Why Most Loyalty Programs Fail to Connect

The unstated ambition of most loyalty programs is to create loyal customers. Customers who feel connected, prefer the brand, and even fight for it. 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. They ultimately don’t connect with the customer.

But why?

If the business is rewarding and recognizing their 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.

As Pete Buttigieg, former U.S. Secretary of Transportation, noted in 2024:

“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. But for the business, it hasn’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 connection that keeps a customer from switching.

Loyalty has limitations.

As a business, there is a more practical 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, because they feel you have given to them. And because they believe you both are going to mutually benefit.

You decide. 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?

That’s connection.