In today's competitive market, retaining loyal customers is crucial for long-term success. While loyalty programmes aim to reward and retain customers, high churn rates can reduce effectiveness. To improve retention, businesses must focus on understanding the customer lifecycle, leveraging data insights, enhancing communication, optimising the customer experience and addressing emotional and lifestyle influences.
Understanding the customer lifecycle
Customer churn can be segmented based on the duration of inactivity. A member who has not made a purchase within six months may be classified as a probable bouncer; after 12 months, as a lapsed customer; and after 36 months, as a lost customer – one who is unlikely to return. Once a loyalty programme member becomes emotionally disengaged, reactivation becomes significantly more challenging. Therefore, it is essential to monitor the entire lifecycle of loyalty programme members to better understand patterns and identify when and where churn is most likely to occur.
By analysing the journey of members who have disengaged versus those who remain loyal, businesses can detect critical touchpoints where timely interventions could mitigate attrition.
Enhancing retention requires a strategic focus on these key stages of the customer journey. This involves segmenting members, for example by behaviour, preferences, and demographics, and developing a framework to deploy targeted strategies across each segment. Metrics such as the Net Promoter Score (NPS) and other customer satisfaction indicators are valuable for assessing loyalty and identifying members at risk of churn. However, implementing visual tools to map the customer lifecycle and track progress can provide a clear representation of where efforts should be focused.
Data-driven insights and communication
The organic activation rate is a metric that measures the proportion of inactive members who re-engage with the programme without any targeted intervention. Any engagement beyond this baseline is considered incremental and can be attributed to specific marketing or loyalty initiatives.
Establishing clear key performance indicators (KPIs) is critical for monitoring effectiveness and guiding improvements. Leveraging purchase history to personalise offers and communications increases relevance, aligning closely with individual customer interests. Highlighting a customer’s preferred brands and products within these communications can further enhance engagement. However, achieving this level of personalisation requires access to granular customer data – something not all organisations currently have.
Personalisation in the financial sector, for example, presents a challenge due to limited access to consumer purchasing data. One way to address this is by forming strategic partnerships to enhance value propositions and gain deeper consumer insights.
From the top 100 global brands tracked in Euromonitor International’s Loyalty Competitor Tracker, 25% of players have a partnership-based programme in 2025
Source: Euromonitor International’s Loyalty Competitor Tracker
However, even within partnerships, organisations are reluctant to share tactical data, such as purchasing history, hindering the ability to tailor communications. One potential solution is to create a server between both entities where data is shared. This enables both parties to exchange insights without compromising data privacy. Brands can gain visibility into where consumers are shopping beyond their own ecosystem, while financial institutions can access valuable information such as average transaction size, product preferences, and purchase frequency.
Enhancing customer experience
Enhancing customer experience involves boosting the customer’s share of mind (awareness and preference for a brand) and wallet (spending on a brand) through financial incentives. Rather than discounts, pre-credited points can encourage repeat purchases. Predictive analysis helps identify lapsed customers likely to return, while test and control groups measure the effectiveness of communication strategies.
Delivering on promises is crucial to avoid dissatisfaction and churn. For digitally savvy consumers, a seamless user experience is vital, as they quickly notice and share friction, impacting brand reputation; therefore, resolving issues promptly and transparently is essential.
Emotional and lifestyle factors
Ensuring that the loyalty programme aligns with the customer’s values and lifestyle can foster deeper emotional connections. Consumers seek and purchase from brands they trust completely, with more than 50% of consumers in regions like Middle East and Africa, Asia Pacific, and Latin America showing this preference.
Read our article, New Concepts in Loyalty, for in-depth trend description, case studies and recommendations.