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#462: 2025 State of Customer Loyalty Report (Part 2) | Leaders in Customer Loyalty: The CEO's Desk · Leaders in Customer Loyalty, Powered by Loyalty360

• 0:05
  Speaker 1: Hello everyone and welcome back to Leaders in Customer Loyalty, the CEO's Desk.
• 0:10
  Speaker 1: This is part two of our episode covering the State of Customer Loyalty 2025 statistics.
• 0:16
  Speaker 1: If you haven't listened to part one, make sure you go back and check it out.
• 0:19
  Speaker 1: There's all kinds of good information from our report.
• 0:23
  Speaker 1: Just to remind you, we had over 90 brand marketers respond to our survey this year and we're examining how the stats and the trends from 2024 have changed in 2025.
• 0:36
  Speaker 1: And we're here again, as always, with Loyalty360 CEO Mark Johnson.
• 0:41
  Speaker 1: Welcome back, mark.
• 0:43
  Speaker 1: Glad to have you here to talk about this stuff today.
• 0:46
  Speaker 2: Looking forward to the discussion.
• 0:47
  Speaker 2: Thank you.
• 0:48
  Speaker 1: Yeah, so when we look at the overall brand priorities, personalization as a strategic goal dropped a bit from 73% in 2024 to 56% in 2025, despite it being the top enhancement.
• 1:03
  Speaker 1: How do you explain the tension between that and do you think there's a disconnect between tactical execution and the long-term strategic vision when it comes to personalization?
• 1:13
  Speaker 2: Yeah, as we mentioned in the last time we got together part one there's kind of an operational focus right now on a number of the programs.
• 1:24
  Speaker 2: Last year, I think it was 79% of the brands were either going to enhance, redo or augment their customer loyalty program.
• 1:32
  Speaker 2: It's kind of contracted a little bit and I think even the number of priorities brands checked I think last year was three and a half, it was just under three.
• 1:44
  Speaker 2: So I think they are checking less priorities, trying to be a little more tactical and maybe focused in regard to what they're focusing on.
• 1:52
  Speaker 2: But again, I think they have a number of new programs.
• 1:55
  Speaker 2: Many brands have launched new programs or launched new personalization efforts.
• 2:00
  Speaker 2: Because it is in vogue, right, hyper-personalization was the word that we heard last year pretty significantly and I'm sure you guys remember from when Don Smith talked about you know he was awaiting hyper-personalization in 2024 and it never really happened.
• 2:14
  Speaker 2: So I think brands are kind of trying to simplify, get that organizational alignment and, you know, make sure that the programs, processes and approaches they have are working.
• 2:24
  Speaker 2: Especially right now Budgets are tighter.
• 2:26
  Speaker 2: We hear that pretty consistently as we talk to brands.
• 2:28
  Speaker 2: So you know, how do you operationalize the program to drive some increased efficacy and efficiency in what you currently have.
• 2:39
  Speaker 1: Yeah, definitely, and I mean one of the other interesting things we saw from.
• 2:42
  Speaker 1: You know, when we're looking at how the strategic plans have changed.
• 2:47
  Speaker 1: Communications was a top five priority in 2024, but it fell off on the 2025 report.
• 2:53
  Speaker 1: Meanwhile, understanding new technologies and deeper customer insights have moved up the list of strategic priorities.
• 3:01
  Speaker 1: Do you think that those are signs of brands turning inward and trying to strengthen their foundations of data collection and tech and insight before they go and try and re-engage externally or scale their programs?
• 3:14
  Speaker 2: I think there's a big focus right now on kind of marketing efficacy, content efficacy, right.
• 3:21
  Speaker 2: So making sure that the content you have being focused on zero-party data gamification now.
• 3:26
  Speaker 2: So having more data does not necessarily mean you have better communications, right, whether it's from the right marketing message you're writing to in the right tone, the right channel, the right voice.
• 3:38
  Speaker 2: But brands are really focused on making sure that what they're putting out is engaged in the customer.
• 3:46
  Speaker 2: So does that mean simplifying the message, emailing them less.
• 3:49
  Speaker 2: Do you have kind of an opportunity to understand what they should have an interest in?
• 3:54
  Speaker 2: Sending you a message regarding pool cleaning and or hospitality services is going to resonate with you Sending me something regarding fitness or something for my kids regarding their sports, that's going to resonate as well.
• 4:08
  Speaker 2: So more is not always better, as we know, kind of the whole paradox of choice.
