Loyalty

Prices are on the rise due to inflation and tariffs, and it’s taking a heavy toll on customer loyalty. 

Consumers are looking for ways to stretch their dollars, and the right loyalty program can meet their financial needs while building strong relationships to keep customers from straying. These demands are giving rise to points-based loyalty, which is only expected to grow in 2026.

Customers will differ on whether they care about special experiences, unique offers, or social elements in a loyalty program — but no one will ever say they hate earning points toward discounts or freebies, according to Halle Stern, principal analyst at Gartner.

Consumers are “very price focused versus experience or relationship focused,” Stern told CX Dive. “Obviously, there are other elements that play into it, but I think that points are very crucial right now given the economy and given how expensive everything’s getting.”

Points-based programs are already proliferating through launches and revamps this year at companies like Jimmy John’s and Lowe’s. Experts expect the momentum to grow in the coming year as brands work to keep up with customer demands for flexibility and personalization.

Major attractions of points-based programs include flexibility for customers to choose how and when they redeem rewards, the ability to gamify points to keep shoppers engaged, and the hyperpersonalization of rewards for each loyalty member via AI.

Flexibility will be a loyalty must

It’s not just that customers want discounts from loyalty programs; they want those discounts at the time and place of their choosing.

Legacy loyalty programs tend to be aspirational, according to Len Covello, CTO at technology loyalty program solutions provider Engage People. Customers would save up over long periods for large discounts or special prizes, rather than take the program into consideration on every trip.

Shifting consumer trends have changed that. Younger consumers in particular are used to immediate discounts from programs like Starbucks Rewards, where rewards start as small as an extra espresso shot in your drink.

“The ability to redeem in a micro transaction world has become the norm,” Covello told CX Dive.

However, smaller rewards aren’t the only options consumers are looking for. In a December survey by The Wise Marketer commissioned by Engage People, nearly all respondents said it’s important to have control over when and where they redeem their rewards points with retailers.

Modern customers are divided between redeemers who are thrilled to earn small but regular discounts, and savers who want to save up for something big even if it takes them several years, according to Covello. A strong loyalty program will have options that appeal to both crowds.

“Choice is huge because one size doesn't fit all,” Covello said.

Gamification will keep customers engaged

Customers may be focused on savings, but that doesn’t mean they don’t appreciate the experiential side of loyalty.

Gartner is seeing more companies gamify their loyalty programs in addition to the introduction of points-based rewards, according to Stern. The combination is natural — it’s very easy to incentivize earning points in ways that feel fun and compelling beyond just swiping a card.

“We're seeing more of around the experiential earning of points,” Stern said. “So you share information about a brand on social media, you participate in an event, or you check in at a location, and you get points towards your next purchase.”

Gamification will grow in importance as points-based programs become the baseline, Covello predicts. When a customer is collecting points from every brand they frequent, the flexibility of points alone is not enough to make any given loyalty program stand out.

“At the end of the day, it's table stakes,” Covello said. “Everyone's going to earn something. The earn rates are going to be relatively similar. If you sit back and you do the math on a blank sheet of paper you'll figure out how they fund the earn, and it's fairly similar across a lot of programs.”

Other perks that complement points and build engagement with a loyalty program could gain greater prominence in 2026 as well. 

Benefits like free shipping or the ability to pay with points at a gas pump encourage customers to use that brand again and again, Covello said. These perks, like points, are becoming an integral part of a loyalty program that keeps customers coming back.

AI will enable hyperpersonalization

AI is shaking up the CX practice as a whole, and loyalty is no different. The technology is poised to change how programs approach personalization in particular.

The biggest impact will likely be the introduction of individualized loyalty program experiences, according to Stern. AI and predictive analytics can dig into a customer’s behavior and purchase history to tailor reward options and offers that meet their specific needs.

“AI and predictive analytics are creating very, very hyperpersonalized experiences in a loyalty program where multiple people could be members of the same program and have very different journeys,” Stern said.

As AI starts to play a larger role in loyalty during the coming year, leaders will need to take special care with how they roll it out, according to Covello. Brands need to be sensitive about how customers see their interactions, especially when it comes to AI-personalized messaging and imagery.

“You still need a gatekeeper to watch, as brands still need to be protective of what's ultimately being generated,” Covello said.

Some customers are becoming suspicious of loyalty apps.

