Loyalty and Personalization
Learn how loyalty programs are evolving today to provide deeper engagement with shoppers, more personalized offers and value beyond price-based rewards.
Welcome to a new era of the
value-conscious consumer.
While price and value have always been inextricably linked, today’s consumers now define value in a far more expansive way.
As consumer expectations rise beyond price, companies like Kroger and Danone are reengineering their loyalty strategies so they don't just offer better rewards, but rather deliver more personalized, connected experiences.
By Michael Applebaum
1 in 4 shoppers recall a moment with a loyalty program in the past year that made them
Source: Deloitte
As much as 40% of consumer perceptions of a brand’s value stem from factors other than price, according to Deloitte. Many retail executives believe this data reflects a structural shift toward value-seeking behavior, one that goes beyond cyclical price sensitivity to factors such as lingering inflation, says Lupine Skelly, retail, wholesale and distribution research leader at Deloitte.
This fundamental shift to the shopper psyche is having ripple effects across the loyalty landscape. Namely, it is accelerating the changes to loyalty programs caused by proliferation and increased competition in the category — forcing retailers to diversify their loyalty platforms beyond price-based rewards and offer additional features that provide deeper shopper engagement and more meaningful types of value.
“When we survey shoppers about why they sign up for a loyalty program, the No. 1 reason they cite is ongoing value,” Skelly says. “Consumers are always looking for ways to find the best prices and the best rewards, but they are also wanting something extra in return for their loyalty, whether that’s more personalization, a better experience or a digital platform that’s easier to navigate and redeem points.”
1 in 4
“When we survey shoppers about why they sign up for a loyalty program, the No. 1 reason they cite is ongoing value”
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Loyalty programs are a vitally important strategic marketing lever. They provide brands and retailers with a built-in customer relationship, essential first-party data and a reliable platform from which to deliver personalized marketing. As consumers increasingly expect both quality and value, loyalty programs can serve as a decisive differentiator — amplifying perceived benefits and fostering deeper, more resilient brand affinity, notes Skelly.
Loyalty programs currently rank as the third most important driver of brand loyalty behind price and value (No. 1) and quality of products, service or experience (No. 2), according to Deloitte. Strikingly, that puts them ahead of factors such as reliability, customer service and convenience as a loyalty driver.
At the same time, there is often a wide gap between enrollment in loyalty programs and active participation in the membership. Consumers frequently belong to multiple loyalty programs yet only remain actively engaged in one. Participation often breaks down due to friction points (e.g., ease of navigation or redemption) or when engagement is purely transactional.
Closing the Engagement Gap
Personalization as a Loyalty Driver
On the strength of an AI-fueled technology boom, marketers are increasingly turning to personalization techniques within loyalty programs as a way to enhance the shopper experience and differentiate their brands.
“Loyalty programs are everywhere, and as consumers join more of them, attention and engagement are harder to earn. It’s also increasingly likely your customers belong to your closest competitors’ programs,” says Daniel Joyner, a consumer and shopper insights analyst at Circana. “To realize real ROI, marketers must design a program that’s distinctive and truly personalized while delivering immediate value and making your brand feel effortless to buy.”
The most successful brands use personalization to make their brand individually relevant, distinctly memorable and directly associated with the purchase drivers that matter to each consumer, he notes.
Despite these advances, marketers often face organizational challenges — namely silos — that hinder coordinated, fully scaled personalization strategies. A lack of cross-functional alignment between brand, shopper and media teams can impact all phases of development, from audience targeting to message delivery to measurement. But CPG companies such as Danone are taking steps to remedy these issues.
The Next Evolution of
deeper engagement
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PERSONALIZED OFFERS
VALUE
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PRICE &
VALUE
quality of products, service or experience
loyalty programs
RELIABILITY
CUSTOMER SERVICE
Skelly says that program basics — simplicity, digital experience and points-based rewards — are table stakes, yet delivering on financial rewards remains an unmet need for all consumer generations. Emotional drivers such as member recognition, personalization, community and purpose, as well as tech-driven features, are more important to Gen Z and millennials, providing a credible path to deeper loyalty and differentiation.
