While loyalty programs continue to influence behavior, influence alone is no longer enough. According to Deloitte, 72% of consumers say loyalty programs make them more likely to engage with their preferred brand, while 56% increase their spending because of the program.
That influence comes with growing pressure to prove loyalty’s business value. Finance leaders want evidence of incrementality. Marketing teams must defend retention investments while continuing to fund acquisition. Customers also have more programs competing for their attention, and many offer similar experiences.
At the same time, marketing budgets overfund acquisition and underfund relationships that could create long-term value. Gartner reported that awareness and conversion accounted for 62.6% of total media spending, while customer loyalty and retention represented less than 15%. Loyalty and retention spending had also declined 29% since 2024. The most AI-mature marketing organizations allocated a greater share of their budgets to loyalty and retention, signaling greater emphasis on long-term customer value alongside conversion.
Brands often manage acquisition, loyalty, payments and customer experience separately while customers experience a single relationship with the brand. Connecting those efforts so every offer, payment behavior or service moment creates greater customer value.
3 ways to strengthen customer loyalty strategy
1. Connect branded credit cards to your customer loyalty strategy
Many brands promote their credit card and loyalty program separately. Customers may respond to an introductory offer but never build long-term engagement with the card. A stronger approach connects the card to the loyalty experience through accelerated earning, differentiated rewards and more personalized journeys. Customers should experience one clear, increasingly valuable relationship across the card and loyalty program.
This connection carries particular importance for younger customers who are still forming payment habits and may not instinctively see a branded credit card as part of their loyalty relationship with a brand. YouGov research found that only 16% of consumers ages 18–34 have a branded credit card.
Clarity and early value can address that gap. Younger consumers need a straightforward explanation of how the card fits their financial habits, immediate proof of value and a frictionless digital experience.
- A clear, connected card and loyalty value proposition
- Immediate digital access and early proof of value
- Relevant incentives that reinforce repeat use
- Exclusive benefits, education and recognition that deepen the relationship
The early months after approval should function as a habit-formation journey. Registration, first use, second purchase, loyalty-profile completion, app adoption and repeat card attachment represent distinct behaviors. Each requires focused communication and reinforcement.
Brands should measure activation, repeat use, spend and loyalty progression.
Sustained card value comes from reinforcing the behaviors that deepen the customer relationship beyond account opening and must become part of the customer’s purchase rhythm.
2. Protect customer retention by eliminating the loyalty tax
Acquisition pressure has created a troubling pattern: new customers often receive the strongest offers. New subscribers receive reduced prices. New cardholders receive large introductory incentives. First-time buyers receive discounts unavailable to established customers. Meanwhile, customers who purchase repeatedly, refer friends and provide years of data may receive little beyond the standard program benefit.
That imbalance creates a loyalty tax, with established customers effectively paying more because they stayed.
Frequent promotions can train customers to wait for an offer and weaken program economics. A stronger customer loyalty strategy gives high-value customers meaningful recognition, access, relevance and choice.
- Surprise and delight: Thoughtful rewards tied to meaningful milestones, increases in engagement, service recovery or signs of potential lapse.
- Gamification: Challenges, streaks, progress indicators, mystery rewards and achievement badges sustain participation between purchases.
- Strategic gifting: Curated merchandise, personalized selections and gifts connected to customer interests or meaningful thank-you moments.
- Unique experiences: Early access, VIP events, learning opportunities, invitation-only communities and benefits connected to brand sponsorships.
- Status and voice: Advisory communities, product previews, feedback panels and referral programs that recognize customer influence.
- Choice: Rewards, experiences, charitable options and benefits that reflect individual priorities.
Related: Strategic customer gifting: Expert answers to common questions
3. Measure customer lifetime value in addition to transactions
Transaction-level incrementality captures only part of a loyalty program's impact. A more useful measure compares expected customer lifetime value with active relationship management against expected value without it.
A stronger loyalty business case measures customer purchase growth, retention, advocacy and customer insight. Together, these drivers help quantify customer lifetime value.
Consider a high-value customer with an expected remaining contribution margin of $1,200. A lapse puts that future value at risk and may also require additional acquisition spending to replace the relationship. A $40 gift, exclusive experience or targeted reward that materially reduces lapse risk can be evaluated as a retention investment against the expected value preserved.
Rigorous measurement still matters. Holdout groups, behavioral analysis and matched controls help identify what truly drives retention and growth.
The “would have bought anyway” concern calls for sharper segmentation and more rigorous measurement. Both help brands direct investment toward customer retention and growth while protecting program economics.
Related: How customer loyalty strategy proves business value to executives
Loyalty as an operating system
Customer loyalty strategy creates greater value when data, technology, communications, rewards and measurement work as one connected system.
- Customer and market research
- Program strategy and economic design
- Customer segmentation and data
- Personalized communications
- Incentives, rewards, gifting and experiences
- Test-and-learn measurement and ongoing optimization
That system gives customers more reasons to deepen the relationship and gives brands a stronger foundation for customer retention, growth and share of wallet.
Find the opportunities in your loyalty strategy
See where your current program is creating value, where fragmented experiences may be limiting performance and which opportunities deserve priority. Use ITA Group’s loyalty program benchmarking assessment to identify a clearer path forward.