Loyalty Programs 101: Why Loyalty Matters for Long-Term Business Growth

By the M+C Saatchi Performance Insights team

TLDR Summary

• Why loyalty business models matter
• Why tiered models can deliver both revenue and profit
• What customers want from Loyalty programs
• Loyalty across sectors 
• Building loyalty behaviours
• Regional priorities and loyalty model value types
• Country-by-country preferences
• Loyalty programs and seasonality
• Demographics of loyalty programs

The Loyalty Business Model

Loyalty is a no-brainer, at least for sectors such as retail, travel, finance, consumer goods, etc. Loyalty programs, by their very nature, offer the opportunity for long-term, predictable growth through frequency of purchase, average order value, lifetime value, and how predictably loyal customers return. Of course, subscription app companies are the classic example of where loyalty schemes really can benefit business growth, bringing customers back regularly to and via their app, delivering first-party data, enabling granular measurement, and enabling highly personalized customer segments in which to continue building their ‘stickiness.’ 

Recent data shows why a loyalty model matters: Boston Consulting Group (BCG, May 2024) found the average U.S. consumer belongs to 15.5 loyalty programs (+10% vs 2022), but only 50% are “extremely/very engaged” (–10% vs 2022) and only 22% say they never consider other brands (–20%vs 2022), meaning the business upside comes from programs that create real behavioral lift rather than simply driving sign-ups, but also that people can easily become disloyal or have their heads turned by similar brands.

Why Tiered Loyalty Models Matter

The strongest model for sustained value is a tiered or paid loyalty program, which is why these strategies are prolific. Would you be surprised to hear that, according to Deloitte’s 2024 Consumer Loyalty Survey reports, 70% of consumers already participate in paid loyalty programs, and nearly half of non-participants would pay if the value were right? 

Perhaps not surprisingly, BCG also found that consumers are most loyal to paid memberships, i.e., where customers understand the value exchange and are willing to part with their hard-earned cash.

Take Amazon Prime as an example. According to McKinsey, as of 2023, 75% of U.S. households were Prime members, and Prime members spend 4x more than non-Prime members over their lifetime. Prime Day is a prime (pardon the pun) example of generating a moment for momentum, with sales growing from just under $1B in 2015 to nearly $13B in 2023, and around $5B incremental revenue attributed to the event.

Not only can loyalty programs create owned revenue moments, but profitability can also rise too: McKinsey (2024) reports personalization pilots delivered 2–4 percentage-point improvements in gross margin dollars versus mass offers, and a 2024 industry roundup cites customers are 82% more likely to repurchase when they feel valued.

Case Study: Enhancing brand values with Rodd & Gunn’s Loyalty Day

Rodd & Gunn, a premier menswear retailer from New Zealand, runs a tiered loyalty program to reinforce its brand values. 

The starting tier offers 10% off purchases, invitations to preview sales events and promotions, and free ground shipping within the US, all of which enhance the customer experience. In the higher tiers, customers receive additional experiences, such as free tailoring and invitations to exclusive Rodd & Gunn events, often held in their physical stores. Some of the flagship stores feature an experiential element, known as ‘Lodges’, with areas such as bars and restaurants where shoppers can relax and really enjoy connecting with the brand. 

Loyalty Day:

An exclusive members-only event for 24 hours, held twice a year. The event is advertised only via email and paid social; therefore, it is only for members and not offered to a wider audience. However, to build the base, Rodd & Gunn runs lead generation campaigns ahead of the events.

The purpose is to highlight what makes the brand unique and build its customer base. Loyalty Day has enabled the brand to differentiate itself from the competition and avoid the noise and associated cost, e.g., high CPAs experienced by retailers during peak sales seasons such as Black Friday.

For the highest tiers of the loyalty program, members are offered access to in-store experiences through ‘The Lodge’ experience, which creates an emotional connection with buyers. The Lodge offers memorable experiences through its unique collection of bars and restaurants available in select locations. 

