The Loyalty Perception Gap: Why Your Program Feels Less Valuable

The loyalty perception gap is the difference between how much value a brand believes its loyalty program delivers and how much value members actually feel. It shows up when internal metrics such as enrollment and points issued look healthy while member engagement, redemption and advocacy lag behind.

PwC's 2025 Customer Experience Survey of US consumers and executives found that "about nine out of 10" executives "say customer loyalty has grown in recent years, but only four in 10 consumers say the same." PwC calls it "not just a perception gap" but "a blind spot with a direct line to lost revenue." The gap is not a sign that members dislike programs. Deloitte's 2025 survey of US loyalty members found that 80% say they get more from a brand because of its program, but the average member enrolls in eight programs and actively participates in only five. Neither survey compares brand and member views of the same program, so the gap is best treated as a hypothesis to test in your own data. This guide covers why brands overestimate value, the three causes, how to measure the gap in your own program, five ways to close it, and what it means for breakage and program cost.

Key Takeaways

What is the loyalty perception gap, and how big is it?

It is the distance between the value a brand thinks its program delivers and the value members feel, visible when internal success metrics outrun member engagement.

The clearest neutral evidence comes from PwC's survey of 5,511 US consumers and 406 US executives, conducted from May 21 to June 30, 2025. Executives were far more confident that loyalty had grown than consumers were. Yet 46% of executives said their company's current loyalty program will be irrelevant in three years. Taken together, the findings suggest many leaders are confident about loyalty in general but uncertain whether their program is what earns it. That uncertainty is a reason to measure how members experience the program rather than assume it.

Deloitte's member survey adds the other half of the picture. Members broadly see value in programs, yet spread their attention thin: enrollment is high and active participation is lower. For a single brand, that means a member counted as enrolled may not be a member the program is actually influencing. The loyalty program quiet quitters guide covers how to re-engage members who have gone dormant.

Why do brands overestimate how much members value the program?

Most program dashboards measure what the brand controls, such as sign-ups and points issued, rather than what members experience when they try to use the program.

Each metric on the left can rise while every member experience on the right stays flat. That is how a program can look healthy in a quarterly review and feel unremarkable to the people in it.

What causes the loyalty perception gap?

Three causes do most of the damage: rewards that feel too far away, friction when members try to redeem, and offers that do not match member behavior.

Rewards that feel out of reach

When the first meaningful reward sits too many purchases away, members stop working toward it. Research on the goal-gradient effect shows the reverse pattern: in a coffee-shop reward program, members "purchase coffee more frequently the closer they are to earning a free coffee" (Kivetz, Urminsky and Zheng, Journal of Marketing Research, 2006). Effort rises as the goal comes into view, which suggests that a reward set too far away does less to motivate members, especially early on. Warning signs include long gaps between enrollment and first redemption, a falling share of members who have ever redeemed, and unredeemed balances growing faster than redemptions.

Friction at redemption

Members who have earned enough to redeem still fail to do so when the process is slow, unclear or easy to forget. Deloitte found that "40% of all respondents admit to sometimes forgetting to redeem." Friction takes three forms:

• Technical: too many steps, redemption that sends members to a separate site, or minimums above typical balances.
• Catalog: rewards that do not match what members want, so balances sit unused.
• Clarity: members cannot tell what their points are worth or when they expire.

Expiration policies deserve particular care. They protect the balance sheet but can feel like a penalty to members who buy infrequently, and state gift-certificate and unclaimed-property rules can affect how rewards may expire. In California, for example, the gift-certificate law exempts certificates distributed through a loyalty program without payment only if "the expiration date appears in capital letters in at least 10-point font on the front" (Cal. Civ. Code §1749.5). Whether a program's points or reward certificates fall under rules like these depends on its design, so check each rule against the program's own terms. This is general information, not legal advice.

Offers that miss the member

Offer irrelevance happens when promotions are built for broad segments rather than for what members actually do. A frequent, low-spend buyer and an occasional, high-spend buyer need different offers, and a single blanket promotion tends to fit neither. The guide to improving loyalty campaigns with data segmentation covers building those segments.

How do you measure the perception gap in your own program?

Have the team predict how members rate the program, survey members including dormant ones, break redemption down by segment, and track NPS over time.

• Dual-track survey. Ask a sample of members, including dormant ones, questions such as "Does this program make you feel valued as a customer?" and "Do the rewards feel achievable within a reasonable time?" Ask program owners to predict how members will answer the same questions. The difference between predicted and actual answers is your perception gap, and the questions with the largest differences show where to start.
• Redemption by segment. Break redemption down by tenure, tier and how members joined. Check balance trends first: members who are steadily saving toward a larger reward are not a problem. Low redemption among new members can point to a slow first reward; low redemption among long-tenured members can point to catalog or expiration problems; low redemption in the middle tiers can point to tier rewards that do not justify the effort. The guide to loyalty program redemption rates covers the metric in depth.
• Member versus non-member NPS. If members are no more likely to recommend the brand than non-members, the program is not adding perceived value. Members self-select, so treat a single comparison with caution and watch how the difference moves after program changes.
• Satisfaction after redemption. A one-question survey at the moment of redemption shows whether the reward was worth the effort, which no balance report can.

