Why Loyalty Programs Don’t Equal Customer Loyalty

The ambition of most loyalty programs is to create loyal customers. And by this ambition, most loyalty programs fail.

Programs can be successful at driving purchase frequency, increasing purchase amounts, and creating a perceived switching cost, all of which are good for businesses, but generally they don’t create anything close to loyalty.

But why?

If the business is rewarding and recognizing its best customers, why doesn’t that matter to the customer? And why doesn’t it shape their views and admiration for the brands and businesses that provide these programs?

It’s simple. Customers earn points, they earn status, they earn rewards.

And like most human beings, when customers feel they earn anything, they (rightly so) believe the credit belongs to them, not the company that gave it to them.

In 2024, Pete Buttigieg, then U.S. Secretary of Transportation, noted:

“Points systems like frequent flyer miles and credit-card rewards have become such a meaningful part of our economy that many Americans view their rewards points balances as part of their savings.”

The key words: their savings. They (the customer) earned it.

This isn’t all bad. If the value that they are earning feels worth it, then customers may continue to earn points, tiers, and rewards. This is certainly true for higher-consideration industries and programs like airline mileage programs. But for most businesses, they haven’t truly earned customer loyalty. If a competitor offers better value, or if the business needs to change the value of their loyalty program due to financial reasons, there is no “loyalty” that keeps a customer from switching.

Loyalty as an ambition has its limitations.

As a business, there is a more valuable ambition than loyalty: reciprocity.

Merriam-Webster’s dictionary defines reciprocity as: Mutual dependence, action, or influence. Oxford Languages defines reciprocity as: The practice of exchanging things with others for mutual benefit.

Said simply: as a business, you want your customer to want to give back to you.

The challenge for a business is to identify what, within your product, your services, your customer experience, your pricing, your support for your audience’s community, etc., makes a real and relevant impression. What are you offering or doing that impresses a customer enough that they believe you are fighting for them, so they want to fight for you? And how do you communicate that to your audience so they understand it?

If that sounds like hard work, it can be. But so is building a successful business.

It is up to you.

As a business, do you want to create customers who feel they’ve earned and are entitled to extra value and privileges?

Or do you want to create customers who want to give back to you?

Unlocking Reciprocity gives you a deeper level of customer connection and commitment.