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EXECUTIVE SUMMARY
- What you need to know
- Outlook for loyalty programs
- Opportunities
- Prioritize higher share of purchases to create more loyal behaviours
- Keep an eye on other programs, because your members certainly are
- Focus on increasing membership among younger consumers
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THE MARKET
- Market factors
- Canadians’ economic attitudes are on edge, but staying afloat
- Graph 1: financial health and labour market index, 2014-2025
- Macro indicators and forecasts reflect the limbo Canadians feel
- High prices and the economy are the biggest barriers to spending
- Graph 2: factors/circumstances that will have the greatest negative impact on spending over the next 12 months, 2024-2025
- Food prices are expected to climb
- What this means for loyalty programs
- Dynamic loyalty programs could create skepticism
- Points and rewards are a central feature in credit card loyalty
- Graph 3: ways of redeeming credit card rewards, 2025
- Living with their parents could delay Gen Zs’ interest in loyalty programs
- Third-party delivery complicates loyalty programs
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CONSUMER INSIGHTS
- Loyalty program usage and frequency
- Most consumers are loyalty program users
- Graph 4: loyalty point collection frequency, 2025
- Loyalty programs are transactional and factor into shopping decisions
- Graph 5: loyalty programs…, 2025
- Graph 6: loyalty programs’ influence on retailer decisions*, 2025
- The heaviest users are the most calculated
- Most loyalty programs aren’t really about loyalty
- Young people aren’t engaged with loyalty programs
- Graph 7: collect loyalty points as often as possible, by age and gender, 2025
- Underdevelopment among younger consumers indicates a lack of relevance
- The consumers who could really use the savings aren’t engaging with loyalty programs
- Graph 8: collect loyalty points as often as possible, by student status, age, time in Canada and household income, 2025
- The biggest barrier for loyalty programs is apathy
- Graph 9: reasons for not using loyalty programs more often, 2025
- Two ways for stakeholders to win new users
- Loyalty programs used
- PC Optimum is the most used program in the market
- Graph 10: loyalty programs used in the past six months, 2025
- Explaining PC Optimum’s success
- Loyalty program users belong to a lot of programs
- Graph 11: repertoire – number of retail loyalty programs used, 2025
- Older users skew to grocery programs, younger people to fast food and coffee
- Graph 12: loyalty programs used in the past six months, by age, 2025
- Younger men are the low-hanging fruit to drive adoption
- Graph 13: loyalty programs used in the past six months, by age and gender, 2025
- Younger men are as likely to use MyMcDonald’s as they are Scene+
- Fast food loyalty engagement is related to visit frequency
- Graph 14: have dined at/ordered from a fast food restaurant in the past three months, by age, 2025
- Graph 15: fast food restaurant visit frequency*, by age, 2025
- Mobile ordering makes loyalty participation seamless
- There’s no loyalty in restaurant loyalty programs
- Graph 16: loyalty programs used in the past six months, by loyalty programs used in the past six months, 2025
- The big question: how do retailers gain ground with younger consumers?
- Important features in loyalty programs
- Rewards and benefits outweigh convenience…
- Graph 17: importance of loyalty program features, 2025
- …but convenience could be what brings in more users
- Graph 18: very/somewhat important), by age, 2025
- Convenience isn’t just about digital apps
- A two-pronged approach to member satisfaction
- Loyalty program frustrations
- Loyalty program users want more rewards and less work
- Graph 19: frustrations with loyalty programs, 2025
- Users’ focus on rewards means companies should review their points models
- Promotion activation is a pain point for frequent users
- Graph 20: frustrations with loyalty programs – the need to activate point promotions, by point collection frequency, 2025
- Finding a middle ground with consumers
- Convenience is an issue for infrequent users
- Graph 21: frustrations with loyalty programs, by point collection frequency, 2025
- Those same skews are evident among younger consumers
- Graph 22: frustrations with loyalty programs, by age, 2025
- Consumers aren’t too concerned about saturation
- In a competitive market with countless options, pain points will be magnified
- Loyalty program linking and brand crossovers
- Loyalty programs are evolving and streamlining
- Graph 23: loyalty program crossovers and links (% yes), 2025
- A loyalty credit card collects points seamlessly
- Payment cards linked to programs offer similar benefits to loyalty-branded cards
- Linked loyalty programs are a little more complex
- Partnered loyalty programs show evolution, but also highlight the need for simplicity
- Men are more likely to use these joint programs
- Graph 24: loyalty program crossovers and links (% yes), by gender, 2025
- Men want simplified loyalty programs
- Loyalty learnings from Amazon Prime
- Prime is a paid program with lots of perks
- Most consumers see it as a loyalty program
- Successful paid loyalty programs are uncommon
- Why Prime is successful
- What other programs can take from Prime’s success
- The Prime model isn’t for everyone
- Think about creative new approaches to loyalty programs
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INNOVATION AND MARKETING
- Launch activity and innovation
- PC Optimum partners with DoorDash
- Tiering incentivizes more loyalty than just points alone
- Some programs are adding perks to their points systems
- Maple Leafs Fan Access rewards the most dedicated fans
- Tim Hortons merchandise makes loyalty an identity
- Sapphire Reserve makes members feel like celebrities
- Cava uses linking to target elite loyalty members
- Albert Heijn builds AI into its loyalty app to increase exposure to the brand
- Loyalty programs are looking for ways to make members feel special
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APPENDIX
- Report scope
- Consumer research questions
- Consumer research questions – crosstabs
- Consumer research questions – further analysis
- Consumer research methodology
- Repertoire analysis methodology
- Generations
- Abbreviations and terms
In the eyes of the consumer, loyalty programs are transactional. Loyalty members want programs that offer discounts and cash redemption using points, and they get frustrated when it takes too long to earn a reward. Meanwhile, the ubiquity of these programs limits their ability to be a differentiator, since shoppers can collect points at most retailers.
That said, their transactional nature makes them an effective savings tool for shoppers, which is particularly relevant in a tense economic climate. The programs may not create actual feelings of loyalty, but consumers lean on them when they need some help saving money. Ongoing economic uncertainty will be a motivator for increased loyalty program usage.
The current economy isn’t the only opportunity for loyalty programs, though. Younger consumers are significantly underdeveloped on loyalty program usage, meaning they present a significant growth opportunity for stakeholders that can create a connection. What’s being offered today hasn’t piqued their interest enough to turn them into users, which means stakeholders will need to adapt their approach to resonate with the next generation of shoppers.
This report looks at the following areas:
- A look at how market trends can impact the relevance of loyalty programs
- Measuring how many people use loyalty programs and how often they collect and redeem
- Ranking the most widely-used loyalty programs
- What consumers want in loyalty programs and what frustrates them
- How program links/crossovers are streamlining the experience for consumers
- Using Amazon Prime as a case study showing how to create loyalty without a points system
- Examples of new features and initiatives that are evolving loyalty programs
Reimagining the loyalty program system can drive growth with younger generations and create real feelings of loyalty towards brands.
Scott Stewart, Associate Director, Lifestyles & Retail
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