Key takeaways:

• Canada has the largest population of loyalty program subscribers, more than any other country in the world.
• Leading retailers leverage AI and customer data platforms (CDPs) to personalize loyalty experiences.
• Even established loyalty leaders must continue to innovate with meaningful partnerships, fresh features, and a clear value proposition to engage Canadian customers.

Loyalty programs are key to cultivating a sticky and engaged customer base. Whether your organization is new or seasoned in the loyalty game, your journey needs to reflect the latest market trends and customer expectations.

In the latest edition of our Retail Reimagined series, we share how leading retailers are innovating their loyalty programs to compete for customers’ wallets and hearts.

State of loyalty programs in Canada

Retail loyalty programs are essential for customer retention and organic growth within organizations. In fact, 70% of customers spend more on brands with loyalty programs.¹

And Canada is one of the most loyalty-obsessed markets in the world! Over 90% of Canadians were enrolled in loyalty programs in 2024.² And affluent Canadians tend to use them 28% more frequently than other groups.³ This tells us that loyalty programs aren’t just for value-oriented consumers; they’re expected by Canada’s biggest spenders.   

Canadian retailers need to focus on loyalty as a key investment area to remain competitive.

Beyond simply creating value for your customers, thoughtfully designed loyalty programs can drive significant value for your business. Some of the most powerful value drivers we have seen include:

• Revenue growth and retention: Features and benefits anchored in core sources of business value (e.g., frequency, basket size or spend, category shift) can drive organic growth. Loyalty leaders grow revenue 2.5x faster than industry peers.⁶

• Customer experience: Loyalty can often be a tool to tie together customer journeys across channels and differentiate the customer experience.
• Reduction of acquisition costs: It’s 5x more expensive to acquire a new customer than to retain an existing one.⁷ Loyalty partnerships can play an outsized role in delivering access to the customer base of partner brands.

• Acquisition of first-party customer data: The value of third-party data and cookies is depleting, and more customers are using AI for search. It’s critical to obtain first-party data from customers at every interaction, which organizations can do with loyalty programs.
• Promotions cost optimization and promotions co-funding: The data collected by loyalty programs allow smart organizations to create more compelling and personalized offers vs. expensive mass promotions. Retailers are using vendor funding to further reduce the cost of loyalty promotions or entering partnerships that support the co-funding of promotions.

It’s clear that loyalty is a hot topic in Canada with many benefits to both consumers and organizations. So how should retailers think about evolving their loyalty offerings and standing out?

7 ways leading loyalty programs stand out in a crowded market

We assessed 16 Canadian retailers based on their loyalty journeys and found that only 25% of them are leaders in the Canadian market.⁸ These retailers are leading on a global scale with many of them providing inspiration to global counterparts. However, we also found that 44% of Canadian retailers are lagging in loyalty offerings, which means there is room for improvement.⁹

Here’s what we can learn from the leading organizations:

1. Clear value proposition, vision, and follow-through

Loyalty is an onion that you need to peel back. Your loyalty program must start with clarity on what you’re trying to achieve for your business and customers. This includes identifying the features customers will value the most from your program. These features will drive the behaviour changes needed to create business results for your organization.

Leading retailers have a clear vision and value proposition for their loyalty programs. With this information, they can inform the capabilities needed to bring it to life:

• People: Who owns the loyalty program and experience? Do you operate in-house or outsource these responsibilities?
• Process: What operating model do you need for your program? How do you leverage data and analytics?
• Technology: What investments do you need to make in your tech stack to maximize data from your loyalty program?

2. Fresh loyalty experiences and offerings

New features, tiered rewards, and gamification keep customers engaged with your program. We have observed that even the most loved programs in the market continue to innovate and launch new features. Loyalty is not a “one and done” proposition. It requires continued experiential innovation to increase customer adoption, heighten engagement, and shift behaviour.

