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Fuel your AI with loyalty—not just data
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Most brands still treat customer loyalty like a program:
But customers don’t experience loyalty that way. They experience it in every interaction—every message, every offer, every moment your brand either understands them or doesn’t.
That gap is getting hard to ignore. 70% of consumer decisions are driven by emotion (not hard benefits with rational appeal), and 86% of loyalty members expect a relevant, two-way relationship with your brand.
Loyalty is no longer something you build for members with static tiers and rewards. It’s something you create by knowing your customer deeply, personalizing each experience and offering value over time.
And for the first time, data, identity and AI are making this kind of customer loyalty strategy possible, moving from transactional campaigns to a continuous, personalized system that reaches every customer.
Done right, loyalty is no longer just a rewards program—it’s a business outcome.
Loyalty leaders grow customer loyalty at both the brand and program level.
A customer loyalty strategy is a person-first marketing approach that uses data and identity, personalization and value exchange over time to build consumer relationships, increase repeat behavior and grow customer lifetime value.
This customer loyalty strategy reaches every customer, whether they’re an official loyalty member or not. It helps to generate the passion, dedication and trust people have for your brand, moves them through the customer life cycle and motivates them toward lifetime loyalty.
A loyalty program is a marketing strategy designed to grow and engage loyalty members and strengthen brand relationships through tailored incentives. The loyalty program is just one component of a successful loyalty strategy framework.
The Real Deal: Big "L" loyalty
Hear from Tamara Oliverio, Vice President of Product Management at Epsilon on how you can shift from program-centric to customer-centric loyalty.
Many customer loyalty strategies depend heavily on rational loyalty, which appeals to a customer’s logic with transactional, hard benefits. Hard benefits are tangible and provide clear, measurable value, such as discounts, cash-back offers or points that can be redeemed for products or services.
However, research from Yale shows that emotional decisions are often stickier than rational ones, and according to Gallup, 70% of consumer decisions—including brand preference—are driven by emotions.
Generating brand-level loyalty must therefore go beyond transactions to also generate emotional loyalty, which appeals to a customer’s emotions through highly relevant experiences that make them feel known and appreciated, as well as through soft benefits that offer emotional or relational value. Examples of soft benefits include exclusive access to events, early product releases and VIP customer service.
You need elements of both rational loyalty and emotional loyalty for a successful customer loyalty strategy, but many brands over-index on rational, hard benefits while neglecting emotional, soft benefits.
How can customer loyalty strategy managers elevate their programs beyond traditional tactics alone and form strategies that nurture real emotional connections? Loyalty program design must include the following core pillars.
Long-term loyalty is built on an ongoing, two-way value exchange.
Consumers deliver value to your brand through purchases and word-of-mouth recommendations. But in exchange, they want more than just quality products, services and experiences—Epsilon research found that 85% of loyalty members intend to buy from participating brands—demonstrating the power of mutual value exchange.
You need to take active steps to nurture this type of loyalty, kicking it up a notch from the typical transactional loyalty program.
Delivering ongoing value through personal interactions requires a deep understanding of who customers are and what exactly they want. Loyalty programs powered by high-quality data allow brands to see their customers more clearly, including their:
Leveraging this kind of consumer data can reveal trends and preferences that can turn missed opportunities into rewarding experiences.
A deep, holistic view of your customers helps you to build customized incentives and experiences that are aligned with each customer’s interests. Consumers particularly appreciate this personalization—80% say they like it when brands adapt their communications based on their interactions and status with their loyalty programs.
Miata Boayue, Content Marketing Manager at Epsilon, explains, “Customers often perceive personalized experiences as a sign that the brand understands them and values their business. And customers who feel brands ‘know them’ are more inclined to seek out and purchase from that brand.”
Tractor Supply Company realized the importance of personalized loyalty experiences and wanted to ensure its Neighbor's Club loyalty program catered to its customers. The loyalty program had a significant amount of customer data to work with. With Epsilon as a partner, Tractor Supply Company was able to better understand the customer journey. It used these insights to make key adjustments to the Neighbor’s Club, which contribute to the program’s 75% retention rate.
Discover how leading retailer Tractor Supply Company (with 2,200+ U.S. stores) and Epsilon partnered together to create a loyalty program that supports over $10B in sales.