A columnist for the Washington Post wrote in October about his realization that the Starbucks app was showing him fewer promotions during the months when he bought more coffee. That anecdote then appeared in a Reader’s Digest article about surveillance pricing within loyalty apps for a host of industries, from airlines to retailers. 

So, are companies avoiding giving customers deals, or even presenting them with more expensive prices, if they’re members of a loyalty program? 

To loyalty consultant Don Smith and loyalty expert Mladen Vladic, the answer is a resounding “no.” Treating loyal customers worse than others is not a practice either would recommend. But when it comes to using loyalty data, the answer is more nuanced. 

“I see rewards and loyalty as a tool to help [companies] with their overall business objectives,” said Vladic, who is the head of product, payment networks at fintech firm FIS. “But you have to strike the right balance.” 

A balancing act

Connected to surveillance pricing is the concept of personalization, which, in itself, requires a balance. Too much can be overwhelming or creepy. Done right, it can make a customer more likely to pay a premium, increase their basket size or boost satisfaction. 

Personalized pricing can, perhaps, more easily slip into the negative side of the spectrum. There could be a case in which two customers sitting next to each other, with equal loyalty status, could be charged different amounts for the same product. Smith, who is the global consulting officer and CMO at customer loyalty consultancy Brierley, a Capillary Services company, would go past “surveillance” and call that “predatory pricing.” And it’s a quick way to break trust. 

“If [customers] sensed that was happening in a loyalty app, or that loyalty data were being consumed for that purpose, they would opt out of loyalty,” Smith said. 

Using personalization data to determine prices could cross an ethical line, Smith continued. Historically, predatory pricing tactics contain racial and gender biases, especially for luxury goods for which the price is negotiable. 

Pricing fluctuations based on market factors, though, is more ethical. The pricing impact of lower inventory and higher demand is basic economics.

On the other side of the balancing act is the fact that CX teams use loyalty platforms to acquire, attract, activate, encourage engagement and drive retention within a given budget, as Vladic put it. The budget for promotions is not unlimited, nor is it necessarily the same each month or each quarter. If a company determines it will get a better return on investment by giving more promotions to a new loyalty member than a frequent user of the loyalty app, there’s a business case for doing so. 

Still, Vladic continued, there’s risk involved. Though he declined to comment on the Starbucks case, he noted that bad press or negative Reddit threads could impact brand reputation and, ultimately, loyalty. Customers these days aren’t opposed to shopping around.

“The ability to switch is easier than ever before,” he said.

A ‘sea of sameness’

To customers, whether their loyalty data is being used to give them more or fewer promotions, cheaper or more expensive prices, may not matter. Vladic estimated most don’t spend any significant amount of time analyzing such fluctuations. It’s less about what they aren’t getting, and more about what they are getting. 

Customers have come to expect certain perks from all loyalty memberships. Most will offer holiday deals, double points and limited time offers, Vladic said. But these ubiquitous expectations also lead to what Vladic called the “sea of sameness.” The ability for a loyalty program to stand out is a challenge that is, perhaps, more noticeable to customers.

“Unless you're going to bring something that is differentiated from competition, however you define that to be or however you define your competition, don't do it, because you're not going to get the incremental lift that you are looking to get,” Vladic said. 

The basics matter, too. Smith urges program managers to track loyalty members’ purchases and reinvest a portion of that to provide perks and experiences. Transparency around standards for ethical data collection and usage is becoming a requirement, as more companies are publishing that type of information for customers to access. 

In short, Smith had this advice: “Don't take your loyal customers for granted.”

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By CSG Systems

Most loyalty debates start in the wrong place: with feelings instead of choices. Brands talk about “love” and “affinity,” but oftentimes customers make a simpler decision: do I keep using this, or do I switch?

That framing matters because it keeps the conversation anchored in what loyalty ultimately is for most businesses: repeat choice. In a CSG/Wakefield survey of 1,200 global consumers, 55% of consumers defined loyalty as exclusive use. Another 22% defined it as simply using a brand more than competitors. In other words, when you measure loyalty as usage, you see where customers draw the line between “default” and “replaceable.”

What does this mean for brands? That loyalty is “default status” for customers, and they revoke that status from a brand when they spot higher risk or a broken value exchange.

Respondents ranked their three 1) most influential factors for staying with a brand and 2) biggest loyalty dealbreakers. Here are the takeaways.