“The Rodd & Gunn Lodge experiences offer members a unique chance to learn about the heritage of the brand in a beautiful setting and deliver a quality, exclusive experience.” This leans into the exclusive feel of members-only clubs, which have existed for many years, and taps into a re-emerging trend for members-only experiences.”

Adrienne Rice, Senior Director of Performance Media, M+C Saatchi Performance

What customers value most in loyalty programs

Deloitte’s 2024 survey highlights the foundational features that determine whether loyalty drives meaningful outcomes:

• 86% of respondents rate financial rewards plus simplicity/ease of use as “important” or “very important.”
• About 4 in 5 consumers value flexibility in earning and redeeming rewards.
• Personalization remains a gap: only 60% are satisfied with current personalization, even though 73% say personalized experiences or rewards are important.
• Digital experience is especially important for younger consumers: roughly three-quarters of Gen Z and Millennials say a high-quality digital experience is essential.

These findings indicate that clear value and ease of use are the entry requirements, while experiences (on and offline) and personalization increasingly determine engagement.

Experiences, be that online or in real life, can heavily influence how customers feel about loyalty.

How loyalty differs by sector: Retail, Travel, Finance, Subscription

Boston Consulting Group’s May 2024 findings suggest two clear loyalty types:

1) Paid membership: delivering strong loyalty outcomes.
Consumers are most loyal to paid membership categories such as streaming services, online gaming, credit cards, and news/media. These sectors benefit from explicit commitment (payment), frequent usage, and benefits integrated into everyday life that become habit-forming.

2) Non-paid programs: high-frequency retail categories.
For example, grocery, pharmacy, and retail programs, where regular purchase behavior supports frequent earning, discounts, and redemption (e.g., vouchers).

An important nuance is that although airline and hotel loyalty programs have historically been strong, they are now among the least likely to drive exclusive purchasing. This suggests that points alone are less differentiating and that experience, service, and partnerships are increasingly necessary.

Building behaviours through picking the right model

Habit forming: Low price / high frequency, e.g., grocery, pharmacy, everyday retail

• Loyalty works by reinforcing routine behavior through simple rewards and frequent interactions.
• Supported by BCG’s finding that grocery/pharmacy/retail leads among non-paid programs.
  

Commitment forming: High price / lower frequency, e.g., travel and considered purchases

• Loyalty must justify continued choice through service, status, convenience, and meaningful experiences rather than only discounts or points.
• Supported by BCG’s observation that airlines/hotels struggle to drive exclusive purchasing behavior.

Paid membership tiers operate across both models because they establish an ongoing value exchange independent of purchase frequency, consistent with BCG’s evidence that paid memberships produce the strongest loyalty and Deloitte’s evidence of widespread participation.

Cultural Differences & Regional Loyalty Expectations

While there is no single global dataset that directly measures
“Cultural skepticism.” There are clear cultural differences that play a key role in how loyalty programs are received and designed. Multiple cross-country studies show that expectations, trust, and perceived value vary significantly by region and market

Regional prioritization and Loyalty Model “value types.” 

The Boston Consulting Group’s (BSG) multi-country survey shows U.S. consumers skew more toward tangible financial value rewards: 85% of consumers rank points, cash back, or promotions among their top loyalty benefits, compared with 75% of Europeans and 55% of Asia-Pacific consumers. 

BCG also notes Asia-Pacific consumers place relatively less emphasis on points and are more interested in partnership benefits, personalized benefits, and unique/exclusive services or experiences, plus they expect easy exchange of points or rewards across payment platforms due to widespread mobile payments. 

What “good loyalty” looks like changes by region; for example, discount-led value tends to resonate more in the US, while Asia-Pacific markets often expect integrated ecosystems and differentiated benefits.

Country-by-country preferences

Deloitte’s 2024 Consumer Loyalty Survey (covering the US, UK, India, and Brazil) highlights distinct market signals:

India	Around half of consumers would pay a fee for loyalty programs offering enhanced services, and feeling appreciated through service is 11% higher than the global average.
USA	Consumers are 9% more likely to pay for fee-based/subscription loyalty programs in 2024 compared with 2022, indicating growing acceptance of convenience-led paid loyalty.
Brazil	80% say access to nonfinancial benefits (exclusive experiences, upgraded services, expedited delivery) is important, 20% higher than US and UK consumers.
UK	While 65% say personalization is important, only about half believe their programs provide adequate personalization (almost 10% below the global average). A clear opportunity for brands to build relationships and therefore value for their customers.

