Your Loyalty Program Is Obsolete: The 5 New Rules for Winning Customers
Executive Summary: Loyalty Reimagined Through DEPTH
For decades, loyalty was measured in points and redemptions. But the old playbook — “spend more, save a little” — no longer works. Customers aren’t looking for transactions; they’re seeking connection, recognition, and meaning.
This paper reframes loyalty through the DEPTH in CRM framework — Data, Environment, People & Processes, Technology, and Human — to show how leading brands are building relationships that last.
The Five New Rules of Loyalty:
Data – From Collecting Points to Connecting Dots
Loyalty begins with insight, not accumulation. The shift is from tracking transactions to interpreting motivations — turning “thin data” into “thick understanding.”
Environment – Meet Customers in Their World
Loyalty happens in context. Brands must operate where customers live — mobile, digital, and cultural spaces — blending convenience with authenticity.
People & Processes – Break the Silos, Build the Relationship
Technology alone doesn’t deliver loyalty; empowered teams do. The strongest programs embed cross-functional collaboration, ensuring everyone owns the customer relationship.
Technology – Enable Meaningful Experiences at Scale
Tech should serve the strategy, not dictate it. AI and automation enhance loyalty when used to simplify lives and scale empathy — not when used to chase trends.
Human – Cultivate Empathy and Emotional Connection
Loyalty is emotional before it’s behavioural. Trust, ethics, and shared values drive advocacy more than any discount. The brands that feel human will win in a machine-driven age.
The takeaway:
Loyalty is no longer a program — it’s a system. One that aligns insight with empathy, technology with humanity. Those who think in DEPTH, not silos, are building the next generation of customer relationships: connected, adaptive, and profoundly human
Neon Threads of Loyalty
Introduction
Not long ago, businesses assumed that showering customers with points and plastic membership cards was the ultimate recipe for loyalty. But the numbers tell a different story: over 50% of loyalty points go unredeemed, and most customers actively engage with fewer than 1 in 5 of the programs they join. It’s not that people have lost interest in rewards – they’ve lost patience with outdated mechanics. In McKinsey’s words, “today’s loyalty programs are stuck in the past – underutilized, hard to measure, and sitting on massive untapped liabilities”. The old model of points-for-purchases is fading fast, replaced by something broader and deeper. In a world of endless choices and instant gratification, your traditional loyalty program is, frankly, obsolete.
What’s taking its place? Simply put, a shift from transactional programs to relationship-centric strategies. Winning customer loyalty in 2025 and beyond means reimagining how you engage your audience at every level – from the data you harness, to the environment and context you operate in, through your people and processes, the technology you deploy, and ultimately the human touch you provide. These five dimensions form the acronym DEPTH: Data, Environment, People & Processes, Technology, and Human. Together, they represent the new pillars of loyalty. This DEPTH model provides a blueprint for scaling customer relationships: it emphasizes purposeful Data, contextual Environment, empowered People and Processes, Technology with oversight, and Human empathy as the foundation of modern loyalty strategies. In the following five rules, we explore each of these pillars – blending strategic insight with narrative depth – to illustrate how leading brands are winning customers in an era where loyalty must be earned through depth of engagement, not just bribes of bonus points.
Rule 1: Data – From Collecting Points to Connecting Dots
Data is your new loyalty currency. In the past, loyalty programs were essentially ledgers of transactions – spend £100, get 100 points. Today, the real value lies not in tallying purchases but in interpreting them. Smart companies are shifting from merely collecting data to connecting the dots that data reveals about customer behaviour and desires. For example, imagine a retail brand noticing that a segment of its customers always buys hiking gear in spring. Rather than blanket-discounting winter coats to everyone, the brand can use this insight to offer those outdoor enthusiasts a first look at new hiking products or how-to content tailored to their interests. By mining the data for patterns and context, the brand speaks to customers in a way that feels personal – far more effective than generic point accruals.
This strategic use of data is no longer optional – it's fundamental. The most valuable loyalty initiatives today are not points-based at all; they’re experience-led and data-driven. Leading brands treat their customer data as a treasure trove of insights to create relevant experiences, not just as a scorecard. They practice “Minimum Viable Data” – gathering only the information that truly adds value – rather than hoarding every click and swipe. Crucially, they focus on data quality, governance, and ethics, understanding that trust is the bedrock of loyalty. After all, 75% of consumers won’t even buy from a company if they don’t trust it with their data, but when there’s a transparent value exchange, customers gladly share information. That’s why experts advise investing in zero-party data – data customers volunteer, like preferences or feedback – by offering clear benefits in return. When customers feel heard and safe, they share deeper insights (“thick data” about their motivations, not just “thin data” about clicks), enabling richer personalisation. In short, data allows you to know your customers, not just count them. Companies that use data to genuinely understand and anticipate customer needs – recommending the right action at the right time or intervening before a customer defects – are building loyalty through relevance. This is a profound shift: loyalty is no longer something you buy with rewards, but something you earn by using data to deliver meaningful, timely, and individualised value.