1. Loyalty is a trust ledger (not a rewards program)

Consumers aren’t ranking “more offers” as their biggest loyalty driver, but rather knowing what to expect and trusting the rules are fair.

The #1 most-cited loyalty factor was transparent and fair pricing, cited by 61% of respondents. Consistent product or service quality followed closely at 58%. Those two numbers sit together for a reason: customers track whether your value holds steady over time, and they notice when it doesn’t.

Conventional wisdom says it’s simply price hikes that create churn pressure. It’s deeper than that—it’s the customer’s feeling that the rules changed without consent.

What brands could do differently

• Treat price changes as trust events. Design a dedicated journey that goes beyond an email template.
• Communicate early and explain without spin. Customers want to know what changed, not a marketing story.
• Watch for early signs that customers might leave after a price change. Track things like plan downgrades, missed payments, more support calls, and visits to the cancellation page.

2. Fraud is the fastest path to “never again”

More than half of consumers (57%) say experiencing fraud on their account is a top reason they’d stop doing business with a brand. That outranked price increases.

Many businesses now view fraud events as both a security issue and customer experience (CX) issue—which is necessary, as customers see fraud as a failure of protection and a promise of future hassle. If loyalty is a risk calculation for consumers, nothing signals danger more strongly than a fraud incident.

What brands could do differently

• Automate and personalize fraud communications, not just alerts. A generic “suspicious activity detected” message is not enough. Customers need next steps, time estimates, and clear ownership.
• Design a single-thread experience across channels. When customers get alerted, they often switch among app, phone, web and email. Maintain continuity of case ID, status, and next actions so customers aren’t left repeating themselves or feeling lost.
• Measure the recovery experience, not just fraud prevention. Track time-to-freeze, time-to-resolution, repeat contacts, and abandonment during verification. Fraud-related churn is often driven by the pain customers feel after the incident.

3. Service failures add up quickly

Poor customer service is a top dealbreaker for 45% of respondents. Unresolved issues are nearly identical at 44%. Taken together, this points to a compounding effect: when customers have to repeat themselves, re-open cases, or chase resolution, the brand stops feeling like the safe, low-effort choice.

That’s why customers often stick with fewer providers—they want less hassle. If loyalty means choosing a brand again and again, then your service operation is being judged on how well you solve problems.

What brands could do differently

• Shift investment from save offers to issue prevention. The best way to keep customers loyal is to solve problems early, so they never reach the point of wanting to leave.
• Build an “unresolved issue” early-warning system. Prioritize customers with repeat contacts, reopened cases, long handle times or transfers. This prioritization requires knowing your customers, as well as what actions they’ve taken or not.
• Focus on how well problems are actually solved. “Ticket closed” doesn’t always mean the issue is fixed. Track repeat contacts and time-to-resolution as key loyalty metrics.

Keeping Your Brand the ‘Default Choice’ in 2026

Customers stay loyal when they trust your rules, feel protected, and get problems solved easily. That keeps your brand as their default choice, again and again.

For more insights and strategies, download the 2026 State of the Customer Experience Report: Winning Loyalty in the Age of Overwhelm.

There is a loyalty perception gap between leaders and customers — 89% of executives say customer loyalty has increased in recent years, while only 39% of consumers agree, according to a September PwC survey.

Just over half of shoppers say their most common reason to stop using or buying from a brand is a bad experience with its products or services, according to the survey of more than 5,500 consumers and 400 executives.

“Executives often think loyalty is built during service interactions,” George Korizis, U.S. principal of customer and enterprise strategy at PwC, said in an email. “Customers tell us it’s decided much earlier — often the very first time they use the product. If you’re not measuring that early experience, you’re missing the biggest driver of loyalty.”

When it comes to loyalty, business leaders and their customers “are speaking different languages,” according to Korizis. 

The gap between leaders and customers exists because executives are measuring behavior, while consumers describe it more like a feeling, according to Korizis. Repeat purchases don’t translate to actual loyalty if customers are only staying with you due to convenience or good prices.

“Executives look at metrics they control — repeat purchases, renewals, engagement scores — and by those numbers, loyalty looks strong,” Korizis said. “But customers define loyalty emotionally: Would I recommend this brand? Do I feel connected? Would I stay if a competitor offered something similar?”

Leaders are reporting problems with loyalty programs as well. Nearly 3 in 5 executives say their loyalty programs aren’t delivering the outcomes they need, according to the PwC survey. 

