Loyalty isn’t what it used to be. A recent study by Deloitte found that 50% of consumers are now enrolled in paid loyalty programs, an increase from 32% just two years ago. Yet, this surge in participation hasn’t translated into higher engagement or spending, signalling a massive shift in what customers value.

Points, discounts, and transactional perks that once kept consumers coming back now feel like a bygone era. As personalisation and shared values dominate purchasing decisions, brands tied to outdated loyalty models risk losing not just customers but relevance.

As brands contend with these changing expectations, the question isn’t whether loyalty programs need to evolve but how they can meet the emotional and experiential demands of modern consumers.

The Erosion of Traditional Loyalty Programs

Transactional loyalty programs, once the cornerstone of customer retention, are showing cracks. While these systems thrived in a simpler era of consumer expectations, their appeal is fading in a market driven by emotional resonance and personal connections. The decline of transactional rewards underscores a pressing need for brands to rethink loyalty.

Stagnation in Innovation
The structure of many loyalty programs has remained stagnant for decades. The typical points-for-purchases model fails to differentiate one brand from another. 

For consumers juggling multiple loyalty memberships, the experience often feels like an impersonal numbers game rather than a rewarding relationship. A McKinsey report shows that 44% of consumers don’t redeem loyalty points because they find the process too cumbersome or irrelevant.

Shifting Consumer Priorities
Today’s consumers are not just looking for monetary incentives; they want brands to recognise their individuality. Customers are drawn to brands that align with their values, from sustainability to inclusivity. Gen Z, in particular, is leading the charge. According to a recent study, 61% of Gen Z shoppers prefer brands with a clear social impact, suggesting that loyalty is increasingly tied to shared purpose rather than transactional perks.

Generational Divide
Generational shifts are further fueling the erosion of traditional loyalty. While baby boomers may still find comfort in classic points-based programs, millennials and Gen Z prioritise experiences and emotional connections. Younger consumers are more likely to engage with brands that offer exclusive events, behind-the-scenes content, or community-driven initiatives, leaving traditional loyalty programs struggling to maintain relevance.

Emotional and Experiential Loyalty is the New Standard

As traditional loyalty programs falter, brands pivoting to emotional and experiential loyalty are gaining a competitive edge. These strategies go beyond monetary transactions, fostering deeper connections that align with consumers’ evolving expectations. 

Building Emotional Connections
The power of storytelling and purpose-driven branding lies at the heart of emotional loyalty. Customers are likelier to stay loyal to brands that resonate with their identity and values. Take Patagonia, for example. The brand has cultivated an intensely loyal community by weaving sustainability into its narrative and actively engaging in environmental activism. Patagonia’s “Worn Wear” initiative, which encourages customers to repair and reuse their products, reinforces its mission and fosters long-term brand loyalty. Customers don’t just buy Patagonia products; they buy into a shared mission to protect the planet.

Experiential Over Transactional
Experiences are now the currency of modern loyalty. Instead of accumulating points, consumers value access to exclusive events, personalised services, and tailored perks. Starbucks Rewards is an example. The program integrates app-based customisation, offering members early access to seasonal drinks and personalised offers based on past purchases. Starbucks also encourages engagement with gamified features, like bonus star challenges, which make customers feel rewarded beyond the purchase. The result? A program that doesn’t just incentivise transactions but builds an emotional connection with coffee enthusiasts.

Community-Driven Loyalty
Consumers crave a sense of belonging. Brands that create spaces for physical or virtual connections see stronger loyalty. Nike’s membership program taps into this by offering exclusive content, fitness challenges, and a sense of camaraderie among its members. This strategy integrates seamlessly with Nike’s ethos of empowerment, turning its customers into a global community of brand advocates. The program’s success lies in its ability to go beyond selling products and cultivate an active lifestyle.

The Future of Loyalty Programs

As consumer expectations continue to evolve, the future of loyalty programs lies in their ability to adapt to emotional, experiential, and technological trends. Brands that harness data, personalisation, and purpose-driven strategies will shape the next era of customer loyalty.

