Brands have never had more data, more AI, more personalization — and loyalty keeps slipping anyway. The research suggests they built strategies on assumptions, not evidence.
Marketers have access to more customer data, advanced personalization tools, and AI capabilities than ever before. Yet many brands still face declining loyalty and rising acquisition costs. Today’s technological advancements have expanded what marketers can do, but they haven’t necessarily improved their understanding of what customers value.
Through my work with organizations across industries, I’ve found that loyalty challenges often begin with outdated assumptions. Brands design programs around what they believe should motivate customers, then invest heavily in benefits, communications, and technology before confirming whether those decisions reflect how customers think and behave.
Recent research found a persistent gap between what customers value and what marketers believe they want. Consumers respond to brands that understand their needs and make interactions easier, yet many loyalty strategies still prioritize transaction volume or more frequent communication over meaningful customer experiences.
Recognition Matters More Than Communication Volume
Traditional loyalty programs were largely designed around a straightforward exchange: customers spend more and receive more in return. Points, discounts, and tier benefits remain valuable, but financial incentives alone rarely create a lasting relationship. Customers can often find a similar offer elsewhere, especially when competing brands use comparable reward structures.
Consumers judge brands by how well they recognize individual needs, preferences, and behaviors. They notice when an interaction reflects their history with the brand instead of treating them like a new customer each time. Recognition gives customers evidence that the relationship extends beyond the next purchase.
The research I mentioned found that 77% of consumers want brands to recognize them, while only 55% feel recognized as individuals. Many organizations have responded to growing expectations for personalization by increasing the volume of tailored messages. Customers may receive more emails, recommendations, and reminders without feeling that the brand understands them any better.
Meaningful recognition doesn’t have to be a grand gesture. In fact, 80% of consumers want recognition to feel subtle and personal, something shared between them and the brand. A company might remember a service preference, acknowledge a milestone, or resolve an issue without asking the customer to repeat information. The impact comes from relevance and consistency, not the size of the reward or sophistication of the campaign.
Also Read: Why Brands Should Just Ask What Customers Actually Want
Consumers Are More Open to AI Than Marketers Assume
Marketers also tend to underestimate customer willingness to use AI. More than half of the loyalty practitioners believe consumers aren’t ready for AI, while 57% of consumers say they are willing to adopt it in the future. That disconnect can prevent brands from pursuing useful applications or lead them to approach the technology with the wrong objective.
Consumers judge AI by the experience it creates. Technology that saves time, improves recommendations, answers questions quickly, or removes unnecessary steps can earn acceptance without requiring customers to think much about the system behind it.
Problems arise when automation complicates an interaction or replaces valuable human support. A chatbot that resolves a simple request can improve the experience, while one that traps a customer in a loop when judgment is required will erode trust. Brands should evaluate AI by the friction it removes and the customer need it addresses, not by how much human involvement it can eliminate.
Using AI to remove friction from routine interactions can help strengthen customer relationships. Automating interactions without considering the customer’s experience may create an efficient internal process that feels impersonal or unhelpful.
Also Read: CMOs Shift Budgets Toward Digital Growth: Gartner
Data Sharing Depends on a Clear Value Exchange
Brands often assume consumers are broadly unwilling to share personal information. The research found that consumers are willing to share information when they understand what they will receive in return. A clear benefit, whether through a reward or a more relevant experience, can create a compelling exchange. Customers become skeptical when brands request information without explaining its purpose or asking for more than the interaction requires.
The amount and timing of the request can be just as influential as the benefit. Eighty-one percent of consumers said they wouldn’t share personal information if they felt a brand was asking for too much in a single interaction. Collecting information progressively gives brands an opportunity to explain their purpose and demonstrate value before asking for more.
Brands also need to follow through. If a customer shares preferences but continues receiving generic offers, the value exchange breaks down. When the benefit is immediate and visible, customers have a stronger reason to continue participating.
Loyalty strategies fall short when internal assumptions replace customer evidence. Customer evidence allows organizations to challenge those beliefs before making expensive decisions.
Loyalty tools are most effective when they address a customer’s needs. The value may be financial, but it can also come from making the experience easier or more relevant. Continually testing assumptions against what customers say and do helps brands invest more deliberately and close the gap between the experiences they intend to create and those customers genuinely value.