Loyalty programs and seasonality, harnessing cultural moments.

Loyalty programs help brands actively shape seasonal demand through various engagement tactics, such as 

• Member only: pre-commitment access to experiences and sales; 
• Early Access: offering tiered benefit windows or ‘exclusive timing’ to encourage purchase outside ‘normal’ times. 
• Increase purchase: increase basket size or frequency through bonus rewards, bundles, and partner benefits. 

Amazon Prime Day is a good example of many of the above, and as a result, according to McKinsey (2024), grew from under $1B in its first year to nearly $13B in sales by 2023, with approximately $5B in incremental revenue attributed to the event. 

Shopper participation grew across markets; for example, Amazon reported 24% more Prime members shopped during Prime Day 2024 in India, demonstrating how loyalty membership directly increases engagement during a defined retail moment. Reuters, citing Adobe Analytics, reported that U.S. online sales rose nearly 6% to $6.4B on the first day of Prime Day 2023, underscoring how a loyalty-gated event can spur concentrated purchasing.

In general, loyalty programs operate seasonally through exclusivity and events. EY’s 2024 loyalty market study found that over 50% of companies offer special sales/exclusive events and exclusive content or services as part of loyalty programs, while BCG research shows that leading programs increasingly provide exclusive access to events, experiences, and partner benefits.

Together, these findings show loyalty programs do not merely participate in seasonal shopping cycles, they can create retail moments, amplify cultural occasions, and drive predictable peaks in annual demand.

Demographic Drivers of Loyalty Program Success

Different demographic groups exhibit varying levels of participation, engagement, and expectations from loyalty programs, particularly across age and income groups. Demographic influences include:

1) Age: At a broad stroke, younger consumers want digital-first value; older consumers want simplicity and control

• Deloitte’s 2024 Consumer Loyalty Survey finds that three-quarters of Gen Z and Millennials say a high-quality digital experience is essential in loyalty programs.
• BCG (2024) reports that in the U.S., consumers aged 18–34 are more drawn to digital engagement through social and mobile channels, personalized
  benefits, and free content or media, while consumers 35+ prioritize monetary benefits.
• Worldpay’s research across the U.S., UK, Singapore, Brazil, and Australia shows Millennials view loyalty programs most favorably, while Boomers+ are the least loyal and more demanding on features such as non-expiring points, automatic earning, and broad redemption options.

2) Income: higher-income consumers engage more; lower-income consumers can be more reliably loyal

• Boston Consulting Group, in its 2024 study, defines high income as households above $150K and finds that high earners are 5–10% more engaged with loyalty programs, while lower-income consumers are about 5% more loyal to the programs they belong to, despite lower engagement levels.

3) Audiences and category preferences

• In Worldpay’s research, loyalty interest is strongest in grocery across countries, with other high-interest categories including health and well-being (57%), travel, holidays, and experiences (56%), and eating out and drinks (54%).
  
  Younger audiences are more responsive to digital, personalized, and experience-led loyalty features but are more selective. Meanwhile older cohorts value clarity and reliability, and income influences whether consumers actively engage with programs or consistently remain loyal.

Loyalty is often misunderstood as a retention tactic, but it’s really a growth model. When designed properly, it changes purchase frequency, increases predictability of revenue, and builds a direct relationship that compounds in value over time

Karan Kumar, Senior Strategy & Insights Exec, M+C Saatchi Performance

Contact us to find out how we help clients achieve long term growth through loyalty programs.

 Sources: ey.com, mckinsey.com, aboutamazon.in, reuters.com, bcg.com  , a-us.storyblok.com, bcg.com, Deloitte’s 2024 cross-market survey, deloitte.com, bcg.com, mckinsey.com, nudgenow.com  deloitte.com, bcg.com, worldpay.com