5 loyalty mistakes retail marketers make and what to do instead

In Business Reporter’s latest episode of DigitalTransformationTalk, loyalty experts discussed how today’s retail brands are rethinking what it takes to build customer loyalty. 

Here are five common loyalty mistakes and how to fix them.

Mistake 1: Treating frequent and loyal customers the same way

68% of consumers say they’re willing to pay more for brands they feel loyal to, according to Marigold’s 2025 Consumer Trends Index. At the same time, 37% indicate they became less loyal or moved away from brands they favored over the past year, with younger generations the most likely to switch (nearly half of 18 to 34-year-olds).  

Some customers return out of habit or convenience, not because they feel connected to your brand or would pay more to buy from you. That’s frequency, not loyalty. True loyalty is emotional and it’s driven by recognition, consistency, and value beyond price. A sustainable loyalty program supports both types of customers, but not in the same way.

The fix: Don’t reward everyone the same way. Recognize the difference between frequent and loyal customers, and design experiences that reflect it. 

“In a time when customer expectations are higher than ever and brand switching is just a click away, cultivating customer loyalty has become a critical differentiator for retail success. Shoppers are no longer loyal just by default. They're loyal by experience and to stand out retailers must deliver personalized and seamless, value driven engagements that go far beyond just the transaction.” – Kevin Craine, Business and Technology Journalist, Host DigitalTransformationTalk

Discounting can feel like the fastest route to repeat business. However, if every customer gets the same offer, regardless of behavior, value, or level of loyalty, you risk eroding margins without strengthening the relationship. Some frequent shoppers are simply chasing discounts but loyal customers expect recognition and relevance.

Start with segmentation to reward frequency and loyalty in different ways. Whether that’s offering tailored incentives to high-value customers or timing discounts to key lifecycle moments, segmentation helps you deliver smarter offers at the right time, creating more value for your business and your customers. Vitacost, a health and wellness retailer part of the Kroger family, put this into practice by delivering tailored offers based on loyalty tiers using dynamic content, frictionless code reveal, and loyalty-driven targeting.

Mistake 2: Collecting data you don’t use

Today’s consumers are willing to share personal information if the value exchange is clear. According to the 2025 Consumer Trends Index, around 95% of consumers say loyalty points, rewards, discounts, and coupons are valuable. But value doesn’t have to mean monetary, as 61% say they are willing to share data in exchange for exclusive content or early access to products.

“The good news is they are happy to share their data with you and tell you what they like and don’t like. It gives them control. They’ve got the choice: do I give you the information, or do I not? If you get that right—if you ask the questions and they’re willing to answer—you build trust. And that’s really important for loyalty.” – John Tsausidis, Principal Enterprise Strategist, Marigold

The value exchange only works if you follow through. Asking for data is just the first step; failing to make the value clear to your customers risks damaging trust.

The fix: Be intentional by collecting only the data you need, acting on it quickly, and making the value obvious to the customer with a more personalized experience. Guided discovery tools, like interactive quizzes or digital fit finders, help customers navigate your catalog more easily and are smart ways to collect data you can use to personalize experiences.

“It’s about understanding what data you need, why you need it, and acting on it in real time. The moment data is created, it’s already going out of date.” – Patrick Strauss, Founder, TomorrowsLeaders

Recognizing milestones, like birthdays, loyalty tier upgrades, or purchase anniversaries, can go a long way toward building emotional connection. Using recent preferences and past purchases helps keep recommendations timely, especially when preferences change. Behavioral signals such as abandoned carts or back-in-stock alerts are easy ways to trigger relevant reminders. Even local context matters, like connecting store events to product interest and location data or tailoring content based on regional weather can make the experience feel more personalized. 

Take a cue from Fleet Feet, a specialty running retailer. By introducing their "fit id" 3D foot scanning technology, they gathered precise customer data to recommend optimal footwear. By turning that data into tangible value, they strengthened relationships and showed customers that sharing information leads to a better experience.

