Loyalty programs remain a cornerstone of retail strategy, but a significant gap has emerged between what marketers believe drives repeat purchases and what actually motivates consumers. 65% of marketers think customers return because of "brand love," yet fewer than 1 in 4 consumers cite emotional attachment as a driver, according to research from Razorfish and GWI.

This disconnect creates what analysts call a "loyalty deficit," where consumers feel they give more to brands than they receive in return. For marketers, understanding this gap is essential to building programs that deliver measurable retention and first-party data value.

What is a customer loyalty program?

A customer loyalty program is a structured marketing initiative that rewards repeat purchases with benefits including points, discounts, and exclusive access. These programs aim to increase customer retention, boost purchase frequency, and collect first-party data that enables personalization.

Programs typically fall into three categories: points-based systems where purchases earn redeemable rewards, tiered structures that unlock progressively better benefits at higher spending levels, and paid memberships that offer premium perks for a subscription fee. Retailers like Starbucks, Ulta Beauty, and Target operate some of the largest programs in the US, with tens of millions of active members each. The data these programs generate has become increasingly valuable as third-party cookies deprecate and retailers build media networks that monetize audience insights.

Why do loyalty programs matter more in 2026?

Four factors elevate loyalty programs' strategic importance this year:

• First-party data scarcity. As third-party tracking diminishes, loyalty programs provide consented, purchase-linked data that powers personalization and retail media targeting.
• Mobile commerce dominance. Sales on mobile devices will account for more than 50% of US retail ecommerce by 2027, according to EMARKETER's October 2025 forecast.
• Rising acquisition costs. Customer acquisition expenses continue climbing, making retention-focused strategies more cost-effective.
• The loyalty deficit. Consumers increasingly feel relationships with brands are imbalanced. Addressing this perception through tangible value exchange is critical, particularly in categories like banking, mobile, and automotive where Razorfish identifies the deficit as most pronounced.

What actually drives repeat purchases?

Marketers overestimate emotional factors and underestimate practical ones. The drivers of loyalty are more pragmatic than brand love:

• Product satisfaction. Consumers return when products consistently meet expectations.
• Convenience. Easy purchasing, fast checkout, and seamless returns matter more than emotional connection.
• Price and value. Discounts remain the top benefit consumers want from loyalty programs.
• Habit and inertia. Familiarity with a brand's app or website reduces friction for repeat purchases.

This suggests loyalty programs should emphasize functional benefits and convenience over aspirational brand messaging.

What are the key elements of an effective loyalty program?

Successful programs balance three pillars:

• Tangible value. Discounts remain the primary motivator for participation. However, 56% of consumers will download an app if rewards feel valuable, and soft perks like early access or exclusive experiences rank nearly as high as discounts, per Razorfish and GWI data. Tiered structures can accommodate both price-sensitive and premium-seeking customers.
• Cross-brand utility. 54% of consumers say the best perks span categories or brands, according to Razorfish and GWI. Partnerships like Starbucks-Delta or retailer coalitions through platforms like Fetch expand perceived value without deep discounting.
• Seamless redemption. Convenience is non-negotiable. Programs must function smoothly across in-store and online channels. Fast checkout and ease of navigation rank as the top reasons shoppers prefer apps, EMARKETER reports.

How are mobile apps changing loyalty program engagement?

Mobile apps have become the dominant channel for loyalty interactions. Apps have become the primary loyalty engagement channel, with 64% of consumers preferring apps over email for program interactions, per EY's 2025 Loyalty Market Study.More than half of loyalty program members use apps at least weekly, with 12% logging in daily.

The in-store impact is substantial:

• 40% of consumers use retail apps in-store to access discounts and coupons, per EMARKETER's October 2025 survey.
• Target app users have basket sizes nearly 50% larger than non-app users, according to the retailer’s chief guest experience officer Cara Sylvester, Walmart app users spend 25% more.
• 50.3% of grocery shoppers would use in-store digital tools if savings were exclusive to those tools, per July 2025 Amazon Ads and EMARKETER data.

This indicates app-exclusive benefits can drive both downloads and in-store engagement.

What role does first-party data play in loyalty programs?

Loyalty programs are now primary vehicles for first-party data collection. As third-party cookies phase out, the purchase behavior, preferences, and engagement patterns captured through loyalty interactions become essential for personalization and media targeting.

45% of US adults use a loyalty app with their primary grocery store, according to July 2025 data from VTEX and Dynata. These apps capture:

• Transaction data. What customers buy, when, and at what price points.
• Preference signals. Product searches, saved items, and redemption choices.
• Cross-channel behavior. How shoppers move between app, web, and store.

CPG brands like Nestlé leverage loyalty platforms like Fetch to identify point-of-market-entry retailers and target customers accordingly. The data enables everything from personalized offers to retail media activations, where retailers monetize audience insights through advertising platforms.

Starbucks Rewards, Ulta Beauty Rewards, and Target Circle are among the programs that stand out for scale and engagement. The common thread: these programs integrate deeply with mobile apps and bridge online and in-store behavior.

How should marketers build loyalty programs for 2026?

Effective program design in 2026 requires addressing the loyalty deficit while capitalizing on mobile-first behavior:

1. Lead with practical value. Prioritize discounts, convenience features, and cross-brand perks over emotional brand messaging. Consumers respond to tangible benefits.
2. Make apps the hub. Design loyalty experiences around mobile apps, including in-store utility like discounts, wayfinding, and scan-to-pay. 60% of loyalty program participants are “very” or “generally” likely to download an app to earn and track rewards, per EY.
3. Expand beyond your ecosystem. Pursue partnerships that extend program value. Consumers want perks that span categories.
4. Invest in AI thoughtfully. 25.8% of mobile shoppers have used in-app AI assistants, and most found them useful, according to EMARKETER. Use AI to scale personalization, not replace human connection.
5. Measure the deficit. Survey customers on whether loyalty feels reciprocal. The gap between what customers give and what they perceive receiving signals relationship health.

We prepared this article with the assistance of generative AI tools and stand behind its accuracy, quality, and originality.

EMARKETER forecast data was current at publication and may have changed. EMARKETER clients have access to up-to-date forecast data. To explore EMARKETER solutions, click here.