Data-Driven Personalisation
Advances in technology, particularly in artificial intelligence and machine learning, enable brands to tailor loyalty programs to individual preferences. By analyzing purchase history, browsing behaviour, and even social media interactions, brands can offer hyper-personalised rewards that feel meaningful. Sephora’s Beauty Insider program exemplifies this approach, providing product recommendations, birthday gifts, and tiered perks based on members’ spending habits. Personalised experiences ensure customers feel seen and valued, fostering deeper loyalty.

The Role of Content
Content has emerged as a powerful loyalty driver, allowing brands to engage customers beyond transactions. From exclusive tutorials to behind-the-scenes stories, content creates touchpoints that keep customers emotionally invested. Peloton’s immersive fitness content, delivered through its subscription model, has cultivated an intensely loyal user base. By integrating valuable, on-demand content with its product, Peloton transforms loyalty into a holistic experience.

Sustainability and Social Impact
Modern consumers increasingly expect brands to align with their values, particularly around sustainability and social impact. Loyalty programs can serve as platforms to amplify these efforts. For instance, IKEA’s “Buy Back” program rewards customers for returning old furniture, promoting sustainability while building loyalty. Such initiatives demonstrate that loyalty programs can do more than retain customers—they can become a core part of a brand’s identity.

The future of loyalty programs will hinge on their ability to go beyond rewards and embrace strategies that resonate on a deeper, more meaningful level. In the next section, we’ll explore actionable steps brands can take to modernise their approach to loyalty.

Actionable Steps Brands Can Take to Modernise their Approach to Loyalty

  • Harness Advanced Personalisation Through AI
    Invest in machine learning algorithms to deliver predictive, data-driven personalisation. Tailor loyalty programs are based on real-time customer behaviours, purchase patterns, and even predictive analytics to anticipate needs before they arise. This positions your brand as proactive rather than reactive in meeting customer expectations.
  • Integrate Experiential Touchpoints
    Design loyalty initiatives that go beyond conventional transactions to include immersive experiences. Examples include exclusive previews, behind-the-scenes brand tours, or curated virtual events. These experiences should reflect the brand’s unique value proposition, reinforcing its identity while cultivating emotional resonance.
  • Build Ecosystems, Not Just Programs
    Transform loyalty programs into ecosystems that foster sustained engagement. For example, create an interconnected platform where customers can access rewards, content, and community engagement tools seamlessly. Think beyond “earning points” to a holistic network that rewards every meaningful interaction.
  • Embed Purpose into Program Design
    Purpose-driven loyalty goes beyond a campaign; it should be foundational to your program. Structure rewards around actions that reflect shared values, such as incentivising sustainable practices or creating donation-matching opportunities tied to customer milestones.
  • Streamline User Experience with Technology
    Adopt cutting-edge digital interfaces, such as conversational AI or biometric authentication, to make rewards programs intuitive and frictionless. Prioritise mobile-first designs and integrate loyalty seamlessly into existing customer touchpoints, such as apps or e-commerce platforms.
  • Emphasise Long-Term Value Creation
    Shift focus from short-term customer retention metrics to lifetime value (CLV). Use advanced analytics to identify high-value segments and create bespoke loyalty tiers or benefits that deepen engagement over time.
  • Continuously Monitor and Evolve
    Leverage sophisticated customer feedback mechanisms, such as sentiment analysis and real-time surveys, to ensure loyalty programs remain relevant. Use iterative design principles to adapt rapidly, ensuring your program evolves alongside shifting market dynamics and consumer preferences.

The Future Demands Connection, Not Transactions

The decline of transactional loyalty programs reflects a broader shift in consumer culture -one that prizes connection over convenience and values over volume. In a saturated marketplace, where every brand promises perks, the ones that endure offer more: a sense of belonging, a shared purpose, and experiences that resonate beyond the checkout line.

This isn’t just a trend; it’s a reckoning. The loyalty of the future won’t be won with points and discounts. It will be earned through trust, empathy, and authenticity. The brands that understand this are already reshaping the rules, proving that, in the end, loyalty isn’t a program. It’s a relationship.