Loyalty happens everywhere, and the most comprehensive approach to loyalty program design considers how to add value throughout the entire customer journey. According to McKinsey, getting omnichannel personalization right can increase revenue by 5% to 15% across the entire customer base.
Whether through email, SMS, app or in-store, personalized communications and tailored rewards boost engagement and deepen loyalty. But these communications must be coordinated across channels and adjusted based on each customer’s real time behavior.
Dunkin’s DD Perks® loyalty program delivers on omnichannel loyalty exceedingly well, personalizing experiences across the brand’s mobile app and mobile ordering, push notifications, direct mail and member statements. Connected to more than 9,000 locations, every order, reward and customer exchange is synced in real-time—enabling up-to-date experiences across channels.
While every customer loyalty strategy should build from the core pillars of loyalty, you should choose a loyalty program structure based on what makes the most sense for your brand and its customers.
Most brands operate their customer loyalty programs based on a traditional tier system with reward or redemption hurdles. Redemption hurdles are limitations brands put on members’ loyalty points, like expiration dates, spending minimums or redemption windows. This allows brands to price segment and control the cost of their loyalty program—but it can be a major frustration for customers.
Don’t forget to personalize tiers and hurdles like any other aspect of your loyalty program. Look to your customer data to design effective redemption hurdles based on individual customers’ prior behavior.
Learn more about setting and optimizing loyalty redemption hurdles.
Some brands implement gamification to transform redemption hurdles from annoyance to motivation. Loyalty gamification involves using game mechanics and game-inspired experience design to drive customer engagement and behavior. From points and badges to levels and leaderboards, gamification elements aim to influence customers using innate human motivators like competitiveness, reward-seeking behavior and the fear of missing out.
Nectar, the largest coalition loyalty program in the UK, introduced a “scratch and win” feature on top of collecting points with each purchase, and it significantly increased user engagement.
If you’re going the gamification route, make sure it's integrated seamlessly into your larger member experience strategy rather than a random bolt-on feature.
Subscription-based loyalty programs like Amazon Prime and CVS CarePass have found great commercial success because they offer value exchange. Brands benefit from consistent revenue, locking in their best customers with built-in loyalty. Consumers enjoy special perks and discounts, exclusive products or services and high-quality, personalized experiences.
According to McKinsey, these paid loyalty programs increase the likelihood of higher spending by 60%, compared to 30% for free programs.
After taking a deep dive in its customer data, Chuck E. Cheese recently realized both the family entertainment brand and its customers could benefit from a subscription model. It subsequently launched the Fun Pass, which offers monthly membership starting at $7.99. Designed to increase affordability and frequency of visits, the Fun Pass provides unlimited visits, daily gameplay and 20% to 50% off food and drinks.
However, subscription models can be challenging to execute. Epsilon Senior Director of Strategic Consulting Lauren Wawrzyniak explains, “Coming up with a great idea goes a long way, but bringing it to fruition proves to be much more difficult, especially in very service-heavy subscription programs that require new supply chain logistics and staffing models."
If you’re considering a subscription-based loyalty program, make sure to choose an experienced loyalty partner.
Check out the essential capabilities and value drivers you should look for in your next loyalty solution—plus nine questions to ask during the process.
A multi-partner loyalty program is a connected, multi-partner program that allows customers to earn and redeem value across all partners. An ecosystem approach expands loyalty beyond a single brand’s products or channels, offering customers a broader set of rewards and ability to leverage partners’ customer data and touchpoints in a privacy-safe way.
Dunkin’ and Shell operate a partner loyalty ecosystem, allowing Dunkin’ rewards members to earn fuel rewards on top of their DD Perks rewards. “Dunkin recognized that fuel prices are a major pain point for their customer base and worked with Shell to add greater value to the loyalty program beyond their core competencies,” explains Wawrzyniak.
If you’re considering a partner ecosystem, finding the right ecosystem partners and loyalty program incentives is key. Analyze your customer data to identify relevant pain points outside of your traditional brand–customer relationship.
Data and identity resolution are foundational to achieving the deep customer understanding your brand needs to create personalized, omnichannel experiences that build customer loyalty.
Schmidt gives the example of her favorite coffee shop suggesting a personalized snack she’s occasionally purchased to accompany her typical coffee order. “This resonates, because it isn't just a transaction. The brand is anticipating what else I personally would want, instead of just suggesting a blanket offer that everybody might be getting at checkout.”
