When you hear ‘marketing waste’, you probably think of failed campaigns. But the real budget drain? Ineffective loyalty programmes that don’t deliver value. It’s time to rethink customer loyalty—and shape the future of loyalty into a strategic driver of growth. CFOs should take note.
The hidden cost of loyalty.
Auto rewarding customers might be the biggest culprit – i.e. giving incentives to shoppers without changing their behaviour. Consider a local coffee shop offering a free coffee after five purchases. Sounds great – until you realise customers were already buying five coffees every week.
This outdated approach gives away revenue to customers who would’ve bought anyway. You’re handing out loyalty rewards that don’t inspire new buying habits or motivate customers to try different products – essentially throwing marketing budget down the drain.
Rethinking loyalty: A smarter approach.
The future isn’t about freebies. It’s about using data to create personalised experiences that actually shift customer behaviour. True loyalty comes from understanding customers’ needs and buying patterns, then inspiring them to take actions they wouldn’t otherwise have taken.
Why traditional programmes fail.
Most loyalty programmes use a one-size-fits-all approach; treating all customers identically and offering generic rewards. This misses the opportunity to capitalise on individual customer value.
Retailers frequently reward customers who were already loyal, failing to drive new behaviour or increase spending. The solution? Stop treating loyalty as a one-off transaction and view it as a strategic tool for customer engagement and growth.
Data: The key to smarter loyalty.
First-party data – customer behaviour, purchase patterns and preferences – is essential for creating targeted loyalty experiences. By leveraging this information, businesses can segment customers based on needs and potential value, then deliver the right rewards at the right time.
A daily coffee buyer might be more inclined to try a new breakfast item rather than another free coffee. With data, businesses can create offers that align with customer interests and maximise their loyalty programme’s impact.
It’s not just about collecting data – it’s about turning it into actionable insights. With advanced analytics, businesses can understand when to incentivise, cross-sell, or discount; transforming loyalty programmes from cost centres into profit generators.
Decision intelligence: Loyalty’s secret weapon.
The game-changer in modern loyalty is decision intelligence – using data and analytics to make real-time, informed decisions guiding customer interactions. This approach allows businesses to move beyond blanket rewards to personalised offers that drive genuine behaviour change.
A loyalty programme powered by decision intelligence doesn’t just keep track of spending – it helps businesses make strategic decisions about when and how to engage customers. This leads to better retention, more effective cross-selling, and increased revenue.
The future of loyalty.
Tomorrow’s successful loyalty programmes won’t purely rely on freebies and discounts. They’ll use data and intelligent insights to create personalised experiences that resonate with customers and foster long-term loyalty.
By moving beyond generic rewards and investing in data-driven strategies, businesses can maximise their marketing budgets and build a loyal customer base that truly adds value.
Stop wasting money on loyalty programmes that don’t work. The future is here—it’s about understanding customers, inspiring action, and driving growth.