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Every morning, millions of people worldwide perform the same rituals: a cup of coffee brewed to perfection, the click of an app to order their favourite latte, or the familiar swipe to unlock a fitness tracker. Behind these seemingly mundane actions lies a powerful force brands have quietly mastered – consumer habits.

Take Gymshark, the billion-dollar fitness brand that transformed a simple New Year’s resolution into a cultural movement. With its 66-Day Challenge, Gymshark didn’t just sell activewear; it inspired customers to commit to a lifestyle. By pairing daily fitness goals with social validation and gamified incentives, the campaign turned fleeting resolutions into lasting routines – one app notification at a time.

Today’s brands aren’t just selling products – they’re engineering behaviour with precision tactics once reserved for behavioural psychologists. By exploiting behavioural triggers like the urgency of flash sales or the dopamine hit from loyalty rewards, companies are shaping consumer decisions in ways most customers barely notice. These strategies are rewriting the rules of consumer loyalty, creating a landscape where habitual engagement isn’t just encouraged – it’s meticulously designed.

But how are these habits built? And what can marketers learn from the brands that have turned routine behaviours into global phenomena? The answers lie in the intersection of science and strategy.

The Habit Loop: A Blueprint for Brand Loyalty

Behind every enduring habit lies a simple but powerful framework: the habit loop. Coined by Charles Duhigg in The Power of Habit, the loop consists of three parts: a cue (the trigger that initiates the behaviour), a routine (the action itself), and a reward (the payoff that reinforces repetition). For brands, understanding this loop isn’t just theoretical – it’s a playbook for embedding themselves into consumers’ daily lives.

Consider how Apple engineers its ecosystem. The cue is the familiar buzz of a notification on an iPhone, prompting users to check their device. The routine follows: opening an app, engaging with a message, or completing a task. The reward is immediate – dopamine-fueled gratification, whether the satisfaction of crossing something off a to-do list or a burst of social validation through a text reply. By repeating this cycle, Apple doesn’t just sell devices; it fosters a dependency on its seamless, interconnected products.

The habit loop isn’t confined to tech giants. Retailers like Sephora also weave it into their strategies. Their Beauty Insider loyalty program uses personalised emails as cues, encouraging shoppers to browse their latest product lines. The routine? Redeeming points, making a purchase, or attending exclusive events. Over time, this loop transforms sporadic customers into loyal brand advocates.

The genius of the habit loop lies in its subtlety. When done right, customers don’t feel manipulated; they feel empowered. And for brands, that’s the ultimate reward.

Habit Formation in Action

Brand/ExampleCueRoutineReward
Gymshark (66-Day Challenge)App notifications reminding participants of daily fitness goals.Tracking fitness activities and sharing progress.Discounts, social validation, and a sense of accomplishment.
Apple Notification buzz or alert.Checking the device, opening an app, or responding to a message.Immediate gratification from completing tasks or receiving social validation.
Sephora (Beauty Insider Loyalty Program)Personalized email reminders about promotions or new products.Redeeming loyalty points, making purchases, or attending exclusive events.Discounts, free samples, and the feeling of being part of an elite club.
Nike (Sneaker Drops)Announcement of a limited-edition sneaker release.Participating in the rush to secure a pair before they sell out.Owning an exclusive product and gaining social prestige.
HelloFresh (Meal Kits)Weekly subscription reminders to select meals.Preparing home-cooked meals using pre-portioned ingredients.Convenience, time-saving, and the satisfaction of a well-prepared meal.
LEGO Ideas (Crowdsourcing)Seeing others participate and submit design ideas.Submitting or voting on fan-created designs for new LEGO sets.Recognition, influence over product development, and being part of the brand’s story.
Barbell CoffeeSocial media posts of fitness enthusiasts showcasing the coffee.Drinking Barbell Coffee as part of a fitness routine.Enhanced workout experience and a sense of belonging to the fitness community.

Case Study: Gymshark – Turning Resolutions into Rituals

Image Credit: Chris Mussell

Background:
Founded in 2012 by Ben Francis, Gymshark grew from a small startup to a billion-dollar brand. Its appeal extends beyond stylish fitness apparel; it’s a brand that inspires action and fosters community.

