Loyalty Marketing 2025
February 24, 2025
As consumer price sensitivity grows, loyalty programs face challenges in maintaining brand engagement. With brand loyalty expected to decline by 25% in 2025, brands that adapt their loyalty programs to meet evolving preferences will not only maintain engagement but also unlock significant growth potential. In fact, a 5% increase in customer loyalty can boost lifetime profits per customer by as much as 86%, underscoring the immense value of prioritizing loyalty strategies.
RedPeg recently conducted a survey to uncover consumer behaviors around loyalty programs. Results reveal significant opportunities: 82% of respondents are enrolled in at least one loyalty program, signaling mass adoption and opportunity to engage members – provided brands address evolving preferences and engagement barriers.
Our analysis of the findings indicate High Earners and Gen Z are key segments for driving long-term loyalty and growth. High Earners, characterized by an income of $150K+, deliver immediate value through increased spending and deeper engagement with premium loyalty offerings. Meanwhile, Gen Z, with decades of purchasing power ahead, represents significant lifetime value potential as they forge brand connections early.
By prioritizing these two audiences, brands can position their loyalty program for enduring success.
Experience Based Rewards Drives Loyalty
The survey highlights a fairly balanced preference for reward types, with 55% of respondents favoring free products or services and 45% opting for experience-based rewards such as concert tickets and travel packages. However, Gen Z and High Earners show a stronger preference for experience-based rewards.
High Earners: 69.3% favor experience-based rewards, driven by their pursuit of novelty and uniqueness.
Gen Z: 52.7% prioritize experience-based rewards, valuing innovation and emotional connections.
Notably, 97% of participants who previously redeemed experience-based rewards reported increased brand loyalty. For brands, this highlights a major opportunity: Win affluent consumers with “money can’t buy” experiences and Gen Z with memorable, authentic experiences.
Meet Audiences Online
Digital platforms play a crucial role in promoting loyalty programs, with 72% of participants learning about them through social media, 70% through online advertising, and 66% through in-store promotions.
Particularly, both High Earners and Gen Z rely heavily on digital platforms to discover and engage with loyalty programs.
High Earners: Most discover programs through online ads (93.3%), followed closely by social media (92%).
Gen Z: Primarily influenced by social media (84.6%), with online ads (72.5%) trailing significantly, yet still playing a key role.
To capture the attention of these audiences, brands must leverage social content, influencer collaborations, targeted search and display advertising that highlight the exclusivity and value of experience-based rewards.
Simplify and Personalize Rewards
The ease of earning and redeeming points was identified as the most critical factor for joining a loyalty program with 73.7% of respondents rating it as very important. Other significant factors included the program being easy to understand and use (68%), and relevance of rewards (66.3%).
Among High Earners, simplicity is especially valued:
88% prioritize ease of use.
84% value ease of earning and redeeming points.
76% highlight the importance of relevant rewards.
For Gen Z, relevance plays a slightly larger role:
69% prioritize relevant rewards.
68% value ease of earning and redeeming points.
62% highlight ease of use.
Simplicity and relevance are critical to engaging both groups, with High Earners seeking intuitive program structures and Gen Z focusing on rewards that align with their values and interests.
Ensure Awards Feel Obtainable
The attainability of rewards is essential for member retention, with 70% of participants rating it as very important for their continued participation in a loyalty program.
High Earners: 80% rate attainability as a deciding factor in program continuation.
Gen Z: 70.3% echo this sentiment.
However, to cultivate a stronger base of brand advocates, prioritizing your most loyal customers is especially important, as research reveals that 74% of customers become loyal to a brand if they have something to aspire to. Balancing aspirational and accessible rewards ensures ongoing engagement, as attainable rewards encourage repeat participation, and aspirational rewards offer consumers something worth pursuing.
Address Barriers Proactively
Both High Earners and Gen Z face barriers to loyalty program engagement, though their challenges differ.
For High Earners, infrequent shopping is a more significant hurdle compared to the average shopper (66.7% vs. 42.6%). To address this, brands should design programs with aspirational end goals that incentivize more frequent purchases.
For Gen Z, the primary barrier is a lack of awareness about relevant loyalty programs (52.4% vs. 40.7% for the average consumer). Targeted promotions of experience-based rewards through digital channels can effectively reduce this gap, driving greater engagement and participation.
Conclusion
High Earners and Gen Z represent key opportunities for loyalty programs, offering immediate value and long-term potential. By prioritizing experience-based rewards, brands can forge emotional connections with these segments, driving sustained loyalty along the way. As programs evolve, delivering meaningful experiences will be key to unlocking enduring loyalty and greater lifetime value.