• 4:11
  Speaker 2: So I think brands are trying to get the right data, the right technology to operationalize again around the data, from marketing orchestration to having the right CDP, sort of getting personal, identifiable information on a customer that they can action on.
• 4:25
  Speaker 2: I think that that's the focus right now, and so maybe doing less but making sure that those messages are, you know, are targeted a little bit.
• 4:33
  Speaker 2: So communications, and also communications, falls under a larger rubric right of personalization, of digital engagement, real experience.
• 4:40
  Speaker 2: So I think that you know we see kind of a drop in all the categories, but I think brands want to make sure the communications they have going out are as effective as possible.
• 4:50
  Speaker 1: Definitely.
• 4:51
  Speaker 1: And that leads us to our next segment here, which is on brands and how they're measuring their effectiveness and the impact of their programs.
• 4:58
  Speaker 1: We saw in the State of Customer Loyalty report that 84% of brands say that their programs are effective or very effective, and that number is holding steady from last year.
• 5:09
  Speaker 1: But when we dig deeper, the confidence is actually growing and we can see year over year you know customer growth.
• 5:16
  Speaker 1: People who reported that that jumped up 11 points.
• 5:19
  Speaker 1: People who you know reported effective engagement rose six points.
• 5:24
  Speaker 1: We've seen incremental value and financial spend across successful programs as well.
• 5:31
  Speaker 1: What do you think changed?
• 5:32
  Speaker 1: And are brands finally seeing their strategies translate into more measurable outcomes?
• 5:37
  Speaker 1: Is there a reason for that?
• 5:39
  Speaker 2: Yeah, again, the whole idea of operationalizing the program still continues here as well, and I think there's a little bit of a confirmation bias here too that people that respond to this are usually members of Lowell 360.
• 5:51
  Speaker 2: And you know they may have kind of a greater sense of organizational alignment and you know they may have that buy-in as we talked about last time as well.
• 6:02
  Speaker 2: It's very important.
• 6:03
  Speaker 2: So members of Lilithi360 award-winning brands are probably comprising more of this survey than usual.
• 6:11
  Speaker 2: So I think that's a big piece of it, but that they are having confidence in the program, they are able to make mistakes, they are leveraging the right technology and making sure the technology kind of does what it's meant to do.
• 6:26
  Speaker 2: Oftentimes, brands bring on platforms that may not truly fit within their environment right, and one of the things we talked about last week a little bit, and we've talked about as well, is brands.
• 6:35
  Speaker 2: Instead of redoing their whole stack, they may be focused on the kind of the weak link in the stack right now.
• 6:41
  Speaker 2: So if you have a limited amount of resources you can spend, if your market orchestration piece isn't working, or if your data lake isn't working, or if your CDP isn't working, let's replace that.
• 6:51
  Speaker 2: So brands are.
• 6:53
  Speaker 2: You know we continue to hear from them that they're focused on understanding the tech stack from a comprehensive perspective but identifying that weak link.
• 7:00
  Speaker 2: So if you can change the weak link that may bring some efficacy kind of throughout the whole customer lifestyle, the journey and in reporting and just overall the effectiveness of the program Definitely, and we also saw an increase in the number of brands who are saying that their programs are delivering enterprise level insights.
• 7:20
  Speaker 1: That rose from 48% to 54%.
• 7:23
  Speaker 1: Do you think that that's probably a result of more of that operationalizing, and is it a sign that loyalty is becoming a more valuable data engine for the business, or at least maybe other executives are waking up to that fact?
• 7:42
  Speaker 2: Yeah, I think that's a big piece of it.
• 7:43
  Speaker 2: Right, we've talked about that leaning in that we heard about at the conference, we continue to hear about now.
• 7:46
  Speaker 2: Brands have 6 million members, 10 million members.
• 7:48
  Speaker 2: They're truly leaning into them, giving them the special offers and being able to kind of grow that data set they have on them.
• 7:56
  Speaker 2: But you know, often, and over the last year, especially this year metrics they're being asked for to substantiate the impact of the program are becoming more important and also more clearly defined.
• 8:08
  Speaker 2: So I think there's trying to align what the goals of the program.
• 8:12
  Speaker 2: You know, oftentimes we hear that CFO thinks this is.
• 8:15
  Speaker 2: You know we're giving away margin.
• 8:17
  Speaker 2: Right, these people are going to make that purchase regardless.
• 8:20
  Speaker 2: So having the right metrics, being able to kind of leverage them, is very important.
• 8:25
  Speaker 2: And again, just having the ability to substantiate to the CFO, to the auditor, the efficacy of the program and that's growing pretty significantly is, I think, a big piece of that.