Approach:
The 66-Day Challenge was grounded in behavioural science, specifically research by Phillippa Lally that found it takes 66 days on average to form a habit. Gymshark encouraged participants to set fitness goals, track progress via its app, and share their journey using the hashtag #gymshark66. The brand amplified the challenge through incentives like discounts and public recognition, reinforcing a sense of accomplishment.

Outcomes:
The campaign generated over 45.5 million views on TikTok, 1.9 million likes on Instagram, and countless user-generated posts. More importantly, it turned fitness goals into habits, positioning Gymshark as a partner in its customers’ fitness journeys rather than just a clothing brand.

Research-brief

The Science of Scarcity: Creating Urgency That Sticks

Scarcity is one of the most potent psychological tools in a brand’s arsenal. Rooted in the fear of missing out (FOMO), it taps into a primal urge to act quickly when something feels limited, exclusive, or fleeting. When employed strategically, scarcity doesn’t just drive a one-time purchase – it fosters habitual engagement and loyalty.

Take sneaker brands like Nike and Adidas. Their limited-edition drops, known as “sneaker drops,” have become cultural phenomena. Customers line up – virtually or physically – for a chance to own a piece of the brand’s exclusivity. 

Scarcity works because it triggers the brain’s reward centres. Studies in behavioral neuroscience have shown that perceived scarcity amplifies the value of an item. The less available something feels, the more desirable it becomes, even if its intrinsic value hasn’t changed. This is why countdown timers, limited stock alerts, and exclusive access notifications are effective marketing tools – they create a sense of urgency that compels action.

For brands looking to leverage scarcity without alienating customers, the key lies in balance.

  • Create Authentic Scarcity: Artificial scarcity – like pretending a product is in short supply when it’s not – can backfire. Instead, tie scarcity to genuine factors, such as limited production runs or exclusive collaborations.
  • Align with Customer Aspirations: Scarcity works best when it aligns with the audience’s values, whether premium craftsmanship, uniqueness, or status.
  • Reinforce the Reward: Ensure the payoff feels worth the effort. Customers should walk away from the experience feeling they’ve gained something exceptional, not manipulated.

Scarcity isn’t just about urgency; it’s about anticipation. When used thoughtfully, it becomes a tool for building habits that keep customers returning for more – the thrill of the chase or the pride of owning something rare. Brands that master this art form elevate their offerings from mere products to coveted experiences.

Social Proof: The Habit Amplifier

Why do you trust a restaurant with a long line or feel reassured when a product boasts five-star reviews? That’s social proof in action – a psychological phenomenon where people mimic the actions of others to make decisions. For brands, leveraging social proof isn’t just about building credibility; it’s about creating habits that feel natural because they’re reinforced by collective behaviour.

Consider the viral power of user-generated content. Consider the viral impact of Starbucks’ #RedCupContest, which encouraged customers to share creative photos of their holiday-themed red cups on social media. The brand turned its everyday customers into content creators, leveraging their enthusiasm to amplify the campaign. Each post showcasing personalised red cup designs acted as a cue, inspiring others to participate. The routine of sharing photos was rewarded with likes, comments, and the potential to win Starbucks gift cards, creating a sense of excitement and belonging to a festive community.

Social proof works because humans are hardwired to follow the crowd. Research from Robert Cialdini, a leading authority on influence, shows people are more likely to adopt behaviors when they see others – especially those they perceive as similar – doing the same. For brands, showcasing relatable stories can be more effective than aspirational messaging.

Case in point: Airbnb’s use of social proof. The platform creates an immediate sense of trust and urgency by displaying how many people have booked a property or highlighting reviews from previous guests. The cue is seeing others’ positive experiences, the routine is exploring listings and making a booking, and the reward is the reassurance of making a safe, validated choice.

When done right, social proof not only builds trust but also creates an ecosystem where habitual behaviours – such as buying, posting, or recommending – become second nature. For brands, the ultimate reward isn’t just loyalty; it’s becoming the default choice in a crowded marketplace.