The issue with loyalty programs is similar to the perception gap, according to Korizis. Executives are building loyalty programs around what companies want to track, not what their customers want out of membership.

“In our research, executives overwhelmingly said discounts and rebates are the core of loyalty programs,” Korizis said. “And yes — customers want those. But they also want things executives tend to underweight: exclusive access, community and experiences that feel designed for them personally.”

Additionally, nearly half of executives say their loyalty program will be obsolete within the next three years, according to the survey. This is because customer engagement has shifted, and consumers are relying on reviews, influencers, AI search and other tools in addition to company apps and websites — a reality Korizis calls the “experience supply chain.”

“Companies are investing heavily in loyalty mechanics inside their four walls, but customers are making decisions in spaces the company doesn’t control,” Korizis said.

Future proofing loyalty programs is a matter of designing them for the broader ecosystem in which customers operate, according to Korizis. Loyalty strategies should recognize that influencers and reviews matter as much as the app.

“The programs that survive will be the ones that fit how customers already want to engage, not ones that force them into a company-designed system,” Korizis said.

Customer loyalty to brands fell globally in 2025 across multiple measures, according to a SAP Emarsys survey of over 10,000 respondents. 

True loyalty, which SAP Emarsys describes as “unwavering, unshakeable” and “the holy grail of loyalty,” dropped 5 percentage points from last year to 29% of respondents in 2025.

Consumers, too, noted their diminished loyalty: 68% of global consumers describe themselves as loyal to certain brands, a decline of 1 percentage point from the year prior.

Multiple pressures contributed to the decline in loyalty, from economic uncertainty and inflation, to supply chain issues and social media trends.

“With rising inflation and new shopping channels emerging, repeat purchases are no longer enough,” Balaji Balasubramanian, president of SAP CX, said in an email. “Loyalty must be earned through meaningful, connected experiences.”

Economic challenges are making it harder for organizations to sustain loyalty. More than one-quarter of U.S. consumers said they can “no longer afford to be loyal” due to tariff-caused price hikes. Two-thirds of respondents said they have switched from a brand they were once loyal to because of cost.

Such findings echoes other research. A Wunderkind survey from August found that higher prices are consumers No. 1 concern, and McKinsey’s ConsumerWise research from September found that inflation and rising prices are leading consumer concerns.

SAP Emarsys’ findings show “that tariffs, inflation, and resulting price hikes have made loyalty harder to maintain, as consumers now prioritize cost above all else,” Balasubramanian said.

Loyalty is no longer just about brand familiarity, with nearly two-thirds of consumers ignoring brand names when buying consumer products. 

Discounts and points won’t win customers over either, Balasubramanian said. Instead, companies need to provide clear, personalized value. That begins with leveraging data to understand their customers and to differentiate the ones who are cost-conscious, quality-conscious or socio-community conscious. 

From there, brands can “serve up products, experiences and offerings that resonate with them uniquely,” he said. “And when they feel understood and valued, they reward brands with repeat business, advocacy, and long-term growth.”

Fitness and wellness businesses are working to retain customers through personal outreach and loyalty programs as economic uncertainty perists, according to a September Mindbody report. Mindbody surveyed more than 1,400 decision-makers across the global fitness and wellness industry.

Personal outreach was the primary tactic for retention, followed by discounted packages and pricing promotions, engagement events and loyalty programs. 

“Community itself is also one of the most powerful retention drivers,” Brian Fields, chief revenue officer at Playlist, the parent brand of Mindbody, said in an email. “Loyalty and growth go hand in hand: When clients feel looked after, they stay, and they bring their friends.”

The fitness and wellness industry is working to foster community and investing in the little things that can improve an experience, whether that’s fresh towels after a workout or complimentary toiletries.

While the industry is largely optimistic about business performance, operators are looking ahead to a potential economic slowdown and considering places to cut costs.

Notably, if it does slow down, businesses are keen to maintain clients’ experience and cut back elsewhere. Only 3% of fitness and wellness businesses said they would cut amenities.

“That’s because things like recovery perks don’t cost much to provide, but they carry an outsized symbolic value,” Fields said. “When you finish a workout class and the instructor hands out eucalyptus towels, you’re more likely to remember your experience at that studio.”

Operators said they’d rather scale back behind-the-scenes costs like marketing or hiring, than remove something a client touches and feels directly, according to Fields.