Two data steps make these measures possible. Redemption records have to be joined to member attributes such as tenure, tier and join channel, which usually means connecting the loyalty platform to CRM or ecommerce data. And the survey sample has to reach non-members as well as members, through post-purchase or site surveys, because non-members are not on the program's email list.

Benchmarks vary too much by category, program age and member mix to be useful as fixed targets. The more reliable test is direction: whether these measures improve, by segment, after each change. BLOYL™, Brandmovers' loyalty platform, provides real-time dashboards and A/B testing against a control group, which helps separate the effect of a change from trends that would have happened anyway.

Five ways to close the gap

The five fixes map to the three causes: make rewards relevant, deliver an early win, remove redemption friction, target offers by behavior, and keep listening.

1. Audit reward relevance

Compare what members actually redeem with what the catalog emphasizes. Reward types with low redemption despite sufficient balances are relevance failures; reward types redeemed quickly despite low prominence are preferences the catalog should feature more. Repeat the audit when member behavior or economic conditions shift, because preferences do too.

2. Deliver an early win

Members who feel they have a head start are more likely to finish. Research on the endowed progress effect found that "people provided with artificial advancement toward a goal exhibit greater persistence toward reaching the goal," which "increases the likelihood of task completion and decreases completion time" (Nunes and Drèze, Journal of Consumer Research, 2006). Options to test include a welcome bonus, a bonus on the first purchase, and progress messages that show how close the next reward is. Whether an early reward keeps members engaged afterward is worth testing against a control group.

3. Remove redemption friction

Walk through redemption as a member would, on desktop and mobile, and cut any step that does not need to be there. Where points expire, send reminders before the expiry date and offer low-cost rewards that a modest balance can reach, so expiring points have somewhere useful to go.

4. Target offers by behavior

Define a small set of behavioral segments, such as frequent low-spend buyers, occasional high-spend buyers, new members and members whose activity is falling, and give each its own offer, timing and reward type. Start with a few segments and test each against a control group, so the gain over a single blanket message is measured rather than assumed.

5. Build a feedback loop

Collect member feedback continuously rather than once a year: a short survey after each redemption, a check-in after the first month, a small standing panel of active members, and a regular review of customer service contacts about the program. Route what it surfaces to the people who can change the program.

What does the gap mean for breakage and program cost?

Unredeemed points are a signal and a liability input, not a revenue line to chase; closing the gap raises reward cost, so each fix has to earn its keep.

Under US GAAP, points that give members a material right carry part of the sale price as a liability. If the business expects to be entitled to breakage, it recognizes the expected amount "in proportion to the pattern of rights exercised by the customer"; if not, it recognizes breakage "when the likelihood of the customer exercising its remaining rights becomes remote" (PwC Viewpoint 7.4). Breakage estimates are also subject to the variable consideration constraint, and amounts that must be remitted to a state under unclaimed property law are not recognized as revenue at all. High breakage can flatter a program's cost line, but it often means members are not reaching rewards they value, which is the perception gap in financial form. The guide to loyalty program liability for CFOs covers the accounting in more depth.

The trade-off runs the other way too. Making rewards easier to reach increases redemption, which raises reward cost and lowers breakage. A fix pays off only when the extra engagement adds more margin than the rewards cost. Not every part of the gap needs closing. Some members will engage lightly no matter what, and the aim is to close the gap where it costs margin, not everywhere. Test changes against a control group, and agree with finance how the liability forecast should change before rolling them out.

What should you track as the gap closes?

Track member experience and incremental value together, by segment, and judge progress by direction over several periods rather than against a single target.

• Redemption by segment: whether new, mid-tier and long-tenured members redeem more after the changes.
• Time to first redemption: how long new members take to reach their first reward.
• Member versus non-member NPS: whether the difference widens over time.
• Satisfaction after redemption: whether members say the reward was worth the effort.
• Active member rate: the share of enrolled members who earned or redeemed recently.
• Incremental margin against a control group: whether the program adds more than it costs.

Report these together. The perception gap is a system-level condition, and closing it shows up across several measures at once.

Conclusion

The loyalty perception gap usually starts with design choices, such as reward distance, redemption friction and offer targeting, and persists because the metrics most teams report cannot see them. Enrollment, points issued and internal satisfaction can all rise while members engage selectively and redeem less than the brand assumes. PwC's finding that executives are far more confident about loyalty than consumers are is a reason to test that confidence inside your own program. Have the team predict how members see the program, ask members including dormant ones, break redemption down by segment, fix the cause the data points to, and judge every change on incremental margin against a control group. Programs that do this replace an assumed value with a measured one.

Sources

• PwC, "2025 Customer Experience Survey" (September 29, 2025)
• Deloitte Insights, "Reshaping loyalty programs in an era of value seeking" (2025 Deloitte Consumer Loyalty Program Survey)
• Kivetz, Urminsky and Zheng, "The Goal-Gradient Hypothesis Resurrected," Journal of Marketing Research (2006)
• Nunes and Drèze, "The Endowed Progress Effect: How Artificial Advancement Increases Effort," Journal of Consumer Research (2006)
• California Civil Code §1749.5 (gift certificates)
• PwC Viewpoint 7.4, Unexercised rights (breakage)