For marketers, the lesson is clear:

  • Amplify User Voices: Encourage customers to share their stories, whether through reviews, testimonials, or social media. Genuine content is far more compelling than polished ads.
  • Leverage Influencers Strategically: Influencers act as powerful cues, but authenticity matters. Select voices that align with your audience’s values and interests.
  • Show Numbers That Matter: Whether “1 million sold” or “500 people are viewing this product,” data-driven proof triggers the fear of missing out while validating consumer choices.

Case Study: LEGO Ideas – The Power of Crowdsourcing

Image Credit: Lego Ideas

Background:
LEGO, the iconic toy brand, sought to deepen engagement with its fanbase through a platform called LEGO Ideas.

Approach:
LEGO Ideas invited fans to submit and vote on new design concepts. The cue was seeing others participate, the routine was engaging with the platform, and the reward was the chance to influence LEGO’s product line.

Outcomes:
LEGO Ideas has produced several successful products, including fan-designed sets like the NASA Apollo Saturn V. The initiative strengthened the brand’s connection with its audience, turning casual customers into active contributors.

Building Habit-Forming Products: Lessons from Behavioral Science

Creating a product that consumers return to again and again isn’t just about innovation – it’s about embedding habits into the design itself. The most successful brands today are those who understand how to weave behavioural triggers into every touchpoint, ensuring their offerings become indispensable in daily life.

Take Spotify, for example. The platform’s algorithms are designed to create a habit loop that feels seamless and personal. Over time, this habit loop keeps users hooked, transforming Spotify from a music service into a daily ritual.

The secret lies in understanding consumer behaviour at a granular level. By leveraging data, brands can anticipate what customers need before they even realise it themselves. This level of personalisation not only builds loyalty but also creates a sense of dependency – making the product feel essential rather than optional.

For marketers aiming to design habit-forming products, here are some key strategies:

  • Make It Effortless: Simplicity is crucial. Complex user experiences deter repetition. Apps like Duolingo succeed because they break down learning into bite-sized, manageable tasks, encouraging daily engagement.
  • Use Variable Rewards: Behavioral psychologist B.F. Skinner demonstrated that unpredictable rewards – like a surprise discount or an unexpected playlist recommendation – are more compelling than consistent ones. The unpredictability keeps users coming back for more.
  • Reinforce Progress: Visual indicators, such as progress bars or streaks, tap into the human desire for completion. Gymshark’s 66-Day Challenge capitalised on this by tracking daily achievements, creating a sense of momentum that users were motivated to maintain.

However, habit-building isn’t just about driving repetitive behaviour – it’s about fostering a sense of value. If a product doesn’t solve a problem or enhance the user’s life, no amount of behavioural science will make it stick. Brands that focus on delivering tangible benefits while subtly embedding habit loops are the ones that transform from being a choice into a necessity.

Forming habits isn’t just a competitive advantage – it’s survival. Products that seamlessly integrate into the fabric of daily life don’t just build loyalty; they create lasting relationships.

The Long Game: Why Habits Require Sustained Effort

Habits may feel automatic, but building them is anything but. The science is clear: meaningful habits take time and consistent reinforcement. For brands, short-term campaigns or one-off initiatives rarely deliver lasting results. Success lies in long-term strategies that nurture customer behaviours over weeks, months, or even years.

Consider Peloton, the fitness brand that redefined home workouts. Peloton doesn’t rely on selling a bike – it sells an ongoing lifestyle. The cue is a scheduled live class or a motivational email reminder. The routine is logging in and working out, and the reward is immediate: real-time encouragement from instructors and the camaraderie of a leaderboard filled with peers. Over time, this repetition turns Peloton users into loyal advocates who associate their fitness journey with the brand itself.

The challenge for brands lies in maintaining momentum. Research shows that habits can falter without consistent reinforcement. Even Gymshark’s wildly successful 66-Day Challenge recognises this reality. After the campaign ends, participants are encouraged to set new goals, ensuring the habits formed don’t fizzle out but evolve into deeper, lasting routines.

