Loyalty programs have long been a cornerstone of customer engagement, but many brands are now facing a critical inflection point. As consumer expectations shift, economic pressures mount, and technology capabilities expand; the traditional “earn and burn” model is being tested in new ways.
While incremental updates can extend the life of a program, they are not always enough to sustain engagement or drive meaningful business outcomes. Increasingly, brands are being forced to ask a bigger question: is it time to optimize, or is it time to redesign?
In this two-part Supplier Perspectives series, industry leaders share how loyalty programs are evolving, and what it takes to keep them relevant. In Part One, we explore the signals that indicate a need for change, when incremental improvements stop working, and how brands are redefining value for more selective, value-conscious consumers.
Read Supplier Perspectives | Redesigning Loyalty for Modern Customers (Part Two) Here.
Contributors
Sydney Shapiro, Strategic Account Executive, Baesman Group
Casey Epley, Product Director, Incentives and Engagement, Maritz
Beth McCoy, CEO, CORA Loyalty
Eileen Peacock, SVP, General Manager, Valuedynamx
Kiran Dhillon, Retail Product Marketing Lead, Hightouch
Ian Andersen, Demand Generation and Marketing Operations Manager, Switchfly
Don Smith, EVP, Chief Consulting Officer, Capillary Technologies
Christopher Kopenec, Director, Loyalty Strategy, Bounteous
Recognizing When It’s Time for a Loyalty Program Reset
Loyalty programs rarely fail overnight. More often, they lose momentum gradually, small shifts in behavior that are easy to overlook until the program is no longer driving meaningful impact. What makes this moment difficult is that surface-level metrics don’t always reflect the underlying issue. Enrollment may still be growing, but the program itself is no longer influencing customer behavior in a meaningful way.
“There are usually a few signals that indicate it’s time for brands to step back and evaluate their loyalty strategy,” said Sydney Shapiro, Strategic Account Executive at Baesman Group. “Internally, declining engagement metrics are often the first indicator—things like reduced redemption rates, stagnant member growth, or decreasing purchase frequency among loyalty members.”
That slowdown is rarely dramatic. Engagement doesn’t drop off a cliff, it flattens. Members are still there, but they’re participating less, redeeming less, and interacting more passively. Over time, that shift signals something more fundamental: the value exchange is no longer compelling enough to drive action.
“It’s usually a combination of signals rather than a single moment,” added Ian Andersen, Demand Generation and Marketing Operations Manager at Switchfly. “Brands may see redemption rates decline, promotions requiring steeper discounts, or engagement leveling off.”
One of the clearest signs of disconnect is when a program appears healthy on paper but lacks real engagement beneath the surface. “Brands may still see enrollment growth, but activity—earning, redeeming, or interacting—begins to flatten or drop,” said Casey Epley, Product Director, Incentives and Engagement at Maritz. “When members stop redeeming, they’re often disengaging emotionally, not just economically.”
In response, some brands try to reignite participation by increasing incentives. But when a program needs constant “sweetening” to maintain engagement, it often signals that the core design is no longer doing the work.
At its core, loyalty is about influence. If the program isn’t increasing frequency, deepening engagement, or strengthening relationships with high-value customers, it’s not fulfilling its purpose. As Christopher Kopenec, Director of Loyalty Strategy at Bounteous, put it, “If your best members aren’t increasing frequency, spend, or staying engaged with the brand, the program isn’t doing its job.”
When Tweaks Stop Driving Results
Most loyalty programs don’t immediately move to redesign. Instead, brands try to optimize, introducing new promotions, adjusting earn rates, or layering in new benefits to regain momentum. In the short term, these changes can create lift. But when results continue to stall, it often signals a deeper limitation: the program isn’t underperforming because of a lack of ideas, but because of how it’s built.
“Tweaks stop being enough when program performance is constrained by the underlying data and execution architecture, not by the creativity of offers,” said Kiran Dhillon, Retail Product Marketing Lead at Hightouch. “If you can’t easily unify store, ecomm, and loyalty data into a single profile… then changing earn rates or adding tiers won’t fix stagnant engagement.”
As brands continue to iterate, another issue begins to surface: complexity. What starts as incremental improvement can quickly turn into a patchwork of features that are difficult to manage and even harder for customers to navigate.
“There’s also a point where layering too many small fixes on top of each other starts to muddy the view,” said Epley. “That’s when brands should revisit the fundamentals.”
Over time, this creates a familiar cycle, new campaigns, refreshed benefits, and repeated attempts to drive engagement without materially changing performance.
“If program managers repeatedly try to revitalize a program… and fail to move the needle on member engagement, it’s a clear sign that revolution is needed over renovation,” said Don Smith, EVP, Chief Consulting Officer at Capillary Technologies.
At that point, the issue is no longer execution, it’s structural. And no amount of incremental change will fix a program that isn’t designed to evolve.
Reframing Value in Modern Loyalty Programs
As brands rethink their loyalty programs, one of the biggest shifts is how value itself is defined. For years, many programs competed on the richness of rewards, more points, bigger discounts, faster earn. But as consumers join more programs and become more selective about where they engage, that approach is losing effectiveness.
“Value today is less about novelty and more about certainty,” said Beth McCoy, CEO at CORA Loyalty. “Programs that feel transparent, predictable, and fair tend to win.” In a crowded landscape, customers are no longer chasing every offer, they’re consolidating their attention around the programs they trust and understand.
That makes clarity just as important as generosity. If value isn’t immediately visible, it often goes unused. “The most important thing is making value visible and front and center,” said Eileen Peacock, SVP, General Manager at Valuedynamx. “If people can't immediately see what they're getting and why it matters to them, they opt out.”
At the same time, value is becoming more personal. Rather than offering the same rewards to every member, leading programs are focusing on relevance, delivering benefits that align with individual behaviors and needs. As Peacock explains, personalization isn’t just about targeting offers, it’s about reinforcing that the brand understands the customer. A well-timed, relevant interaction doesn’t just drive redemption, it reinforces the relationship.
This shift is also changing how brands think about rewards themselves. “Value in loyalty isn't defined solely by the size of the reward,” said Casey Epley of Maritz. “It’s about how useful, flexible, and relevant the program feels in someone’s life.”
That often means expanding beyond traditional points and discounts to include a wider range of options, from practical, everyday rewards to more experiential or aspirational moments. The goal isn’t just to offer more value, but to make that value feel accessible, meaningful, and worth engaging with over time.
In this environment, the programs that stand out aren’t necessarily the most generous. They’re the ones that make value clear, relevant, and easy to use, turning loyalty from a transaction into something customers actively choose to engage with.
Conclusion
Loyalty program redesign is no longer a reactive exercise, it’s becoming a strategic necessity. As engagement signals shift and incremental fixes lose effectiveness, brands are being pushed to rethink not just how their programs perform, but how they’re fundamentally structured and what value they deliver.
In Part One, the message is clear: recognizing the right signals, understanding the limits of optimization, and redefining value are critical first steps. In Part Two, we’ll explore how brands can operationalize these insights, diving into personalization, innovation, and the capabilities needed to build loyalty programs that are designed to evolve.