Loyalty has not disappeared. Brands traded it away. | MarTech

Every few years, loyalty is reexamined. Customers are described as fickle. Switching costs are low. The attention span is getting smaller. The story is well known: loyalty is no longer realistic in a digital, price-sensitive world.

That framework is convenient and usually wrong. Loyalty has not disappeared. Brands diluted it – slowly, deliberately and often unintentionally – by replacing gimmicks with value and confusing engagement with commitment.

That’s why Volute Group’s prediction that 2026 will be the year that loyalty becomes a competitive advantage again feels less like a prediction and more like an inevitability. The market forces corrections.

The loyalty illusion

For more than a decade, loyalty programs have been designed to look effective rather than be effective. Points programs and gamification have increased. Promotions became perpetual. Dashboards filled with activity metrics – signups, redemptions, clicks, opens, streaks – all indicate momentum. What they didn’t show was whether any of it actually delivered incremental, sustainable value.

In many organizations, the hunt for loyalty became performance art. The underlying assumption was simple: if customers are engaged, they must be loyal. But commitment is not loyalty. It is behavior: often rented, sometimes subsidized and often reversible once the incentives disappear.

From a measurement point of view, this was the original sin. Loyalty programs are rarely designed around causal impact and never built to answer complex questions such as:

• Would this customer have stayed after all?
• Did this reward change long-term behavior or accelerate a purchase?
• What happened to margin-adjusted lifetime value?

Instead, brands optimized for what was most easily observable and not for what mattered economically.

Dig deeper: Acquisition gets the attention, but loyalty drives the results

The gimmick era collapsed when its economics became meaningless. Retail programs have inflated points issuance without improving the experience. Repayment costs rose, while incremental expenses leveled off. Programs quietly became discount engines, compressing margins under the mask of loyalty.

Subscription companies combined perks and short-term incentives to slow customer churn without addressing price friction or product fatigue. Attrition stabilized briefly, but lifetime value declined as retention costs rose faster than retained earnings.

Gamified engagement programs incentivized activity metrics that had no causal link to repeat purchases or advocacy. Dashboards looked busy. The profit and loss figures did not improve.

Even travel and financial services – once the gold standard for loyalty – trained customers to distrust the system through repeated points devaluations. Loyalty turned into arbitrage. Preference gave way to optimization.

Customer behavior reflects changing values

There is a persistent tendency to blame customers for declining loyalty. They are impatient. They hunt for deals. They no longer appreciate brands.

That explanation is unfair. Customers nowadays pay more for less. Prices have risen because service levels have fallen. Long-standing brands have been slow to reinvest to stay relevant, stretching the cash cow model to its limits. A recent WSJ article about declining loyalty for Kraft Mac and Cheese illustrates the point, but Kraft is hardly alone.

Brands continue to speak the language of customer centricity while behaving in increasingly extractive ways. Viewed through this lens, customer behavior is not emotional, but rational. Loyalty is an investment decision from the customer’s perspective. It requires trust that the exchange will remain fair over time. When brands undermine that trust, customers don’t revolt. They redistribute. What looks like infidelity is often a rebalancing of values.

One of the most damaging misconceptions about marketing is treating loyalty as something that can be launched. Loyalty comes from consistent value delivery over time. Strong loyalty brands rarely talk about loyalty programs. They focus on fundamentals: price discipline, service reliability, reducing friction and maintaining trust. Their customers do the loyalty work for them.

Weak loyalty brands do the opposite. They are building increasingly elaborate programs to compensate for deteriorating experiences, hoping that mechanisms can replace credibility. They can’t.

Dig deeper: 7 ways to increase customers’ emotional connection and loyalty to your brand

The measurement gap that no one wants to own

Loyalty programs persist not because they work, but because they are rarely held accountable for financial results. Most organizations can tell you how many customers signed up, how much they redeemed, and how often they engaged. Far fewer people can tell you:

• What was the incremental increase in retention?
• How has the margin-adjusted CLV changed?
• What was the payback period?
• Which behavior actually resulted in profit?

Without these answers, loyalty becomes a cost disguised as a growth strategy. This is where the CFO lens comes in. Loyalty only becomes defensible when it is treated like capital allocation: clear hypotheses, disciplined measurement and accountability for returns. Everything else is theater or, worse, wasted resources.

Aligning loyalty with value and responsibility

Economic pressure has a way of revealing what really works. As margins tighten and customers become more selective, loyalty efforts that don’t deliver measurable financial returns will become increasingly difficult to justify. Involvement without economic impact will not survive long-term research.

That’s why 2026 is important. Programs based on optics rather than outcomes will become prohibitively expensive. The brands that succeed will make it easier: reduce dependence on discounts, tie rewards to behaviors that matter, and measure loyalty as a profit factor rather than a participation metric. The question will shift from how to increase engagement to how to increase lifetime value.

This kind of loyalty requires long-term thinking. It depends on leaders being willing to defend investments that compound over time, even if they don’t provide an immediate return on investment. Founder-led and privately held companies often perform better here because they can prioritize consistency over extraction and value over optics. Public companies can do the same, but only if loyalty is treated as a business growth tool and not a marketing expense.

Strip away the platforms, points and terminology and loyalty is easy. It relies on an honest exchange that is consistent, reliable, respectful and valuable. If 2026 becomes a turning point for loyalty, it won’t be because brands have discovered something new. That will be because they have finally aligned customer value, brand behavior and financial responsibility – and stopped mistaking gimmicks for growth.

Dig deeper: CLV is the growth metric that marketing can’t fake