The average consumer now belongs to 15+ loyalty programs. Sounds like engagement is up, right? Wrong. That's a 10% increase from 2022, while actual loyalty has simultaneously collapsed.

According to the Emarsys Customer Loyalty Index, true loyalty fell to just 29% in 2025 – down 5% from the previous year. Translation? People are signing up for more programs while being loyal to fewer brands. They're collecting points everywhere and committed to nowhere.

Welcome to the loyalty crisis. And if you're still running a traditional points-based rewards program, you're about to find out why it's not working anymore.

The Cost-of-Living Reality Check

Here's what killed traditional loyalty: the cost-of-living crisis forced consumers to make a brutal calculation. When choosing between buying what they can afford versus staying loyal to a brand for points they might redeem someday, affordability wins every time.

Emarsys research shows that 60% of consumers switched brands in the past year specifically due to cost considerations. Not because they disliked their previous choice. Not because the quality dropped (though 34% did switch for that reason). Simply because they couldn't afford to maintain loyalty when cheaper alternatives existed.

This is the fundamental shift that traditional loyalty programs haven't adapted to: points accumulation requires repeated purchasing power that many consumers simply don't have right now. You're asking people to demonstrate loyalty through spending at the exact moment when spending is the problem.

Why Points Programs Feel Pointless

McKinsey research, cited across loyalty statistics, reveals something damning: 50% of paid loyalty program memberships are cancelled within the first year due to insufficient use. Half. Within twelve months.

Think about what that means. Consumers are interested enough to sign up, sometimes even pay to join, and then abandon the program before they've extracted any meaningful value. That's not a customer problem – that's a program design problem.

BCG's 2024 research on loyalty programs shows engagement declining despite membership growth. People are in more programs but participating in fewer. The average consumer is overwhelmed by choice, underwhelmed by value, and increasingly cynical about whether accumulating points actually benefits them.

The Perception vs. Reality Gap

Traditional loyalty programs operate on a delayed gratification model: spend money now, get rewards later. But here's the psychological trap: later feels increasingly uncertain.

When consumers are financially stretched, immediate savings beat future points every single time. A 10% discount today is infinitely more valuable than 100 points towards something they might purchase next month – assuming they can still afford it.

LoyaltyLion's 2025 research highlights another critical shift: 34% of consumers now switch brands based on sustainability credentials, up from just 21% previously. Loyalty is increasingly tied to values alignment, not transactional point accumulation. Yet most rewards programs remain purely transactional.

The Death of Brand Switching Costs

It used to cost something – time, effort, risk – to switch brands. You'd stick with what you knew because trying something new had friction. Digital commerce has obliterated that friction.

Deloitte research shows customer acquisition costs have risen 50% in just five years, while retention remains 5x cheaper than acquisition. Yet paradoxically, customers are easier to lose than ever. The barriers that kept people loyal by default have disappeared.

Research compiled across customer retention statistics reveals a stark truth: retention is more cost-effective than acquisition, but harder to achieve. The old model of earning loyalty through accumulated points no longer works when consumers can switch brands with a single tap.

What Comes Next: Loyalty as Platform, Not Program

The future of loyalty isn't about collecting points – it's about creating platforms where loyalty becomes the mechanism for accessing benefits that matter right now.

This is the shift from B2C to B2B2C. Instead of brands trying to build direct loyalty with overstretched consumers, they participate in ecosystems where employers or platform providers make brands accessible as part of a broader value proposition.

Think about it: when a brand becomes part of an employee benefits package, the consumer doesn't need to choose between affordability and loyalty. The cost is covered. Suddenly, loyalty becomes frictionless again.

This model flips the traditional approach. Instead of asking consumers to demonstrate loyalty through repeated purchases they might not be able to afford, brands become the obvious choice because access is already funded.

The Strategic Shift Required

For brands navigating this transition, several things need to change:

Immediate value over delayed gratification – Benefits need to be accessible now, not after accumulating enough points for redemption.

Integration over isolation – Standalone loyalty programs feel like homework. Platform-based approaches where your brand is one option within a broader ecosystem feel like opportunity.

Values alignment over transactional points – With 34% switching for sustainability and values, loyalty requires more than purchase history.

Funded access over consumer spending – When someone else (employer, platform) covers the cost, loyalty becomes about preference rather than affordability.

The Uncomfortable Truth

Traditional loyalty programs aren't failing because they're badly executed. They're failing because they're solving a problem that no longer exists – using mechanisms that no longer work – in an economic context that's fundamentally changed.

The cost-of-living crisis revealed what was already true: points-based loyalty was always a house of cards built on consistent disposable income. The moment that income disappeared, so did the loyalty.

What's emerging in its place isn't just an updated version of the old model. It's a completely different architecture where brands access customers through platforms that make loyalty possible again by removing the affordability barrier.

The question for brands isn't whether to evolve – the 29% true loyalty rate and 60% cost-driven switching makes that decision for you. The question is whether you'll recognise the shift quickly enough to be part of what comes next.