Rule 2: Environment – Meet Customers in Their World
Loyalty doesn’t live in a vacuum – it lives in the context of customers’ daily lives and the broader culture. Environment in the DEPTH framework means aligning your loyalty strategy with the world in which your customers operate: their habits, values, and the channels they use. A decade ago, that might have meant sending a birthday coupon via email. Today, it means being present and useful in the moments and places that matter to customers. Consider how Starbucks transformed its loyalty approach by embedding it into customers’ routines. Starbucks didn’t just create a program; it built an entire ecosystem through its mobile app. That app is now a “relationship command center” – a single place where customers order and pay for coffee, collect rewards, receive personalized offers, even stream music or play games. The result? Members open the app on average 4.3 times per week, seamlessly integrating Starbucks into their weekly rhythm. By meeting customers in the mobile environment – on their morning commute, in line at the store, wherever – Starbucks drives engagement (and sales) far more effectively than any stand-alone punch card ever could.
Every brand can learn from this example: design for the environments your customers live in. In 2025, that overwhelmingly means designing for a digital, mobile-first experience. Loyalty interactions need to be as convenient and intuitive as the best consumer apps. Experts underscore this shift: successful brands “optimise for smartphone interaction patterns”, rather than treating mobile as an afterthought. Whether it’s a retail chain enabling one-click rewards redemption in its app, or a bank integrating its loyalty rewards into popular payment wallets, the message is clear – to win loyalty, be where your customer is, when they need you.
Environment isn’t just technology and channels; it’s also about cultural context and values. Customers are asking, “Do you understand my world and what matters to me?” Brands that can say yes will earn a deeper form of loyalty that goes beyond transactions. That might mean localising your offers to suit regional preferences, or timing communications to fit customers’ lifestyles (for instance, sending a promotion when a customer enters your store’s neighborhood). It certainly means aligning with customer values and the broader social environment. Studies show superficial gestures don’t cut it – brands must authentically reflect the values of their customers to create lasting bonds. For example, a fashion retailer committed to sustainability could reward customers for recycling old clothes, not just for buying new ones, reinforcing a shared commitment to the environment. Such gestures demonstrate that the brand gets the customer’s world. Rule 2 is about context: ensure your loyalty strategy fits naturally into the context of customers’ lives and the current cultural moment. Loyalty grows when customers encounter your brand as a trusted companion in the right place, at the right time, and on the right terms.
Rule 3: People & Processes – Break the Silos, Build the Relationship
Even the most innovative data or tech won’t foster loyalty if your organization isn’t set up to act on insights and serve customers in a unified way. Loyalty is a company-wide endeavour, not a marketing project. Rule 3 is to align your People and Processes to put relationships first. This means breaking down internal silos and fostering a culture where every team and every employee plays a part in earning loyalty.
Consider what happens when silos persist: A customer’s online purchase history sits with the e-commerce team, her support tickets sit with customer service, and her store visits are known only to the in-store sales staff. No one has a full picture, so the next marketing offer she gets is irrelevant to her actual needs, or a service rep fails to acknowledge her loyalty status during a complaint. These fractures in the experience erode trust. Forward-thinking companies prevent such missteps by reorganising around the customer. They empower cross-functional teams and share data and insights across departments, ensuring that marketing, sales, support, and product teams are all working in concert to delight the customer as one. In practice, this could involve weekly cross-department “customer focus” meetings, unified customer dashboards accessible to all, and incentive structures that reward teams for collective customer outcomes (like improved retention or NPS) rather than narrow departmental KPIs.
Breaking silos is not easy, but it pays off. In the banking industry, for example, challenger banks have stolen a march on incumbents by building customer relationships holistically. One notable case is Monzo in the UK, which forwent the typical rigid rewards scheme in favour of features that genuinely help customers manage their money (think spending insights and no-fee travel spending). The result? Monzo saw customer growth of 31% by ditching traditional rewards for a more genuine partnership approach. The lesson is that loyalty flourishes when a company’s people and processes rally around delivering real value, not just pushing promos. Achieving this might require new processes – for instance, faster feedback loops so customer insights lead to quick action, or training frontline staff to recognise and personally thank loyal customers (rather than leaving recognition solely to automated emails). It also requires a culture shift: every employee, from the data analyst to the store greeter, needs to feel responsible for nurturing customer relationships.
