Customer Loyalty Programs: The Complete 2026 Guide

A customer loyalty program is a structured way of rewarding people for choosing your brand again, usually through points, tiers, membership perks, or increasingly, recognition for things they do rather than just things they buy. The best ones build a habit. The average one builds a drawer full of cards nobody uses. In 2026, most of them fall into the second category, and I've got the receipts to prove it.

I run Zenko, so you'd be forgiven for assuming I'm about to sell you something. I will, eventually, at the bottom of this page, briefly, and I'll tell you exactly when so you can skip it. But first I want to walk through what the data actually says about loyalty programmes right now, because it's a genuinely strange moment. Everyone's building one. Almost nobody's happy with the results.

The state of loyalty in 2026

Here's the number that should worry every marketing director reading this: according to the SAP Emarsys Customer Loyalty Index 2025, the deepest form of loyalty, the kind where a customer genuinely prefers you and would say so, dropped from 34% to 29% in a single year. That's the sharpest fall the index has recorded since it started. People aren't leaving loyalty schemes. They're just stopping caring about them.

That fits with everything else in the data. The Bond Loyalty Report 2025, run with Visa across a quarter of a million consumers, found the average person is enrolled in 17.4 loyalty programmes but only actively uses about 8.8 of them. Half your members, roughly, are dead weight the moment they sign up. Antavo puts the average annual activity rate at 59%, and estimates $10 billion in US loyalty points go unspent every year. That's not lost revenue exactly, but it's a lot of goodwill sitting in a drawer, slowly rotting.

Meanwhile the money keeps flowing in. Depending on which research firm you ask, and I'd genuinely take any single number with a pinch of salt here because the estimates range from about $8bn to $16bn depending on scope, the global loyalty technology market sits somewhere around $15bn in 2025, growing at 10 to 15% a year. Antavo's 2026 report found marketers now put over half their total marketing budget, 51.5%, into loyalty and CRM. So we're spending more than ever on programmes that are engaging fewer people than ever. That's the whole problem in one paragraph.

Why generic points programmes are struggling

Three symptoms, all backed by the data:

Fatigue. Antavo found 49% of members say it takes too long to earn a meaningful reward, 41% are annoyed by expiring points, and 39% just don't find the rewards attractive in the first place. If your programme's core mechanic is "collect points, wait a long time, redeem for something underwhelming," you're not alone, but you are losing.

Devaluation. This one's not a feeling, it's a pattern. Starbucks changed its Stars expiry rules in May 2025 so points now lapse six months after the calendar year they're earned. Dunkin' brought in 12-month expiry in October 2025, alongside higher redemption thresholds. Qantas raised the points needed for a Sydney to London reward flight from 55,200 to 63,500 in 2025. Airline miles as a category devalue by roughly 15% a year, against general inflation of 2 to 3%. Every one of these moves quietly breaks a promise the customer thought they'd signed up for.

Boredom. Euromonitor's 2025 Voice of the Consumer survey found 27% of Gen Z and 25% of millennials describe their loyalty programmes as, in their words, not fun. That's a brutal review for something companies spend half their marketing budget on.

What actually works: the retention case, with the caveat nobody includes

I'm not going to tell you loyalty programmes don't work, because the honest evidence says they can. Accenture puts loyalty members at 12 to 18% more incremental revenue per year than non-members. McKinsey found top performing programmes lift revenue from actively redeeming members by 15 to 25% annually, and that redeemers spend 25% more than members who are enrolled but inactive. Existing customers convert at 60 to 70%, against 5 to 20% for a cold prospect (Marketing Metrics), and it costs 5 to 25 times more to win a new customer than keep an existing one, per Bain's long-standing research.

Here's the bit almost nobody puts in the same article as those stats. Both McKinsey and loyalty analytics firm Brandmovers point out that the gap between member spend and non-member spend is partly, maybe mostly, self-selection. Your biggest spenders were always going to join your loyalty programme. The programme didn't necessarily make them big spenders. McKinsey's own research found roughly two-thirds of established programmes fail to deliver real value, and some actively erode it. I'd rather tell you that up front than let you find out after you've built one.

The fix that's actually showing up in the data

If cheap plastic points are wearing thin, what's replacing them? Two things, and they're related.

The first is gamification, done properly rather than as a synonym for "we added a progress bar." I go into this in detail on the gamification page, but the short version: a 2025 Mastercard and CataBoom study found gamified loyalty mechanics produced a 50% increase in average session time and a 22% drop in churn. That's a real, recent, well sourced result, not a recycled stat from a decade ago.

The second, and this is where I'll admit my bias, is rewarding the action itself rather than just the transaction. Sweatcoin has 150 million users converting steps into rewards, and a study published in the British Journal of Sports Medicine found it associated with roughly a 20% increase in users' activity levels. Etihad's Conscious Choices programme, launched in 2022, gives members Tier Miles for carbon offsetting and lighter baggage, not spending more. Patagonia's Action Works connects customers to volunteering rather than discounts, and Patagonia ranked third in KPMG's 2024-25 US customer experience survey, up 16 places on the year before. None of these programmes lead with a points balance. They lead with something the member actually did.

That's the model Zenko is built around: verified real world actions, learning, moving, shopping, playing, purpose led choices, tied to rewards funded by brand campaigns, with the impact verified rather than just claimed. I'm not going to pretend that's the only answer on this page, because the evidence above shows plenty of well built points and tier programmes still work. But if your current programme is one of the 29% still delivering true loyalty, it's probably because it rewards something more interesting than the next purchase. You can read more about how that works on our brands page, or keep going through this cluster: loyalty programme examples across every model, what gamification adds, whether you should build or buy a platform, and the honest evidence on retention.

FAQ

What is a customer loyalty program?

A structured system that rewards customers for repeat engagement with a brand, traditionally through points or tiers tied to spending, increasingly through recognition of actions like learning, activity, or purpose driven behaviour.

Do loyalty programmes still work in 2026?

Selectively. The market is growing and top performing programmes deliver real incremental revenue, but SAP Emarsys found true loyalty fell from 34% to 29% in the most recent year measured, and McKinsey found roughly two-thirds of established programmes fail to deliver real value. Design matters more than the fact of having a programme at all.

Why are so many loyalty programmes failing to engage members?

The consistent findings are slow reward earning, expiring or devaluing points, and rewards members don't actually want. Antavo found 49% of members say earning takes too long and 41% are frustrated by expiry rules.

What's the alternative to points based loyalty?

Gamified mechanics (streaks, challenges, tiers tied to engagement) and action based loyalty, where the reward is tied to something a member did, learning, moving, shopping thoughtfully, or supporting a cause, rather than simply how much they spent.