Loyalty Programs Are Stuck in 2015 While Lifecycle Marketing Moved On. Most Retailers Still Treat Them as Separate Departments.
Digiday's new Unpacked guide with SheerID argues that traditional loyalty programs feel stale because they are organisationally siloed and only measured on loyalty metrics. Consumers want relevance and value, but distrust data collection. Brands that align loyalty with lifecycle stages win on retention.
Blanket discounts and traditional points programs do not drive today's consumers. They want value, relevance and trust. They are also wary of the data collection that delivers those things.
Digiday and SheerID just published a research-backed argument that most loyalty programs are quietly underperforming because they are run as a separate department from lifecycle marketing. The headline insight is uncomfortable. Loyalty programs and lifecycle marketing are aiming at the same customer with the same intent, but they are budgeted separately, measured separately and executed by different teams. The customer experiences the join.
"Loyalty is no longer earned through rewards alone. It's built through relevance, transparency and sustained commitment to understanding customers over time." That is the entire pitch.
The data collection paradox is the most useful part of the report. Consumers expect personalised experiences and resent the data they have to give up to get them. Most retailers have responded by collecting more data, building bigger CDPs and shipping more personalised emails. That is the wrong move. The brands winning on retention are collecting less data but using more of it.
Why it matters
Australian retail is in a particularly painful spot on this. Loyalty programs are everywhere. Coles flybuys, Woolworths Everyday Rewards, Qantas Frequent Flyer, MyDavid Jones, ATL, Priceline Sister Club. Most are managed by a loyalty team focused on enrolment growth and points liability. Lifecycle marketing sits in the CRM or growth team, focused on email opens and SMS conversion. They share a customer and do not share a roadmap.
The gap shows up in three places. The welcome series does not reference the loyalty status. The reactivation email does not know the customer is sitting on $40 of unspent points. The product recommendation does not factor in the lifecycle stage. Each of those is fixable in a week with the right alignment and basically unfixable when the teams report into different directors.
The structural problem most retailers cannot see. The customer reads one stream of messages. The brand sends from two disconnected systems
What to do about it
The broader point is that loyalty is not a product anymore. It is the operational expression of a lifecycle marketing strategy. Brands that act on that get retention. Brands that keep loyalty in its own department get a points liability and an email open rate that flatlines.