Every interaction—online, in-app or in-store—generates valuable data that unlocks customer insights so you can deliver value like that personalized snack suggestion.
But you need to collect and unify that data before you can use it.
Loyalty programs are a reliable way to grow the first-party data you need. This includes basic customer information (like name, email, address, etc.). It also includes behavioral and transaction data (such as what a customer buys, their browsing behavior on your owned sites and communication preferences).
However, a lot of customer data is incomplete, duplicative and inaccurate. Identity resolution organizes a brand’s first-party data and it enriches it by filling in the missing information. Building identity into your first-party data strategy solves for:
For the best view of customer, consider a customer data platform that integrates identity resolution natively. This type of CDP unifies, expands and augments your data so you can keep a pulse on your evolving customers and optimize their loyalty experiences.
Ultimately, your loyalty data should feed AI decisioning, so it’s critical to maintain complete, clean and accurate customer data. AI is only as good as the data that fuels it.
The Real Deal: Turn data into smarter loyalty
If you want to create meaningful moments that resonate with your customers—power your loyalty program with a strong data foundation.
It’s one thing to know that your customer loyalty strategy should be delivering data-driven, personalized experiences that evolve with each customer. It’s another thing altogether to execute on that mandate. Until recently, many loyalty marketers would have considered it impossible.
But artificial intelligence is ushering in a new era of AI-powered loyalty marketing.
Loyalty programs often struggle to resonate because they’re using outdated or incomplete data, static tiers and assumptions about the customer that haven’t kept pace with their interests and intent. Now, it’s easier than ever to keep up with each customer and engage in ways that make each person feel known.
Fueled with first-party data and identity resolution, an AI loyalty platform with predictive modeling can:
Agentic AI takes loyalty marketing campaigns a step further. From insight delivery to decision-making, in-platform agents help loyalty program managers:
This technology allows loyalty marketers to stay one step ahead, spotting opportunities, validating customer participation and building real connections.
Boasting over 105 million members, Walgreens has seen the value of powering its MyWalgreens loyalty program with AI. Epsilon processes over 5 million transactions a day for the pharmaceutical retailer, using AI to make sure each customer gets the right experience, at the right time and in the right channel.
“Being named a Leader in Forrester’s most recent loyalty Wave reflects, for us, the work we’ve done to give brands a loyalty foundation built on enriched member data for AI-driven personalization,” said Prabhu Kannan, Managing Director, Loyalty at Epsilon. “Loyalty only works when marketers can trust the insights behind it, activate their loyalty data—enhanced by third party data across channels, and uncover the opportunities already within their customer base. Epsilon’s loyalty offering helps identify those opportunities and turn them into behavior-shifting experiences that drive meaningful outcomes and long-term customer value.”
Are your customers loyal to the deals—or the feels?
For years, loyalty marketers have relied on transactional metrics like redemption rates, spend and retention to gauge performance. But these metrics only tell part of the story. They show what customers did, not why they did it or whether they’ll come back.
The reality is that no single metric can define loyalty. Brands must understand how different signals work together to paint a complete picture of customer behavior, emotional connection and future value. To truly understand loyalty success, evaluate and optimize against a holistic set of loyalty metrics:
This guide will help you understand which metrics truly bolster smarter loyalty marketing—and which are smoke and mirrors.
Loyalty management platforms have come a long way from managing points and distributing rewards. The modern loyalty platform is a system of intelligence that turns customer data into personalized experiences, measurable outcomes and long-term loyalty.
To achieve these aims, look for the following essential capabilities as you evaluate loyalty technology partners.
Customer loyalty in 2026 is no longer about managing a program. Instead, loyalty managers must orchestrate a system:
The brands that win will be the ones that move beyond points and perks to create meaningful, personalized experiences at scale, turning everyday moments into reasons to stay.
That’s exactly what solutions like Epsilon Loyalty are built to enable. We help brands unify data, activate insights and deliver the kind of relevance that drives emotional connection and measurable growth.
Because in the end, loyalty isn’t something you track. It’s something you create—moment by moment, customer by customer.
Epsilon Loyalty enriches your first-party data, providing a clear customer view—ensuring you thoughtfully engage members in the moments that matter to them.