For marketers, sustaining habits requires:

  • Regular Engagement: Consistent touchpoints, such as app notifications, newsletters, or loyalty rewards, keep the habit loop active. However, overloading users with messages can backfire – timing and relevance are key.
  • Evolving Incentives: As customers progress, their motivations may shift. Brands should adapt rewards and messaging to match their audience’s changing needs and aspirations.
  • Building Communities: Social belonging is a powerful motivator. Platforms like Reddit or fitness groups tied to specific brands foster environments where habits are reinforced by peer validation.

It’s also crucial to plan for setbacks. Behavioural scientists note that lapses are natural and shouldn’t derail the process. Brands that offer ways to “restart the streak” or provide gentle nudges to re-engage are better positioned to retain their customer base.

The takeaway is simple: habits don’t form overnight, and they don’t sustain themselves. Brands that commit to the long game – through thoughtful design, consistent reinforcement, and adaptability – stand the best chance of embedding themselves into their customers’ lives. Customer loyalty is hard-won; this approach separates fleeting trends from enduring success.

Beyond Products: Building Emotional Connections Through Habits

For truly habit-forming brands, the goal isn’t just repeat purchases – it’s building emotional connections that transcend the product itself. When habits become rituals, they anchor the brand in the customer’s identity, creating loyalty that’s as much about emotion as it is about utility.

Look at how Coca-Cola has turned drinking soda into a cultural moment. The cue might be a hot summer day or a festive holiday gathering. The routine is reaching for a bottle of Coke, and the reward is both physical – quenching thirst – and emotional, tied to nostalgia, happiness, or celebration. Coca-Cola reinforces these associations through campaigns like “Taste the Feeling,” ensuring the product is linked to more than just refreshment.

Emotional connections are particularly powerful because they integrate the brand into life’s meaningful moments. Research by behavioural scientists shows that emotions, not logic, drive most decisions, especially when it comes to habitual behaviour. Customers are far more likely to stick with a brand aligned with their values, memories, or aspirations.

To build these connections, brands must:

  • Tap into Personal Narratives: Encourage customers to see the brand as part of their story. Nike’s “Just Do It” campaign, for example, isn’t about shoes – it’s about personal triumphs and perseverance.
  • Leverage Sensory Triggers: Familiar sounds, visuals, or scents can evoke emotional responses. Think of how the “ba-da-ba-ba-bah” jingle makes McDonald’s instantly recognisable and stirs feelings of comfort and familiarity.
  • Celebrate Milestones: Recognise and reward customer achievements tied to the brand. Whether tracking fitness goals or celebrating years of loyalty, these gestures create a deeper bond.

The result is a shift from transactional relationships to lasting partnerships. Customers don’t just buy a product; they invite the brand into their lives. When a brand achieves this level of connection, it becomes far more than a choice – it becomes a habit woven into the fabric of daily existence.

In the end, habits are about more than behaviour; they’re about identity. Brands that successfully align themselves with who their customers are – and who they aspire to be – don’t just win loyalty. They earn a place in their customers’ lives that competitors can’t easily disrupt.

Final Thoughts: Habits Are the New Currency of Brand Loyalty

With endless choices competing for attention, the brands that succeed are those that seamlessly embed themselves into daily routines. By mastering the science of habits—leveraging cues, routines, and rewards—leading companies aren’t merely selling products; they’re transforming behaviours and forging emotional bonds that endure.

From brand challenges to cultural rituals, the strategies behind big campaign successes reveal a universal truth: habits are the backbone of loyalty. They transform one-time purchases into repetitive behaviours fleeting interest into steadfast engagement. For marketers, the lesson is clear – understanding and shaping customer habits isn’t optional; it’s essential.

The challenge lies in the execution. Successful brands understand this is a long-term commitment that requires adaptability, authenticity, and a deep understanding of what drives their audience.

Ultimately, it’s about more than repeat sales—it’s about building a brand that becomes an essential part of customers’ lives. Those who master the art and science of habit formation will not only earn loyalty but also position themselves as indispensable, no matter how the market evolves.

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