“Amenities are a visible signal that the business is prioritizing the member experience, even when budgets are tight,” he said. “In practice, protecting amenities is really about protecting retention — small details that make clients feel cared for are what keep them coming back.”

The report also found that customer service is the second-largest AI use case in the industry, with nearly 1 in 5 operators using the technology for such tasks as reminders, scheduling, or client communication. The top use is for marketing content.

Solving customer challenges is an essential but frequently overlooked tenet of customer loyalty.

Most loyalty programs focus on discounts that drive transactional engagements, but cultivating loyalty goes beyond a rewards program. Good experiences — and recovered experiences — keep customers coming back. 

“Solving customer challenges is one of the most powerful drivers of loyalty because it shows customers that a brand sees them, hears them and, more importantly, is willing to take action to make their experience better,” said Patricia Camden, EY Americas’ loyalty leader.

Research shows that addressing customers’ issues with a brand’s service can increase customer satisfaction and loyalty toward that brand.

“People remember when a brand makes things right, makes their life easier or removes some sort of friction from the process,” Camden said.

That can help build trust and confidence, which are essential ingredients for long-term brand allegiance, experts said.

Solving problems cuts churn

Bad experiences cost companies return business.

More than half of customers’ poor experiences with brands result in customers cutting their spending, according to Qualtrics XM Institute. A Morning Consult survey found that one-quarter of consumers switch brands after just one bad experience.

Every customer challenge, therefore, is a loyalty-building opportunity. 

Emotionally charged or high-stakes situations like rescheduling a trip because of a personal emergency are especially “powerful loyalty touchpoints” that can “strengthen the relationship or cause lasting harm,” said George Korizis, front office strategy and transformation leader at PwC.

“These moments become proof points to a consumer that a brand is dependable and customer-centric,” Camden said. “Solving the right problems in the right way is no longer optional. It’s a loyalty imperative.”

One of PwC’s financial services clients, for example, recently deployed AI-powered virtual agents to handle routine tasks and escalate complex issues, such as identity theft or large transaction disputes, to human agents, according to Korizis. The virtual agents improved resolution speed and satisfaction scores, but the escalated interactions “led to significantly higher net promoter scores and long-term customer retention” by creating trust, Korizis said.

Customers expect care, not perfection

Speed, empathy, transparency and overcommunication are the most critical aspects of understanding and addressing a customer’s issue, experts said.

But customers expect care, not perfection, according to Boomerang, a lost and found solution vendor, which specializes in addressing customer issues. 

“Acknowledge their stress, keep them informed and solve the issue like it’s your own. Technology can help with automation, but the human element is irreplaceable,” the Boomerang spokesperson said.

Businesses should focus on delivering frictionless resolutions to their customers. 

Implementing an omnichannel approach to solve customer problems can help ensure that a customer’s needs are met, regardless of how they initially contact a brand, said Chris Donato, president and chief revenue officer at Zendesk. It can also help brands get the most out of their human agents by freeing them up to deal with more complex or emotionally charged issues.

Effectively resolving customer challenges requires a thoughtful balance of responsiveness, personalization and consistent follow-through, Korizis said. Tools like real-time pulse surveys can help businesses identify service gaps, while “closing the loop after resolution reinforces trust” and shows customers that the company values them beyond a single transaction, Korizis said.

“Resolving an issue well is more than just great customer service, it’s a moment of truth,” Camden said. “It demonstrates that the customer truly matters, and that’s what creates loyalty.”

The problem and brand matter

Customer service strategies vary by issue and industry, experts said. In retail, for example, AI-powered self-service and other automated systems can help customers address most routine inquiries, such as real-time updates on an out-of-stock item or making a simple return.

However, customers often expect more personalized support for complex or emotionally charged concerns. 

“In healthcare or financial services, a relatively small error, like a billing issue or a miscommunication, can feel deeply personal because it touches something essential,” Camden said.

In such instances, the resolution isn’t just about fixing the problem, “it’s about restoring trust in a brand that customers rely on for security and peace of mind,” Camden said. “The expectations are higher, and the consequences of getting it wrong are more lasting.”

The best-performing organizations align their service delivery with the emotional and practical needs of each moment, Korizis said.

Regardless of the industry or individual circumstances, brands must prioritize customer service to achieve sustainable, long-term growth. After all, customers’ problems are loyalty opportunities.