Leadership must champion this change. Set a sharp vision that loyalty is “a core organizational capability, not just a set of marketing campaigns”. Encourage cross-functional orchestration – break down silos and empower teams to act on insights together. When teams collaborate, customers experience one brand, not a disjointed array of touchpoints. Companies that get this right treat loyalty as an operating model woven through the business. They invest in training people on customer empathy, redesign processes to be customer-centric, and even adjust policies that hinder seamless service. By synchronizing your people and processes around the customer, you create a fertile environment for loyalty to grow. Every interaction becomes an opportunity to strengthen the relationship, because your whole organization is working in harmony to serve the customer’s best interests.
Rule 4: Technology – Enable Meaningful Experiences at Scale
In the digital age, technology is the great force-multiplier for loyalty – but only if used wisely. The fourth rule is to harness Technology with purpose: to elevate and scale the customer experience without losing the human touch. The goal isn’t to have the flashiest tools; it’s to use tech to deliver faster, smarter, and more convenient interactions that feel personal. Think of technology as the engine that powers the loyalty machine you’re building. With the right engine, you can surprise and delight millions of customers as if you knew each one personally.
A prime example is personalisation powered by artificial intelligence. Modern loyalty leaders are deploying AI and machine learning to tailor offers and rewards in real time. Instead of static reward catalogs, algorithms now analyze each customer’s behaviour and preferences to decide the next best action. As Boston Consulting Group observed, the most successful loyalty systems are “experience-led,” using data and tech to customize each customer’s journey. Picture a travel app that notices you typically fly to ski destinations every December and proactively offers you bonus miles for a flight to Cortina d'Ampezzo – exactly when you’re planning your winter trip. Behind the scenes, an AI is crunching data to predict what will make you, specifically, feel valued. This isn’t sci-fi; it’s happening today. AI can dynamically adjust rewards and content for each user, so that a fitness enthusiast gets offers related to new running gear while a young family sees loyalty perks for theme park tickets. The effect is a feeling of “Wow, this brand really knows me!” – a hallmark of deep loyalty.
Technology also enables omnichannel integration and instant gratification, both key to modern loyalty. Customers should experience your loyalty program as a cohesive whole whether they’re on an app, website, or in-store. This often requires investing in cloud-based CRM platforms, robust integration between systems, and emerging tech like blockchain for interoperable rewards. For instance, some brands are exploring loyalty ecosystems that let customers earn and burn rewards across partner companies in real time. Imagine using your hotel points seamlessly to get a free coffee at the airport – such fluid experiences are increasingly feasible with the right tech architecture. Additionally, real-time engagement is crucial. If a customer just left a product review or referred a friend, your system can instantly recognise that behaviour with a reward or thank-you message, reinforcing the connection when it’s most relevant. One study found companies leveraging real-time personalisation saw a 10-15% revenue lift on average, highlighting how responsive tech-driven loyalty tactics can directly impact the bottom line.
However, an important caveat: technology must remain a means to an end, not the end itself. It’s easy to get carried away with shiny new tools (from chatbots to NFTs) and lose sight of the customer. The DEPTH framework stresses technology “with oversight and the customer in mind”– in other words, use tech to serve your strategy, and keep a human lens on its implementation. Ensure algorithms are monitored for fairness and relevance. Use automation to ease pain points (like speedy checkout or personalised recommendations) but still provide channels to reach a human when needed. Ask: does this new tech truly enrich the customer’s story with us? If the answer is yes – it saves them time, surprises them with relevance, or connects them to a community – then it’s a worthy investment. The bottom line: Adopt technologies that genuinely enhance the customer experience and help you scale personal engagement. When done right, tech allows you to deliver consistency and delight at a scale that human effort alone could never match, all while freeing up your people to focus on the moments that most need a human touch.
Rule 5: Human – Cultivate Empathy and Emotional Connection
At the heart of loyalty lies an age-old truth: we are loyal to those who treat us well, who understand us, and who share our values. No amount of data or tech can replace the Human element in customer loyalty. In fact, as businesses become more digital, the human touch stands out even more. Rule 5 is a reminder that your customers are people first, not entries in a database – and they will remain loyal to brands that make them feel seen, respected, and valued on a human level.
