How to Build a Loyalty Program That Drives Long-Term Growth

Building a loyalty program means deciding which customer behavior the business wants to change, designing a value exchange members will use, choosing a structure and rewards that fit, funding it with sound economics and measuring whether it changes behavior over time.

Many loyalty programs launch with enthusiasm and then fade, and one common reason is that they were built around a reward rather than a business goal. Deloitte's 2025 survey of US loyalty members found that "the average consumer enrolls in eight loyalty programs, yet actively participates in only five," and McKinsey observed in 2021 that "around two-thirds of established loyalty programs fail to deliver value" (McKinsey, Next in loyalty, 2021). Long-term growth comes from programs designed to be used, funded to be sustainable and measured to show what they change. This guide walks through nine steps, from objectives to optimization. For timelines, see the guide to how quickly a loyalty program can launch.

Key Takeaways

Step 1: What should a loyalty program achieve?

A loyalty program should start with one or two business objectives, such as visit frequency, basket size or retention, and the measurable customer behaviors that show progress.

Programs launched without clear goals are harder to evaluate and harder to keep focused. Before choosing rewards, agree on:

• The objective. For example, raise purchase frequency among occasional buyers, increase basket size, grow category reach or reduce churn.
• The behavior. The specific customer action that moves the objective, such as a second visit within 30 days.
• The KPIs. Active member rate, repeat purchase rate, incremental revenue and margin against a control group, and cost per active member.
• Ownership. Who owns the program across marketing, finance, technology and operations, and who approves changes.

If no behavior can be changed profitably, for example where purchases are rare or margins are too thin to fund rewards, a loyalty program may not be the right tool, and CRM, promotions or service improvements may serve the objective better.

Step 2: Who are the members, and what value will they get?

Define the customers the program is for and the value exchange they will notice, based on what they already value rather than what is easiest to give away.

Look at purchase data and customer research to identify which customers matter most and why they buy. A good value exchange is easy to understand, reachable within a normal purchase rhythm and relevant to how members use the brand. In Deloitte's survey, "80% of consumers" said they "get more from the brand because of the loyalty program," and 72% "say loyalty programs make them more likely to spend with their preferred brand" (Deloitte, January 12, 2026). Those answers describe each respondent's most-preferred program, and Deloitte cautions that its results "should not be generalized across all loyalty memberships." The value has to be visible early: a first reward that takes months to reach risks teaching members to ignore the program, though longer cycles can work in B2B or high-ticket categories where purchases are naturally infrequent.

Step 3: Which program structure fits?

The right loyalty program structure matches the target behavior: points for spend, visit-based rewards for frequency, tiers for top customers, paid membership for recurring utility, or a hybrid.

Earning does not have to be tied only to purchases. Brandmovers built SoCal Explorer for Metrolink, Southern California's commuter rail, rewarding "both transactional and non-transactional rider behaviors" with points for every mile traveled on digital or physical tickets; the program recorded a 60% active engagement rate among enrolled riders and +15% average monthly transactions among members (disclosed by Brandmovers). These are reported program results, not a control-group comparison. For tier design, see the guide to tiered rewards programs.

Step 4: Which rewards go beyond discounts?

Combine enough financial value to feel real with access, recognition, experiences and convenience, which can be worth more to members than they cost to deliver.

Programs built only on discounts can teach members to wait for the next offer and squeeze margin. Options that work alongside financial rewards include early access to products or sales, priority service, members-only events or experiences, personalized offers, and recognition such as status or milestones. Test each against a control group rather than assuming members value it; what works varies by category.

For B2B programs, purchases are less frequent and decisions involve several people, so rewarding non-purchase behaviors such as training, certifications and referrals can matter as much as rewarding orders. Seasonal businesses can use incentives to steady demand: Aquatrols, a turfgrass technologies manufacturer, relaunched its loyalty program with Brandmovers on BENGAGED™, adding points bonuses and multipliers for off-season purchases. Off-season sales increased as much as 23% at times (disclosed by Brandmovers; Aquatrols case study).

Step 5: How do you make the economics work?

Model the earn rate, reward cost, points liability and expected redemption before launch, then confirm with a control group that the program creates incremental margin.

• Earn rate and reward value. How much value members get per dollar or visit, and what that costs. As an illustration, if members earn 1 point per dollar and 1,000 points buys a $10 reward, the program returns 1% of spend; if 70% of points are expected to be redeemed, reward cost is about 0.7% of member spend before fulfillment and operating costs.
• Points liability. Points earned but not yet redeemed are a commitment to members; involve finance early on how they are accounted for.
• Expected redemption and breakage. Redemption is one sign that members value the program; McKinsey reports that "redeemer members spend 25 percent more than enrolled but inactive members," a comparison rather than proof of cause (McKinsey, Next in loyalty, 2021). High breakage can mean rewards are out of reach or irrelevant.
• Incrementality. Compare members who receive a mechanic with a held-out group, because members may already be your best customers. Where the base is too small to hold out, compare matched regions, stores or accounts, or track the same members before and after a change.