3. Personalization with customer data platforms (CDPs) and AI

Over 70% of customers expect personalized loyalty programs, yet only 45% of brands offer them. Leading loyalty programs offer personalized offers and choice throughout the entire customer lifecycle. These options relate to how customers earn or redeem points, the rewards they are awarded, or the content they receive. For example, Sephora’s Beauty Insider Program gives customers personalized email offers and rewards based on their purchase and browsing history.

Purchase and browsing history are rich with data to personalize customer experiences, if the organization has the appropriate technology and data foundation. AI and customer data platforms (CDPs) have the potential to further add value to the customer These platforms, when used correctly, can:

• inform customers about something relevant;
• provide value through tailored recommendations and offers;
• streamline loyalty experiences to remove friction;
• remove bias and emotion from decisions; and
• automate decisions at scale.

Bottom line? CDPs and AI have the potential to inform decisions around the loyalty customer experience that no human could process naturally or quickly.

4. Strong fraud and data privacy measures

Fraud and data breaches are at an all-time high in Canada, especially with push payments in financial services. Loyalty programs are at risk of being targeted on two fronts. First, by internal bad actors who seek to game the system and acquire free merchandise. Second, by external bad actors who seek to steal customer data.

Leading retailers think of fraud from day one, with measures like:

• Updated cybersecurity processes
• Fraud management solutions dedicated to loyalty fraud
• Clear communications to their customers

The result is twofold. Fewer data incidents improve customer trust, and fewer fraud incidents reduce lost merchandise and revenue.

5. Meaningful partnerships for enhanced value

Canadian coalitions and partnerships are leading globally in how they enhance personalization and value for customers. For example, we’ve recently observed several new partnerships announced in the Canadian market.   

These partnerships often enable customers to “stack,” earn, and redeem value across programs, while delivering organizations with insights on their customers’ shopping behaviours and driving greater brand resonance.  

We are also observing leading retail programs leaning heavily into financial services propositions and unconventional partnerships, underscoring the critical value of data to drive rich and targeted offers to increase your brand’s share of wallet.

6. Consistent and creative omnichannel experience

Customers expect a consistent loyalty experience. Leading retailers seamlessly integrate their loyalty features across in-store, online, and apps. Customers have grown to expect seamless experiences with loyalty across channels, which includes elements such as:

• Simple enrollment
• Quick navigation
• Straightforward earning and redemption process

7. Smarter ways of tracking loyalty value

Loyalty programs often have clear perks for customers, but the business returns can be difficult to track. Attribution of customer growth and retention is a common challenge in retail.

Many retailers lean on traditional metrics to evaluate the success of their loyalty programs, (retention, frequency, and basket size). Leading retailers prove out their loyalty theories by looking at new sources of value, like:

• Data access and usability: Does your loyalty program give you meaningful customer data?
• Partner capabilities: Are your partnerships bringing you measurable value, data, or expertise that you don’t have?
• Brand resonance: Is your brand stronger with your loyalty offering?

How Deloitte can help

Deloitte has immense insights and hands-on experience with the latest loyalty innovations across multiple retail subsectors. We have worked on the most successful loyalty programs in the global consumer industry. And our proven process can help you get to the next horizon of loyalty.

The path forward is different for every retailer. Some examples of our strategic support include:

• Loyalty Program Design Accelerator: A playbook and blueprint to accelerate design choices and understand how choices drive customer and business value.
• AI-powered data platforms: Implementing AI tech to unlock value from customer data.
• Partner advisory and deal structuring: Identifying and valuing strategic and financial sources of value to unlock through loyalty partnerships.
• Security advisory and implementation: Creating cybersecurity systems and processes to combat fraud risks.

We help retailers throughout their entire journey to achieve their next level of loyalty maturity.

Transform your retail loyalty program

Your loyalty program is your lifeline for customer engagement, growth, and relevance in the market. Your customers are always hungry for more. We can help you determine the next step in your journey to maintain your competitive edge and satisfy your customers.

Book a call with a leader below to bring your loyalty goals to life.