As brands look ahead to 2026, loyalty programs are evolving beyond transactions toward deeper emotional connection, relevance, and trust. Shifting consumer expectations and broader uncertainty are accelerating this change.
We recently spoke with Hayley Hanel, Senior Manager of Strategic Consulting at Kobie, who shared how growing unease around social, political, and economic change is reshaping loyalty strategies and elevating the role of community and belonging.
Loyalty Is No Longer a Transactional Tool
The traditional loyalty playbook, which rewards spend to drive repeat behavior, is no longer sufficient. In 2025, Hanel observed a fundamental change in how members interact with loyalty programs and what they expect in return.
“We’ve had members reach out to brands or other members to look for that sense of belonging, going beyond that transactional vehicle that loyalty programs have typically been in the past,” she said.
This shift represents more than an evolution in engagement tactics. Loyalty programs are increasingly being asked to serve as relationship engines, reinforcing habit, signaling status, and creating a sense of reciprocity between brands and their most engaged members.
“It’s not enough to know what the customer has done transactionally,” Hanel said. “We’re going to have to start to understand why they did it and what motivated that behavior, what emotion drove that choice.”
As brands gain more sophisticated tools and access to deeper insights, emotional connection is becoming a strategic input that can be understood and activated, not just acknowledged.
Community as a Core Loyalty Differentiator
The growing emotional role of loyalty is closely tied to the rise of community-led engagement. According to Hanel, the strongest programs are not forcing community into loyalty, they are expressing it naturally through the brand.
“I always look to best in class programs like Nike,” she said. “They’ve created these really fun running groups that you can go to and workout with others from across the U.S., and they have workout classes they’re hosting. It’s a very authentic expression of their brand through communities.”
In these cases, loyalty becomes less about incentives and more about shared identity. Community reinforces emotional connection in ways traditional rewards cannot, helping brands stand out in crowded, promotion-heavy markets.
Navigating Loyalty Value Compression
While expectations rise, brands are also facing tighter margins, creating what many describe as loyalty value compression.
“What you can’t do is discount your way to loyalty,” Hanel said. “It’s an easy lever to pull often.”
Instead, she emphasized two approaches that preserve margin while increasing perceived value. The first is reducing friction.
“If you can offer something to members that’s actually making their experience more convenient, that’ll add value to the experience,” she said.
The second is strategic partnerships. Hanel pointed to Target as a brand successfully expanding value through its ecosystem.
“Target gave me a free trial this year to Target 360,” she said. “Part of the same-day delivery is this partnership ecosystem that I actually can get free shipping through their entire Shipt partnership.”
Rather than eroding margin, partnerships can extend value in ways that feel meaningful to members.
The Personalization–Privacy Paradox
As personalization capabilities accelerate, brands are also encountering heightened consumer sensitivity around data usage.
“We’ve never been able to personalize more than we can today,” Hanel said. “But I think consumers are kind of taking a step back and thinking brands are starting to ask for a lot of my data.”
This creates what Hanel described as a personalization-privacy paradox: balancing relevance without crossing into discomfort.
“Loyalty programs are this insanely trustworthy space where you have consented data. If you’re asking for it in a way that transparency is at the center, you’re going to have a huge advantage, ” Hanel said.
That transparency starts with how brands ask for permission. Hanel noted brands shouldn’t ask for blanket permissions, instead they need to be very specific and that incentives and clear value exchange can increase comfort levels.
“There are certain things members are willing to share if they get bonus points for it,” she said.
When AI Feels Invisible, Loyalty Feels Human
As brands work to balance personalization with trust, AI is increasingly shaping how loyalty programs deliver relevance without being ‘creepy’. For Hanel, the real opportunity lies not in making AI more prominent, but in making it seamlessly integrated into the member experience.
“You don’t actually want to know that this is AI. You want to just make it feel like a human level connection, ” Hanel said.
By helping brands better understand motivation and emotion, AI allows loyalty programs to move beyond surface-level personalization toward interactions that feel intuitive and timely. When executed well, the technology fades into the background while the experience feels more personal.
In this way, AI becomes an enabler of emotional loyalty rather than a visible feature members must interpret or evaluate.
Why Enrollment Is No Longer a Meaningful KPI
As loyalty strategies evolve, the metrics used to measure success must evolve with them. Hanel cautioned brands against relying on enrollment rate as a primary indicator of loyalty performance.
“Enrollment rate as a primary KPI I think is dangerous,” she said. “How many times have you signed up for a program because you got a percent off your first purchase and then you forget you’re a part of that program?”
Enrollment alone offers little insight into whether members are engaged, active, or deriving ongoing value from a program. Instead, Hanel emphasized the importance of focusing on behaviors that signal real loyalty.
For example, Taco Bell’s social strategy doesn’t focus on how many new followers it gets. Rather, the company is focused on how many shares and comments it gets, Hanel said.
For loyalty programs, that same mindset applies. Engagement, participation, and interaction provide a clearer picture of member commitment than sign-ups alone.
Start With Listening, Not Overhauls
For brands unsure where to begin, Hanel emphasized the importance of listening before rebuilding.
“What better way to learn what works or doesn’t work with your program than to talk to people,” she said.
Rather than attempting large-scale transformations, she encouraged brands to start with smaller, informed changes.
“You don’t have to try to fix everything at once,” Hanel said. “That’s super overwhelming, it’s expensive, and it might not work.”
Instead, incremental improvements, grounded in data, research, and member feedback, can build momentum and drive meaningful change.