What does emphasising the human element look like in practice? It can be as simple as a heartfelt thank-you and as profound as a company taking a stand on issues that matter to its community. Often, it’s the little stories that illuminate this principle. Consider the tale of an upscale hotel that noticed a loyal guest’s profile mentioned his interest in art. Upon checking in for his birthday weekend, he found a hand-written note and a guide to local art galleries waiting in his room – a small gesture, but one that made him feel genuinely appreciated. Such moments create emotional resonance that far outlasts any points promotion. When customers feel an emotional connection – that a brand “gets” them or cares – they stick around. This is supported by research: emotional loyalty can drive significantly more repeat purchases than rational incentives like discounts.
Trust is another critical component of the human connection. Customers need to trust that you have their best interests at heart. This means being transparent, fair, and ethical in all loyalty dealings. If you personalise offers using their data, explain how and obtain consent. If you promise a reward, deliver it without hidden strings. Broken trust can kill loyalty faster than any competitor’s coupon. On the flip side, when you prove trustworthy, you earn grace and advocacy. Think of how some brands turned pandemic hardships into loyalty opportunities by waiving fees or extending benefits proactively – they sent the message that “we’re in this with you,” and many customers won’t forget that. Indeed, loyalty in 2025 is fundamentally about human relationships, not transactions. Technology’s role is to enhance these human connections, not replace them.
Moreover, a human-centric approach means aligning with human values and aspirations. Customers are asking deeper questions about the brands they support: Do you stand for something beyond profit? Do you treat your employees well? Are you inclusive? A strong sense of purpose and ethics can be a magnet for loyalty. Brands like Patagonia, for example, enjoy fierce customer devotion not because of a lavish rewards program (their returns policy and community initiatives play a bigger role) but because people believe in their mission and authenticity. Authenticity is key – as noted earlier, superficial virtue-signaling backfires, whereas genuine alignment with customer values creates an emotional bond. Whether your brand is about sustainability, innovation, community, or reliability, live that promise in every customer interaction. Make customers feel not just that they like your brand, but that being loyal to you says something positive about them. That emotional affirmation can be more powerful than any discount.
In sum, never lose sight of the humans behind the data points. Empathy, transparency, and shared values should guide your loyalty strategy at every turn. Train your team to listen to customers actively and respond with understanding. Solicit feedback and show you’ve acted on it. Treat loyal customers as VIPs – not just in terms of perks, but in respect and attentiveness. Remember, the feelings you cultivate are the glue of loyalty. As one loyalty expert put it, the brands thriving today understand that loyalty is about human connection more than anything else. Nurture that connection, and customers will reward you with enduring loyalty that no competitor can easily sever.
Conclusion
The age of the stand-alone, cookie-cutter loyalty program is over. Simply tallying purchases and doling out points is no longer sufficient – and for many companies, it’s become a liability rather than an asset. But as we’ve seen, loyalty itself is far from dead. On the contrary, customers are yearning for deeper relationships with brands; they’re just not finding it through old-school programs. To win and keep today’s customers, businesses must embrace the five new rules of loyalty anchored in DEPTH: Data, Environment, People & Processes, Technology, and Human. These aren’t just buzzwords – they are a holistic blueprint for building genuine, defensible customer loyalty. By leveraging data to truly know your customers, adapting to the environment in which they live and what they value, aligning your people and processes to put customers at the center, deploying technology that personalises and simplifies their experience, and never losing the human touch that forges emotional bonds, you create a loyalty ecosystem that is both resilient and rewarding.
This approach isn’t merely a nice idea; it’s a strategic imperative in a crowded market. Companies that have pursued loyalty with depth are already reaping the benefits: stronger customer retention, higher lifetime value, and competitive insulation that others can’t easily copy. They are turning customer relationships into a source of sustainable growthc. Meanwhile, brands clinging to shallow, transactional models are finding diminishing returns as consumers vote with their wallets for relationships that mean something. The choice for business leaders is stark. As one industry report put it, “while you’re optimizing points structures, disruptors are optimizing relationships”. In other words, the race is on to see who can genuinely engage customers, not who can print the most membership cards.
Ultimately, winning customer loyalty in this new era comes down to a mindset: think of loyalty not as a program, but as an outcome – the outcome of doing all the little (and big) things right by your customer, consistently over time. The five rules we outlined provide a roadmap for those little and big things. They require investment, yes, and often organisational change. But the reward is significant: a tribe of loyal customers who not only stick with you but also advocate for you in the marketplace. In the spirit of both strategic rigour and narrative insight, let’s close with a simple truth: your customers are ready for deeper relationships – the question is, are you?
The brands that embrace these new rules of loyalty stand to forge connections that last a lifetime. Those that don’t risk seeing their hard-won customers slip away in search of something more meaningful. The playbook has been rewritten – now it’s up to you to put it into practice, and win customers not just for a season, but for a lifetime.