9 minute read 30 Nov 2023
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Accelerating customer loyalty: leveraging trust, technology and data

Patricia Camden

Managing Director, EY Americas Loyalty Leader

Lifelong learner, passionate about utilizing technology and creativity to help clients meet challenges and grow relationships. Talent developer. Eternal optimist. Proud mom to teens and a black lab.

Michael Anders

Principal, Strategy and Transactions, EY-Parthenon, Ernst & Young LLP

Senior leader focused on customer analytics and pricing. Has led engagements with dozens of Fortune 500 companies and private equity firms.

9 minute read 30 Nov 2023
Related topics Consulting Customer

Consumer trust and loyalty are hard to gain. It’s time to tap into customers’ emotions using loyalty programs, powered by data insights.

Three questions to ask

  • What is customer loyalty, and how do we foster it?
  • What are the benefits of leaders transforming their company into a loyalty powerhouse?
  • How do we embed loyalty throughout an organization beyond just marketing?

Loyalty programs have evolved significantly from the days when customers collected and redeemed Sperry & Hutchinson (S&H) Green Stamps for exclusive products and submitted mail-in proofs-of-purchase to acquire branded items (Orphan Annie decoder ring, anyone?) from Ovaltine.

Although advancements in technology and data analytics have allowed both B2B and B2C companies to create highly customized loyalty programs, many companies are finding it difficult to provide real value to their customers, as well as to their overall organization.

What’s causing the difficulty? It’s a two-part answer. 

First, companies are neglecting the broader customer relationship by focusing attention on the transaction. Consumers want deeper, personal relationships with brands. They want to be acknowledged as an individual first and a customer second, and know that their brand loyalty isn’t going unnoticed.

Second, companies are neglecting to use the power of their existing customer data or collect useful data that can provide an accurate picture of their customer to proactively identify opportunities for engagement, building trust and improving their overall loyalty program.

Simply put, fostering customer retention, acquiring new customers, and increasing customer and brand loyalty while maximizing revenue will require a shift from transaction-based loyalty programs to emotion-driven, experience-centric engagements. And technology is key, namely data and customer insight.

Cultivating customer loyalty

Customer loyalty is a precious commodity and one of the most effective sales influencers. It’s an enduring, mutually beneficial relationship between your brand and your customers, and a necessity to stay competitive and propel growth – especially during periods of high inflation and uncertain economic climates.

When it comes to customers, loyalty is a byproduct of your company consistently providing exceptional, personalized customer experiences while satisfying customers’ wants, needs and desires.

According to Grand View Research,¹ loyal customers can yield conversion rates between 60% and 70%; new customer conversion rates are around 5% to 20%. This highlights the need to enhance and/or launch customer loyalty programs to improve your relationship with existing customers.

Fostering customer loyalty is indispensable as it has been shown that loyal customers:

  • Become brand advocates, recommending your brand to others
  • Make purchases more frequently, buying more over their lifetimes
  • Interact with your brand through a variety of channels (social, email, mobile)
  • Reduce the need for customer acquisition and strengthen customer retention
  • Are willing to share opinions and feedback regarding their experience (surveys, polls, reviews)

To cultivate customer loyalty, you must build relationships outside of the transaction. As in life, relationships take time, effort and an ongoing investment to establish trust. Neither loyalty nor retention can be bought; they must be earned.

How do you earn them? Customer loyalty programs.

Navigating the sea of loyalty programs

The consumer is changing, and earning customer loyalty is more challenging than ever before. Lingering disruptions from the pandemic, new economic concerns and a deeper focus on value have caused new shopping behaviors, but one thing remains consistent: consumers want what they want when and how they want it.

From the need for value and convenience to frictionless, personalized experiences at every touch point and knowing they’re being seen and heard, consumers are increasingly voting with their attention, engagement and dollars. If they don’t find these things with your brand, they will “jump ship.”

That said, brands should consider the following: start to view their company in a new light, as a loyalty leader, not just a company with a loyalty program.

Rather than silo loyalty programs in marketing, look at it as a collaborative, cross-functional effort. Besides marketing and sales, modern programs require other departments, such as finance and tax, digital and technology, business growth, and strategy and operations to be successful.

Whether maintaining an existing loyalty program or establishing a new one, it should be a heightened priority to be inclusive of all departments, as well as employees, in an effort to retain current customers, attract new ones, and meet and exceed increasing expectations.

Loyalty programs provide companies with a unique opportunity to have a direct relationship with consumers, moving them from share of wallet (transactional-focused) to share of heart (emotion-focused) through personalization, building trust and ties to community and purpose.

Transactional emotional scale

They also empower companies to collect customer insights, zero-party (0P) data and first-party (1P) data, leveraging it to bring visibility to customer behaviors, as well as to help guide future marketing and engagement efforts to deliver distinct customer experiences. 

Loyalty programs in numbers

Beyond miles, points, rewards, etc., today’s loyalty programs are about the blend of ideas, processes and technologies working together to drive engagement and build trust and emotional connections, which lead to differentiated experiences and foster loyalty as a result. 

79% mentioned that loyalty programs impact the likelihood that they would continue purchasing from a brand, and another 80% agreed that they purchased more often from a brand when joining its loyalty program.

While consumers want top-tier products and services, which help build brand loyalty, they want more. They want to feel that a brand not only cares about them, but also cares about the same issues and causes that they do. They want to know that brands are vested emotionally in them.

