Do loyalty programs still work?

Do loyalty programs still work?

Yes, when there is a real reason to take part beyond the discount. People do still join programs and spend more with the brands they belong to, so the mechanic is far from dead. The catch is that signing up is not the same as staying active: the average shopper belongs to well over a dozen programs and is active in fewer than half of them, so a program only really works when it earns a place in that active half.

Why do so many loyalty programs feel like they have stopped working?

Because the reward is generic and too far away to change what anyone does. When every brand offers the same points-for-dollars deal and the payoff is months of spending down the track, the program fades into the background and stops shaping behaviour. The customer is still technically a member, but the card just sits in the wallet. That gap between a big member count and a small active one is where most programs quietly lose people.

What separates a loyalty program that works from one that does not?

A reason to take part that the customer would still value even if you took the discount away. The programs that hold people give them something to do, not just something to accumulate: standing that means something, access they cannot get elsewhere, a moment worth showing up for. When taking part is worth it on its own, the discount becomes a bonus rather than the entire point, and the loyalty you are after is the outcome of that, not something a points balance buys.

Are points and discounts enough on their own?

Rarely, because they compete only on price, and price is the easiest thing for a rival to beat. A discount buys a transaction, but it does not build a reason to come back once a better offer turns up somewhere else. Points still have a real place as a simple, familiar mechanic that customers understand at a glance, but if they are the whole relationship, the program is renting attention rather than earning it.

So should a brand still run a loyalty program?

Yes, as long as you can answer one question honestly: would people take part even if the reward were smaller? If the answer is yes, you have something worth building on and scaling; if the only reason anyone joins is the discount, fix that before you spend to grow it. The deciding question is not whether to have a program but whether people have a reason to take part beyond the money, which is the whole idea behind building participation rather than just handing out points.