Mistake 3: Delivering a disjointed experience

Too often, customer service, CRM, email, and in-store teams work in silos and fail to deliver a unified customer experience.  Even well-intentioned programs can create friction by missing loyalty information in emails, offers that don’t work in-store, or inconsistent recognition.

“Getting that omnichannel consistency right is not an easy task. Let's be really, really blunt about this. But creating the one story that you can extrapolate around the many touch points that you have in your omnichannel strategy is absolutely vital.” – Patrick Strauss, Founder, TomorrowsLeaders

The fix: Loyalty lives across every touchpoint. Ensure you are delivering a consistent experience across channels and teams by aligning across technologies, channels, and departments. A connected experience starts with connected teams and connected technologies.

“The consumer sees one brand. But internally, CRM and loyalty teams are often working separately. That’s why I get an email with no mention of my points, even though I’m in the program.” – John Tsaousidis, Principal Enterprise Strategist, Marigold

Make sure your marketing and loyalty technologies include integrations with POS, CRM, and e-commerce systems, so that pricing, offers, and other data is seamless across teams.  

Fashion retailer Pimkie shows how aligning teams and systems improves performance. By integrating data across its CRM, marketing, and store networks, they launched automated cross-channel campaigns that personalized offers for local store events, boosting email engagement and in-store experiences.

Mistake 4: Using engagement metrics as a stand-in for loyalty

It’s easy to assume that high open rates or click-throughs reflect strong loyalty, but engagement doesn’t always mean commitment. A customer might open every email but never make a purchase, or redeem a discount without any real connection to your brand. If you're only tracking surface-level metrics, you're missing the deeper signals that show whether your program is truly building loyalty.

The fix: Measure what matters. Focus on long-term value and behavioral outcomes, not just engagement. Track lifetime value, redemption, retention, incremental revenue, and repeat purchase behavior. Compare customer lifetime value of loyalty program members against non-members to evaluate the effectiveness of your program.

“You need to look beyond engagement. What’s the incremental revenue generated by loyalty members? Even small shifts can drive significant long-term gains.” – Patrick Strauss

Here are some metrics that offer a deeper view of your customer loyalty performance than engagement alone:

• Annual spend: The total amount spent by a customer over a year.
• Average order value: The average dollar amount spent per transaction.
• Visit frequency: How often a customer makes a purchase within a defined period.
• Customer lifetime value (CLV): Projected total revenue from a customer throughout their relationship with the brand.
• Customer retention rate: The percentage of customers who continue to buy over time.
• Redemption rate: The percentage of issued rewards that are actually redeemed.
• Enrollment rate: The percentage of eligible customers who enroll in the program.

Mistake 5: Overcomplicating the technology

Many marketers delay launching a loyalty program because the technology feels too complex, time-consuming to get started with, or out of reach. But waiting for perfect conditions means missing real opportunities to engage your best customers.

The fix: Start with a solution that fits where you are now and can grow and mature with you. 

“Progressive profiling is such a powerful tactic. You don’t need to ask for everything up front but you collect meaningful data over time, build trust, and keep data accurate along the way. That can be done without the immediate need for a CDP.” – John Tsaousidis, Principal Enterprise Strategist, Marigold

Know what you want and need from your technology. Choose tools with built-in segmentation strategies, pre-built integrations, and a modular set-up that will evolve with you over time. 

That’s exactly what the Virginia Lottery did, launching a modern, mobile-first loyalty program that delivered strong results without requiring a long or complex build.

Loyalty that lasts starts with getting the basics right

By avoiding these common mistakes, retail marketers can build programs that are smarter, more sustainable, and built for long-term customer connection. Treat loyalty as a strategy, not just a tactic: one that adapts to different customer needs, uses data with purpose, and delivers consistent experiences across every touchpoint.

Watch the full conversation on how retail brands build and retain brand loyalty with Kevin Craine, Business and Technology Journalist at DigitalTransformationTalk, Patrick Strauss, Founder of TomorrowsLeaders, and John Tsaousidis, Principal Enterprise Strategist at Marigold.