In fact, companies that have an emotional connection with their customers outperform the sales growth of competitors by 85%, as per Gallup.⁴ 

Building emotional connections for lasting engagement

Although the numbers speak for themselves, the following are a few common potential benefits of loyalty programs:

  • They help to view program members as individuals, enabling better understanding and deeper personalization to meet their needs more accurately.
  • They provide a streamlined way to collect and unify meaningful insights and build a member database, a valuable asset that is complementary to marketing.
  • They significantly improve customer retention and lower churn rates, turning infrequent buyers into repeat customers. A popular coffeehouse chain does this well. Members earn stars for each purchase that are redeemable for free food and drinks – driving purchase frequency, improving retention and reducing churn. The chain has also embraced metaverse trends to implement gamification to enhance its program; members complete interactive games and collect Non-Fungible Tokens (NFTs) to unlock exclusive benefits, rewards, virtual events, etc.
  • They increase the value of each purchase or average order value (AOV) by rewarding members based on their total spend, in turn amplifying CLV. Members will spend more, more frequently, and remain a customer longer. A well-known beauty and wellness company has mastered this within its “insider” program. Complementing its tiered membership, where points are redeemable for branded cash and rewards, members enjoy perks like free shipping, exclusive gifts, private events, first access to products and connecting with fellow beauty enthusiasts. This is a great blend of unique offers, events and a sense of community.

How to transform your loyalty program 

Loyalty programs are a staple of business, an ideal strategy to reward brand-loyal customers and collect critical data to leverage personalization as a differentiator and enhance customer experiences at every touch point. Grand View Research⁵ expects that the US will see a 15.9% compound annual growth rate (CAGR) in the loyalty management market (2022-2030). 

Vying for customers’ attention, trust and loyalty will continue to be competitive. The following are considerations to improve your current program or establish a new one:

  • 1. Orient teams around the entire customer journey to embed loyalty

    To be successful in loyalty, companies must do two things: fully understand a holistic view of their customers and ensure that their entire organization has a seat at the table.

    Ask yourself: What are our customers’ buying trends and shopping habits? What are their wants, desires and needs? What type of relationship do they currently have with our brand? What does that engagement look like? What touch points are missing or need improvement? Is our value proposition integrated within our program? Is loyalty embedded throughout the entire customer journey?

    When thinking about your team, ask yourself: What role will they play in encouraging brand loyalty, building trust, providing value within the customer experience and retaining customers? How will they support the customer journey?

  • 2. Foster trust

    Trust is the ultimate goal of every loyalty program; it’s the foundation.

    Having the right team in place – a knowledgeable cross-functional team that breaks down silos and understands how to leverage the right technologies and data – will empower you to deliver value to customers at every interaction while being able to solve problems quickly when they arise.

    This creates a loyalty program that emphasizes personalization and emotional engagement to build trust and retention over time, surprising and delighting customers from their first interaction with a brand to being lifelong enthusiasts.

  • 3. Create connection through personalization

    Consumers want to be thought of as individual customers. Go above and beyond a one-size-fits-all approach. Create exclusive reward schemes and experiences based on customer data, inclusive of demographics, purchase history, stated or inferred preferences, etc.

    Members also want to feel a sense of community and purpose. If you’re actively addressing social issues or partnering with charities, it’s an opportunity to embed social value and foster interaction and connection, enabling members to participate in, or contribute to, shared missions.

    Additionally, establish strategic partnerships and relationships with complementary brands to bring not only a sense of cohesiveness or connectedness to their customer journey, but to also create one-of-a-kind offers. Strategic relationships present an opportunity to be seen as a credible, respected brand, as well as to cross-sell and cross-promote your products and services to new audiences.

  • 4. Double down on data

    As third-party cookies are phased out, loyalty programs are becoming a source of valuable zero-party and first-party data, which can inform and personalize various touch points throughout the customer journey.

    Data improves customer segmentation, allowing you to tailor incentives and marketing – think birthdays, holidays, anniversaries – improving customer engagement, satisfaction, happiness and retention.

  • 5. Power your program with technology

    Having the right technologies can ease participation in your loyalty program (sign-ups, rewards redemption). They can enable streamlined omnichannel experiences, focusing on mobile to traditional in-store. This allows members to interact with your brand across all channels, presenting the opportunity to track customer activity to leverage for targeted campaigns.

    Also, smart and emerging technologies like artificial intelligence (AI) and machine learning (ML) can do everything from analyze large amounts of data to help expand your brand to virtual worlds to create gamification programs, unlocking new and exciting experiences and special moments for members – thus increasing overall engagement.


Loyalty programs provide not only business benefits, such as increased revenue, greater customer lifetime value and lower cost to serve, but also customer benefits through meaningful engagement and recognition. Turning buyers into brand loyalists is key in today’s competitive landscape. Loyalty programs provide the leverage that companies need to differentiate their brand and use customer insights to meet escalating consumer expectations, drive behavioral change and inspire emotional loyalty – by delivering value and stellar personalized experiences to keep members happy and engaged.

Special thanks to Michele W. Novich, Manager, Ernst & Young LLP; Maddie K. Gissler, Senior, Ernst & Young LLP; Errin T. Saunders, Senior, Ernst & Young LLP; and Hannah M. Welsh, Senior, Ernst & Young LLP for their contributions to this article.

About this article

Patricia Camden

Managing Director, EY Americas Loyalty Leader

Lifelong learner, passionate about utilizing technology and creativity to help clients meet challenges and grow relationships. Talent developer. Eternal optimist. Proud mom to teens and a black lab.

Michael Anders

Principal, Strategy and Transactions, EY-Parthenon, Ernst & Young LLP

Senior leader focused on customer analytics and pricing. Has led engagements with dozens of Fortune 500 companies and private equity firms.

Related topics Consulting Customer