Here lies a major opportunity for marketers to take their loyalty programs to the next level.
"It’s also increasingly likely your customers belong to your closest competitors’ programs."
— Daniel Joyner, Circana
AI is enabling brands to work more efficiently to deliver on the promise of personalization, notes Connors. “If I have a personalization science with, let’s say, a hundred different segments of customers I can deliver to, then you’re looking at a market where I have to create a hundred different [sets of] creative,” she says. “AI takes away some of that complexity and grunt work, which makes personalization scalable and possible for many brands in a way that is now actually cost-effective.”
Providing additional benefits or support within the digital journey can be an especially effective technique for building loyalty with younger shoppers. According to research from the World Economic Forum, 66% of Gen Z consumers (compared with 40% of other generations) use digital tools such as wellness apps and fitness trackers to monitor their health.
With this in mind, Kroger has introduced new features within its loyalty program app, such as OptUp — a tool that allows users to track their progress toward wellness goals based on a product’s overall nutritional score, and to adjust their future purchases accordingly.
“The traditional construct of points and rewards is still very important at Kroger, and I would venture to say many retailers, because it’s a really tangible value exchange that you can have with your customers — but you have to consistently show customers that you value their loyalty and will continue to earn it,” says Barbara Connors, vice president of strategy and activation at Kroger Precision Marketing (KPM), which now includes Kroger’s retail media unit and its 84.51° data science practice under the KPM umbrella.
of Gen Z consumers use digital tools such as wellness apps and fitness trackers to monitor their health.
Kroger introduces new features within its loyalty program app, such as OptUp.
66%
"...you have to consistently show customers that you value their loyalty and will continue to earn it."
Breaking Down Silos — and Rising Expectations
“When you look at the ecosystem as a whole, instead of in pieces, you can scale more effectively, reduce duplication and deliver more relevant and personalized experiences for shoppers."
— Erin Anderson, Danone
“When you look at the ecosystem as a whole, instead of in pieces, you can scale more effectively, reduce duplication and deliver more relevant and personalized experiences for shoppers," she says.
Retailers, too, are making progress on this front. Kroger’s consolidation of its retail media, insights and loyalty marketing units, completed in early 2025, allows brands to go to market with KPM using one consistent strategy and a single source of truth, says Connors.
“It creates a powerful opportunity for brands to engage with customers from the point of discovery all the way through earning and maintaining loyalty — all anchored on that same customer intelligence, the same audience strategy and same personalization science that we’ve used to think about this holistically across the path to purchase," she says.
“We recently brought our media team and our lower-funnel shopper marketing teams together into one group,” explains Erin Anderson, vice president of shopper omni-activation and partnerships at Danone. “This structure helps us deliver a more unified and consistent shopper experience by having everyone aligned on one team.”
Danone’s new streamlined approach provides several advantages, says Anderson. It allows the teams to drive stronger synergies, collaborate more closely and share critical resources. It also strengthens collaboration across all consumer touchpoints — including media, e-commerce, search and shopper marketing.
A more efficient use of resources also allows the Danone brand to scale and deliver personalization more effectively. “This change is about bringing those groups together so we can navigate a fragmented marketplace in a more holistic way,” says Anderson.
MEDIA TEAM
LOWER-FUNNEL SHOPPER
MARKETING
“Consumer expectation growth has remained pretty constant, hovering in the 25% to 28% range year over year, while brands’ ability to keep up is only the 8% to 9% range,” says Robert Pasikoff, president of BrandKeys, a research firm that measures expectations across 119 categories.
Expectation growth has been fueled mainly by technology sectors, but when expectations rise in one category, it tends to spill over into other categories, he says.
Circana's Joyner perhaps summed it up best: “There are no shortcuts to building loyalty.”
Still, the bar for success across loyalty platforms remains high, because consumer expectations for brands continue to rise.
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