Brands winning at loyalty today understand that the game has changed – traditional points-based programmes no longer guarantee retention but meaningful engagement does. From “soft contracts” that create a sense of reciprocity without long-term commitments to the delicate balance between personalisation and privacy, here’s how loyalty is being redefined – and what brands must do to keep up.
1. Loyalty Without Lock-In
Consumers increasingly reject rigid, long-term commitments, but still respond to a sense of reciprocity. The best loyalty programmes now function as "soft contracts" – offering immediate, tangible value while subtly reinforcing habitual behaviour. With behavioural economics at the forefront, brands are abandoning points accumulation in favour of instant gratification (e.g., surprise and delight, dynamic discounts and value adds) that creates a sense of goodwill and makes disengagement feel like a loss.
For brands, this means moving away from rigid, points-based models and focusing on moments of value that feel generous without requiring much in return. It’s about creating low-friction rewards that give customers a reason to keep showing up – even if they haven’t officially pledged loyalty.
Sephora’s Beauty Insider loyalty programme is a perfect example. Members get a birthday gift just for joining, along with surprise samples and early access to events. It’s not about locking people into tiers – they’re building goodwill upfront, making the idea of disengaging feel like missing out on something special.
2. Emotional Loyalty Over Transactional Loyalty
Traditional loyalty programmes focus on rewarding repeat purchases, but real loyalty is emotional, not just transactional. Brands should be thinking less about points and more about cred. Emotional loyalty comes from making people feel like insiders, not just consumers. How can you make your customers feel seen, special, and part of something?
Brands that integrate personalisation, exclusivity, and status benefits (e.g., early access; unique experiences) create deeper, more resilient consumer relationships. This taps into identity-driven loyalty, where consumers align with a brand not to get special offers, but rather because what it offers is special – reflecting their values, aspirations, or self-image.
Nike does this brilliantly with its Nike Membership, which gives members access to product drops before anyone else, personalised workouts, and exclusive content. The programme isn’t about savings, but rather about affinity.
3. From Points to Play
Consumers have grown weary of predictable, linear and frankly dull point systems. The best programmes incorporate elements of play – leveraging unpredictability, progress loops, and social recognition – to create a sense of fun rather than obligation.
Instead of “spend to earn,” think “engage to be surprised.” Brands that bring in elements like streaks, unlockable content, or social challenges can make loyalty feel like a game people want to play, rather than a task they need to complete.
Duolingo is a masterclass in this. While it’s not a traditional loyalty programme, its streaks, random XP boosts, and badges keep people coming back – without needing to dangle a discount. It taps into habit-forming behaviour through play, not pressure.
4. From “Earn & Burn” to “Belong & Benefit”
The traditional loyalty model assumes customers stay for rewards, but many consumers want a sense of belonging. Loyalty programmes that foster a community element – whether through members-only spaces, shared values, or peer interaction – are more effective at keeping customers engaged. It’s about turning customers into collaborators and fans into family.
Glossier gets this. They don’t have a traditional loyalty scheme, but they’ve built a cult following by giving their community a seat at the table. From involving customers in product development to hosting them in Slack groups, they’ve created a feedback loop of loyalty based on inclusion, not incentives.
5. Personalisation vs. Privacy Paradox
Consumers want hyper-relevant, personalised experiences but are more sceptical than ever about how their data is used. The best loyalty programmes navigate this by offering transparency, choice, and value exchange. Rather than passively extracting data, intelligent brands encourage "data for value" exchanges – where consumers willingly share preferences in return for tailored experiences, exclusive content, or VIP treatment.
Checkers is nailing this locally with its Xtra Savings programme and Sixty60 app. Rather than offering vague points or hard-to-redeem rewards, Checkers gives customers instant, personalised discounts based on their shopping habits. Through Sixty60, they take it a step further, using purchase behaviour to streamline reorders, suggest relevant products, and make grocery shopping feel effortless. Customers know their data is being used, but they see the benefit right away – which builds trust and loyalty in real-time.
TL;DR
In this no-strings-attached era, loyalty isn’t earned through rigid systems or points tallies – it’s cultivated through shared values, flexible rewards, emotional connection, and real-time relevance. Brands that treat loyalty like a living, breathing relationship rather than a transaction are the ones that’ll turn casual flings into long-term love.
Originally published in Financial Mail.
