For way too many brands and companies, loyalty is stuck. Customers are increasingly apathetic towards brands with little or nothing more than a homogenous loyalty program focusing solely on transactional value.
Loyalty is not a program. It never was.
A “me too” loyalty program is hardly brand building or differentiating, especially without any connection to a good, or ideally, a better customer experience.
Skeptical? The evidence is overwhelming.
Consumers No Longer Consider Themselves Loyal
Research we conducted pre-Covid at my previous firm (rDialogue) revealed that 83% of consumers consider themselves loyal, which they defined as a willingness to pay a premium or go out of their way to do business with a brand. Loyalty is stuck when customers don’t feel or behave that way, as the data suggest.
- Well after Covid, nearly half of Millennials and Gen Z (45%) report no brand loyalty. (McKinsey)
- With more programs in the market than ever, engagement dropped by 10% in the last two years and a similar number of consumers – 5 to 10% — are more inclined to consider switching programs and brands in the same industry. (BCG)
- These trends go across industries but are at the core of what started loyalty marketing. The Wall Street Journal recently published a piece describing the shift by frequent flyers to becoming free agents.
- CNN added airlines are now giving frequent flyers “the middle finger” in the form of devaluating miles and raising qualifications for elite status. When considering loyalty comes from brands showing loyalty to customers, CNN’s analogy is apropos.
Companies are not focused on Customers
Only 3% of companies are “customer obsessed” and not surprisingly, customers are frustrated. (Forrester). Loyalty is stuck when it doesn’t lead to a better customer experience. And as important as that might seem, companies and loyalty are failing.
- US CX Quality index is at an all-time low. (Forrester, 2024).
- Consider that 88% of consumers say the experience a company provides is as important as its products/services. (Salesforce)
Like Loyalty, Brands Are Stuck Too
Customers are loyalty to brands, not loyalty programs. The American Marketing Association defines a brand as “a name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers.” Emphasis mine.
- According to VML’s 2025 Future 100 report, 72% of consumers said that “very few [brands] really stand out as different.”
If brands are stuck, suffering from a serious lack of differentiation, loyalty is stuck as well. as illustrated by VML, it is easy to see loyalty as hardly being anything but differentiated. Making it stuck between generic brands and generic loyalty programs.
Getting UNSTUCK
While there is no silver bullet, there are some fundamentals worth considering to gauge how STUCK your organization is.
- Leadership: Are customers and the CX a priority for the enterprise? Part of the commercial strategy? Part of the business and/or strategic plans? Customers reduce spending 38% of the time following very poor experiences and stop spending entirely 15% of the time due to negative experiences. Easy to see that even small improvements in CX provide exponential revenue gains (Qualtrics)
- Brand: Is your brand well defined and differentiated? The best brands consistently deliver higher shareholder returns (Interbrand) and outperform the S&P 500. (Brand Finance)
- Data and Insights: Are you using customer data accordingly? Not just for marketing but for decision support, including operationally and financially?
- Customer Insights: Do you know who your customers are at least a segment level? What their loyalty drivers are (by segment, at least)? Does your organization understand what loyalty is and how critical it is for the success of the business?
- Measurement: Are customer and loyalty metrics viewed as KPIs for leadership and across your organization? Are they tied to financial performance and known – and reported — to investors? Are your selling margins expanding or contracting?
- Innovation: Does your company pursue customer-led or at least customer-focused innovation? Is what drives customer loyalty understood?
While it’s not easy or black and white, these questions are a starting point. There is a very low bar for loyalty and CX leadership, but that leadership is a choice.
We first wrote about this idea a few years ago, and since that time, it’s gotten worse, not better.
It’s about time to get loyalty UNSTUCK. For more insights on getting loyalty unstuck, go here.
Editor’s Note
Phil Rubin, a charter CLMPTM, is the founder of Grey Space Matters, a boutique firm that works with global brand and industry leaders to accelerate growth though customer focused, insights-led strategies and go-to-market execution. Prior to GSM, Phil founded rDialogue, formerly the leading independent loyalty strategy and analytics firm. Phil serves on the boards of several companies and also as a member of the Wise Marketer Group Advisory board.