• 8:35
  Speaker 2: They know the data points that they're being asked for is, I think, a big piece of that.
• 8:40
  Speaker 2: They know the data points that they're being asked for, so they're bringing them forth in a way that can substantiate the program.
• 8:49
  Speaker 1: Yeah, that's awesome, and that probably contributes to the fact that 52% of brands are saying that they consider their programs superior or significantly superior to competitors in their industries.
• 8:55
  Speaker 1: Do you think that, you know?
• 8:57
  Speaker 1: Is this confidence justified?
• 8:59
  Speaker 1: Is it some of that confirmation bias?
• 9:00
  Speaker 1: Do you think that there's a gap between the perception and the performance that people should be wary of, or is the you know?
• 9:07
  Speaker 1: Are they correct in feeling strong and confident in their programs?
• 9:12
  Speaker 2: No, that's another one too that has definitely grown over the last few years.
• 9:15
  Speaker 2: I think we've done this year this study three years now.
• 9:16
  Speaker 2: One too that had definitely grown over the last few years.
• 9:18
  Speaker 2: I think we've done this year this study three years now, and the first year there wasn't that kind of significant kind of confidence, but it's definitely grown.
• 9:26
  Speaker 2: I think a little bit that's confirmation bias, again being able to dial into the right metrics.
• 9:31
  Speaker 2: But you know, traditionally 23 and before, many brands had that inferiority, complex right.
• 9:37
  Speaker 2: They felt that they were the organizations with better teams, it was funded better, they had the right resource allocation where now it seems to definitely flip Again, a lot of the people that take these are award-winning programs, people who are members of Volte360.
• 9:53
  Speaker 2: So we may be selecting kind of a more successful and kind of confident group.
• 9:59
  Speaker 2: But if you look back holistically on the reports that we've had going back to 22 and beyond, we ask this question quite often, or some iteration of it, and it is definitely swung pretty, pretty strongly from that inferior or significantly inferior to the complete other side or significantly inferior to the complete other side.
• 10:19
  Speaker 1: Yeah Well, another sign that we've seen that people have confidence and are investing is that the loyalty team sizes are growing at brands.
• 10:26
  Speaker 1: 29% of the brands reported that they increased the number of people on their customer loyalty team in the last year.
• 10:33
  Speaker 1: Do you think that that suggests that loyalty is finally getting the resources it needs, or do you think there's still a talent gap there that needs to be filled?
• 10:42
  Speaker 1: Is that a barrier for brands?
• 10:44
  Speaker 2: Yeah, there definitely is still a little bit of a talent gap succession planning but there are resources out there from different universities having training programs, but I think brands are more focused on kind of training internally around the program.
• 11:01
  Speaker 2: Hopefully some of the brands that we have that have the resources from.
• 11:05
  Speaker 2: You know, our university and the digital roundtables we hold on a weekly basis really help kind of share best practices across verticals.
• 11:13
  Speaker 2: But you know, again, brands are looking to add to their teams and there's also a big push too from all kind of not something onshoring, but if you had a large technology provider that did staff augmentation, you had two or three or four resources there.
• 11:32
  Speaker 2: They really didn't count them as part of the loyalty team originally right.
• 11:34
  Speaker 2: Count them as part of the loyalty team originally right.
• 11:40
  Speaker 2: But now if they brought over one resource or two resources, or if they had five resources, you know, at one of the technology partners or consultants, and now those have all been brought in-house.
• 11:45
  Speaker 2: You're seeing that kind of.
• 11:47
  Speaker 2: That kind of is represented in that number as well.
• 11:50
  Speaker 2: They're definitely bringing it in-house.
• 11:52
  Speaker 2: You know, before COVID there was a push to building out centers of excellence.
• 11:56
  Speaker 2: So how do you get?
• 11:58
  Speaker 2: Customer loyalty is something that is a focus in the organization.
• 12:01
  Speaker 2: It kind of was tempered a little bit going through COVID and coming out, but now again brands, as we've talked about, leaning into customer loyalty, building out centers of excellence internally that can truly help them leverage the data, operationalize the program and drive the metrics that are needed.
• 12:17
  Speaker 1: Thank you, yeah, and you know, it's really an exciting time to be part of the customer loyalty industry and seeing all these shifts happen and this growing confidence and the understanding of you know folks that may, you know, at an organizational level have been resistant or thought about loyalty as a liability, Now understanding where it really is an asset to them Absolutely.
