Article
The Future of Loyalty Programs and the Role of AI
From points to predictions: how AI is rewriting the rules of customer loyalty
From points to predictions: how AI is rewriting the rules of customer loyalty
Where it all started – The evolution of customer loyalty programs
Loyalty has come a long way from the coffee-shop punch card (buy 10, get 1 free). Airlines took it to another level when, in 1979, Texas International Airlines (and later American Airlines) created the blueprint for tiers, partners, and more. Today, Qantas’s famous frequent flyer program alone generates around 25% of the company’s profit.
Credit cards took loyalty mainstream, as cash-back normalised rewards on everyday spend and spawned new co-brand ecosystems. Coalitions then broadened both value and data: programs like Flybuys (Australia), Nectar (UK), and Payback (Germany) created shared currencies and richer targeting capabilities.
Why loyalty is becoming the default
Two forces have made loyalty a CEO-level topic, making a strong loyalty marketing strategy essential for long-term growth:
- Lower barriers to entry. Falling tech costs and lead times, combined with tighter privacy regulations and customer expectations, have pushed first-party data strategy to the centre. More companies are reallocating trade and media dollars into loyalty, where incremental lift and payback are higher & clearer. Gone are the days of “half the money I spend on advertising is wasted; the trouble is I don’t know which half”.
- Economics you can bank on. Launching a new program can lift sales by around 7%[1] through higher basket size and more frequent visits, while also improving retention and, at times, even new high-margin revenue streams.
A great example is the rise of loyalty-enabled retail media networks (e.g., Woolworths’ Cartology; Coles 360), which let brands target based on customer behaviour and close the loop on real sales, not just clicks. One recent Cartology campaign for Sprite Lemon+ reportedly drove 115k new-to-brand customers with a 16% repeat rate.
What is coming next
In customer loyalty, AI is already raising the ceiling on personalisation, taking “next best action” from static rules to dynamic, creative, and context-aware moments across channels. Expect:
Hyper-personalisation of offers
Using more data to deliver the right offer, at the right time, through the right channel.
Lifecycle management
Acting swiftly and pre-emptively on engagement and churn drivers to sustain or reactivate customer relationships.
Creative at scale
Accelerating the creative process by tailoring copy and imagery to segments (or even individuals) and iterating based on performance.
Conversational shopping
Chatbots that learn from behaviour to offer personalised, real-time value and convenience (e.g., “What are the best offers for me today?” or “It’s cold. Show me dark jumpers in my size from my favourite brands.”).
Hassle-free shopping
Smart agents that learn your habits, diet goals, and upcoming events can help streamline purchases, ushering in a new era of agent-to-agent transactions.
The takeaway
Loyalty can play a pivotal role in driving growth and preparing your business for the future. A well-designed program delivers measurable loyalty program ROI through stronger retention, higher basket size, and new revenue streams.
Curious how your program stacks up and what it would take to take it one step further? Try Winning’s Loyalty Health Check and get actionable insights in just two weeks.
[1] Malika Chaudhuri, Clay M. Voorhees, and Jonathan M. Beck, “The Effects of Loyalty Program Introduction and Design on Short- and Long-Term Sales and Gross Profits,” Journal of the Academy of Marketing Science 47, no. 4 (2019)
Bruno Sousa
General Manager Australia
Bruno Sousa brings extensive experience in the Australian market, having held senior roles such as Director at Mastercard Data & Services and Group Head of Strategy & Insights at Best & Less Group Holdings Limited.
At Winning, he leads the development and growth of new local operations tailored to the specific needs of Australian clients. His work is grounded in the same technical and strategic excellence, results-driven approach, and client focus that define Winning’s success across Portugal and Spain.