Step 6: What technology and data does the program need?

The program needs a platform that runs its earning and redemption rules, connects to point of sale, ecommerce and CRM systems, and reports results by member and segment.

Key requirements:

• Rules flexibility. Marketers should be able to change earning rules, offers and bonus events without long development cycles.
• Integration. Point of sale, ecommerce, app and CRM systems need to share member status and balances so members see the same thing in every channel.
• Data and reporting. Member-level behavior, segment reporting and the ability to run tests against a control group.
• Fulfillment. A way to deliver rewards reliably, whether discounts, products, experiences or digital rewards.
• Fraud controls. Monitoring for account takeover, fake accounts and points abuse, which drain value from honest members.

BLOYL™, Brandmovers' loyalty platform, supports points, tiered, punch card, subscription or paid membership and hybrid structures. It includes a rules engine that marketing teams can configure without engineering, non-purchase earning, gamification modules, a rewards catalog of 100,000+ options with automated fulfillment, A/B testing against a control group and built-in fraud protection. Brandmovers' mid-market implementations with standard integrations (a CRM connection, a core points program and a standard catalog) take six to twelve weeks from brief to launch, and enterprise builds 90 to 120 days (disclosed by Brandmovers).

Step 7: Which rules apply to a loyalty program?

In California, covered businesses need prior opt-in consent before enrolling consumers in a loyalty program tied to personal data, and every program should publish clear terms.

• Financial incentive consent. The California Consumer Privacy Act says a business "may enter a consumer into a financial incentive program only if the consumer gives the business prior opt-in consent" that "clearly describes the material terms of the financial incentive program" (California Privacy Protection Agency, CCPA text, section 1798.125(b)(3)). This applies to businesses covered by the act, including those with "a gross annual revenue of $26.625 million or more (effective January 1, 2025) for the preceding calendar year" or that meet other thresholds (California Privacy Protection Agency, FAQs).
• Revocable consent. The same section says consent "may be revoked by the consumer at any time," and if a consumer declines, the business "shall wait for at least 12 months before next requesting" opt-in consent. It also bars financial incentive practices that are "unjust, unreasonable, coercive, or usurious in nature."
• Clear terms. State how points are earned, what they are worth, when they expire and how the program can change. Good practice is to give members notice before changes that reduce value.

Other states have their own privacy laws, and some industries, such as alcohol and financial services, have their own rules on incentives, so check each market. This is general information, not legal advice.

Step 8: How should you launch the program?

Launch in stages: pilot with a segment or region, fix what members and staff struggle with, then roll out with clear enrollment messages and staff training.

• Pilot. Test enrollment, earning and redemption with a limited group, and compare their behavior with a similar group outside the pilot.
• Train staff. Frontline and service teams need to explain the program and resolve issues.
• Make enrollment easy. Few fields, a clear first reward and consent captured properly.
• Plan the first 90 days. Early communications should get new members to their first reward.

The 90-day launch guide covers a launch plan step by step.

Step 9: How do you measure and keep improving the program?

Track active members, redeemers and incremental results against a control group, then review rewards, rules and communications on a regular schedule.

Deloitte also found that "40% of all respondents admit to sometimes forgetting to redeem," so reminders and visible balances are part of keeping members active. Set a rhythm, such as a monthly performance review and a deeper annual review of structure and rewards, and change one thing at a time where possible so results can be read. The guide to redemption rates covers how to diagnose low redemption.

Conclusion

A loyalty program drives long-term growth when it is built backward from a business objective: the behavior to change, a value exchange members will use, a structure and rewards that fit, economics that hold up and measurement that shows what changed. Rules and technology need to be ready before launch, and the work continues after it. Programs treated as ongoing products, reviewed and adjusted on a regular rhythm, are the ones most likely to keep members active and keep earning their budget.

Sources

• Deloitte, "Reshaping loyalty programs in an era of value seeking" (January 12, 2026)
• McKinsey & Company, "Next in loyalty: Eight levers to turn customers into fans" (October 12, 2021)
• California Privacy Protection Agency, California Consumer Privacy Act text
• California Privacy Protection Agency, "Frequently Asked Questions"
• Brandmovers, Metrolink loyalty program case study
• Brandmovers, Aquatrols B2B loyalty case study