• 12:39
  Speaker 1: So, as we kind of like start to look ahead from all of these things, you know, during this like time of transformation in the loyalty world, if we keep seeing these kind of shifts year over year, where do you think we'll be when we talk about this report a year from now?
• 12:55
  Speaker 2: Yeah, it's definitely a very dynamic time within the industry.
• 12:57
  Speaker 2: You know, earlier today we were talking about some of the shopping bots and opportunities that are out there.
• 13:03
  Speaker 2: But this focus on customer loyalty I think it's kind of the clarion call that we see.
• 13:08
  Speaker 2: It's operationalizing the program, focus on the program, socializing the program internally.
• 13:13
  Speaker 2: The brands that are doing well have this distinct advantage from the fact that the program is valued, it's understood and they know now that instead of maybe focusing on non-members, really focus on the program.
• 13:31
  Speaker 2: How do we talk about the program?
• 13:31
  Speaker 2: How do we consistently talk and train around the program?
• 13:33
  Speaker 2: So I think training is becoming a big piece as well.
• 13:34
  Speaker 2: Many brands are looking for that next generation customer loyalty program.
• 13:39
  Speaker 2: They've had version one or two and they're looking to kind of redo that.
• 13:43
  Speaker 2: So I think that from a qualitative perspective the number of calls I've had over the last even couple days many brands are looking about next gen.
• 13:50
  Speaker 2: But again, this focus on the operationalizing, understanding how it's viewed in the program, addressing within the organization and how to make sure that you can have the most advantageous perspective and address any inconsistencies you have, that focus on internal-external alignment is a big push.
• 14:10
  Speaker 2: But I think another thing is.
• 14:12
  Speaker 1: Brands are starting to look at what next generation is Totally so is there a specific trend from this year that you think will gain the most ground by 2026?
• 14:25
  Speaker 2: I don't know if there's a specific, you know, I think, circumnavigation or kind of surreptitiously.
• 14:33
  Speaker 2: I think that the personalization piece, I think it is going to kind of come out as one of those trends maybe that we see more out of right Because they're focusing on getting more out of the program, out of the customers, focusing on customers.
• 14:45
  Speaker 2: So the brands realize that they have to make sure that they're engaging, listening to, understanding, providing the right content, products, services and their offerings.
• 14:52
  Speaker 2: So I think, kind of in a roundabout manner, you're going to see personalization as one of the ones that kind of jumps up at the end of the year that you ask brands in kind of retrospect that they truly focused on or areas that they may have felt or do feel that they had the most success in.
• 15:09
  Speaker 1: Totally Well.
• 15:10
  Speaker 1: So do you think that there's one area, that where you expect to see a drop off?
• 15:15
  Speaker 2: Yeah, I think kind of new reward offerings, partnerships are probably the two areas.
• 15:21
  Speaker 2: Partnerships may be the biggest one, because partnerships right now the fact that they are obviously more custom, more tailored to the brand and the participants in the program if you have one, two, three, four programs, they take a little a brand, should I say, in the program.
• 15:36
  Speaker 2: They take a little while longer to substantiate an ROI, to prove out an ROI, versus kind of mass affiliate programs.
• 15:43
  Speaker 2: So I think that brands want to make sure they get them right and so I think partnerships kind of will probably drop off a little bit I think this year because economic uncertainty, finding willing participants in kind of a new partnership are going to be challenging and there's been a lot of partnering up over the last couple of years.
• 16:01
  Speaker 2: So I think that's one.
• 16:02
  Speaker 2: I think, if you look back retrospectively, the kind of focus on partnerships, rolling out new partnerships, will drop pretty significantly in the latter part of this year and going into next year.
• 16:12
  Speaker 1: Oh, that's really interesting.
• 16:13
  Speaker 1: Well, I think that that's wrapping it up.
• 16:16
  Speaker 1: Thank you so much, mark.
• 16:17
  Speaker 1: You know it's always great to get your perspective.
• 16:20
  Speaker 1: You're the only one in the industry who's hearing from all of these brands directly and looking at the data, and so we really appreciate that you take the time to give insights.
• 16:31
  Speaker 1: If you haven't checked out the State of Customer Loyalty Report, make sure you visit loyalty360.org.
• 16:34
  Speaker 1: Download the report.
• 16:36
  Speaker 1: It's full of great stats.
• 16:37
  Speaker 1: We have a lot of comparison year over year.
• 16:39
  Speaker 1: You can dive in.
• 16:40
  Speaker 1: Make sure you go back and check out part one, if you haven't already, of this CEO's Desk podcast, and we will see you next time.
• 16:48
  Speaker 1: Thanks everyone.