As CTO of Engage People Inc. Len Covello helps companies differentiate loyalty programs to deliver a better experience for their customers.
If you are a retailer, you probably already have a loyalty program—or have considered starting one. A recent Salesforce survey found that two-thirds already have a loyalty program, and another 29% are in the middle of launching one.
Simply offering a loyalty program will not ensure its success. While the average shopper belongs to four loyalty programs, more than 33% of shoppers belong to a program they’ve never used. To drive true value and connect with customers, retailers must reimagine their existing loyalty program. Revampment begins by investing in the full customer lifecycle—from customer engagement to point accrual and, ultimately, point redemption and brand loyalty—to ensure that the value of the program is felt by both the customer and brand alike.
Quality Loyalty Programs
A quality program incentivizes customer engagement by offering personalized value tailored to customers’ interests and spending habits, while also delivering long-term benefits to retailers through brand loyalty and engagement.
This year, Deloitte’s financial well-being index is down nearly 8%, but retail spending continued to inch up .3%. This dynamic shows that consumers are becoming more discerning with their dollars and have high expectations for brands. Retailers must understand customer needs and design targeted loyalty programs that provide rewarding experiences in order to maintain brand loyalty.
Customers expect brands to know them as individuals, understand their preferences and offer curated and personalized communication, offers and redemption options. Research shows personalization is crucial, and without it, customer engagement suffers. According to the 2025 Customer Trends Report from Attentive, 81% of customers ignore irrelevant messages and 25% are less likely to purchase after receiving a generic message.
Retailers can create a hyper-personalized experience using AI to process behavioral data and automate outreach and offerings. Customers also want an easy, simplified experience with flexible and immediate redemption options. Specifically, Pay-with-Points (PwP) or redeeming rewards in real time and at the point-of-sale is becoming a standard expectation. These features simplify the experience and encourage the reward-redemption cycle.
Loyalty programs don’t need to be transaction-focused. Genuine engagement builds trust and relationships, generating increased transactions over the long term. Improved loyalty also boosts brand referrals and social media shares, driving improved cash flow and increased brand credibility.
Loyalty Different For Every Brand
While all successful loyalty programs share some common characteristics, not every program should look the same. Depending on the retailer type, business and brand footprint, loyalty programs can vary significantly to effectively capture the core audience. Here is how loyalty may look different in three key retailer categories:
Quick Service Restaurants (QSR)
Customers of quick service restaurants demand a one-to-one experience where redemption options are personalized to specific preferences. In food service, personalization is especially important because food preferences are unique to the individual.
Broad-based incentives won’t incentivize sales, as customers prefer to make their own selections with earned points. QSRs do well with a gamified loyalty experience that encourages engagement. Finally, because convenience is critical to the QSR format, the loyalty program should follow suit, offering a clear rewards system that allows users to easily engage with the system and redeem rewards.
Omnichannel Retailers
Omnichannel platforms are multifaceted, offering customers multiple ways to shop, purchase and receive goods, and the loyalty program should mirror this as a unified experience across shopping platforms, from in-store to online to app and other digital storefronts. This will allow the retailer to easily engage with the customer, no matter how they choose to make purchases.
Omnichannel retailers can create engaging rewards across multiple shopping channels that help shape those unique shopping outings. Seamless integration is also a key component of the omnichannel experience, with the program easily accessible at checkout, whether in-store or online. Users should easily earn or redeem points, regardless of whether the checkout is in person or virtual.
Grocery Stores
Today, customers purchase groceries in a variety of ways, and preferences can change frequently, depending on personal needs. Grocery rewards are most impactful when they focus on meeting the customers’ proclivities for adaptability by allowing easy mobile access to accommodate an on-the-go lifestyle.
Enticing grocery loyalty rewards also amplify savings by linking to other cost-saving tools and incentives, like brand-promoted special offers and coupons. This will give customers the best opportunity to find value and most effectively redeem points. Lastly, grocery loyalty programs are most successful when customers can convert points into cash that can be used directly at check-out to reduce their total.
First Steps To Revamping Your Program
If a loyalty program isn’t delivering value, it needs reworking. Leading retailers do this often, including brands like WingStop and Ikea, which revamped their loyalty programs to drive customer engagement, provide better incentives and build brand loyalty. During a revamp, brands can uplift their current program by investing in new technologies that revolutionize the loyalty space, thereby increasing value.
The first step is to audit the current program and analyze competitor models to identify gaps between the current program and expected gains. Look at critical KPIs like redemption rate, repeat purchase rate, net promoter score and incremental revenue, and produce measurable insights to illuminate how the current program performs against expectations and to highlight areas for improvement.
A program revamp also presents opportunities for more operational efficiency through tokenization or cross-partnerships. Retailers can incorporate rewards tokenization to increase flexibility and simplify redemptions, enabling lower loyalty program operational costs by automating the process and improving the experience. Brands can also bolster value through like-kind brand partnerships, sharing audiences and increasing rewards offerings while creating valuable industry alliances.
Revamping loyalty programs for long-lasting, meaningful value should be non-negotiable for retailers and brands. In the current economic environment, customers are more careful with where and how they shop and spend, and a strong loyalty program provides a clear competitive advantage.
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