “instant” expectations and gratification. By incorporating these payments capabilities into their programs, retailers can adapt to consumer demands while fueling increased purchases and longer-term loyalty.

In addition to evolving payments capabilities making their way into loyalty programs, I expect hyper-personalization—largely driven by the demand for greater flexibility and a better loyalty experience—to take hold in 2025. Programs that leverage AI and data analytics to deliver these bespoke experiences have the ability to turn one-size-fits-all offerings into dynamic, meaningful interactions.

As loyalty program demands continue to evolve and new trends emerge and take hold in 2025 and beyond, retailers who adapt and incorporate the right technologies should expect to come out ahead. They don’t have to embark on the journey alone. With the right partners in place, whether for compliance or modern payments capabilities, retailers can ensure they’re deploying the solutions and capabilities their customers are looking for safely and efficiently.


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