Brands should expand how consumers can engage with the loyalty program to increase the value of the program to consumers and differentiate their business. As consumers’ inflation mindset persists, executives have renewed their focus on making loyalty programs stronger and stickier. Deloitte’s 2024 retail industry outlook found that strengthening loyalty programs was the highest of four growth priorities among executives.

Taking a targeted approach to address evolving consumer priorities and the changing competitive landscape is critical. Loyalty programs should identify what resonates with their customers and balance creating value for consumers while maintaining program profitability.

Our survey identified three key program features that engage consumers and help brands drive profitable loyalty and create sustained advantage:

• Paid membership tiers give interested consumers access to additional benefits and provide brands with an additional revenue stream. To attract consumers, brands should offer exclusive benefits for paid members, such as members-only discounts, promotions, and products, so that consumers clearly understand the value they are receiving in exchange for the fee.
• Brand partnerships provide consumers with more opportunities to use their loyalty program benefits and help brands expand their consumer base. Partnerships allow consumers to earn and redeem benefits in more than one place—which helps increase the perceived value of the program and creates opportunities to build brand loyalty.
• Generating and capturing consumer data is an additional benefit of expanding loyalty program reach. Customer data can both power more tailored loyalty experiences and act as a stand-alone revenue driver. In Deloitte’s 2024 retail industry outlook, nearly two-thirds of brands said they share or plan to share customer loyalty data with advertising platforms.

Consumers crave personalized programs and are willing to share their data for more tailored experiences. To improve consumers’ satisfaction and respond to demand for increased personalization, brands should do more than just increase the volume of personalized recommendations and tailored offers. They should explore ways to forge deeper emotional connections with consumers. For instance, personalizing digital engagement based on consumers’ likes and dislikes can simplify, streamline, and create a more rewarding experience.

Personalization exists on a spectrum—from near one-on-one personalization to the creation of individualized brand experiences, both of which are compelling but come at a cost and require significant investment. Despite these challenges, brands should not shy away from investing in robust data governance and infrastructure. These data enhancements are necessary to ensure clean, applicable data that can be leveraged to better implement personalization features.

In their scale, complexity, and reach, consumer loyalty programs have come a long way from the sandwich-shop punch card. With more data about consumer preferences than ever before, they can evolve even further. Retailers can use the insights from the Deloitte Consumer Loyalty Survey to forge more meaningful connections with their consumers and make their programs more responsive to evolving consumer preferences and market-specific needs.

Consumers are increasingly adopting a “Yes, and” mindset. Yes, they want meaningful financial rewards, and they want to be able to redeem them with other brand partners. Yes, they want intuitive program designs, and they want customized experiences that recognize their unique preferences. Consumers will always value the rewards they receive, but rewards alone are not enough to capture and keep the attention of increasingly selective consumers. While this presents brands with the difficult challenge of balancing core program features with newly developed benefits, it also presents brands with an opportunity to redefine how they think about their loyalty programs and the value they create for customers.

Going forward, we continue to recommend loyalty programs that are easy to use and provide clear financial benefits. Paid loyalty programs may see a greater lift in member spend and engagement than “free” competitors by providing unique benefits, such as upgraded benefits and customer service. In addition to revealing broader trends, our annual survey also underscores the importance of tailoring strategies and benefits to appeal to varying industry trends, consumer bases, and generational cohorts.