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Leaders in Customer Loyalty: The CEO's Desk | 2025 Customer Loyalty Trends Uncovered Part 2

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Welcome to Leaders in Customer Loyalty: The CEO’s Desk, a Loyalty360 original podcast series featuring exclusive executive insights from Loyalty360 CEO Mark Johnson.
 
In part 2 of this interview, Mark unpacks the Top 11 Trends in Customer Loyalty for 2025, straight from Loyalty360’s Advisory Board sessions at the 2025 Loyalty Expo.
 
What You’ll Learn in This Episode:
• Why organizational alignment is mission-critical to program success How leading brands are substantiating and reinforcing loyalty program value
• The growing pressure to prove ROI to CFOs and align loyalty with business strategy Key strategies for simplifying loyalty program structures and overcoming tier fatigue
• The evolving role of AI, data, and personalization in loyalty program optimization
• How brands are adapting to economic uncertainty, supply chain disruption, and regulatory changes
• Real-world examples of loyalty innovation from brands like Wigels and others
 
Whether you’re a loyalty program manager, brand executive, or tech partner, this episode is packed with critical insights to help you evolve your loyalty strategy in a time of rapid change.
 
📌 Subscribe for more in-depth discussions on customer loyalty, emotional engagement, loyalty partnerships, and next-gen program design.

Speaker 1:

Good afternoon and good morning everyone. Welcome back to Leaders in Customer Loyalty, the CEO's Desk, the Loyalty360 podcast series, where we unpack loyalty trends with insights only our CEO can offer. I'm Ethan Perry from Loyalty360, and in this part two episode, we're continuing our conversation with Mark Johnson, Loyalty360 CEO. If you haven't listened to part one, make sure you go back and check it out, because we are going to continue discussing the 11 trends shaping customer loyalty in 2025. The Loyalty360 advisory board reported on all of this to us, and they touched on things from shifting consumer values to the structural challenges faced by brands today. In this installment, we're diving deeper into partnership strategy, AI, execution risks, program differentiation and advanced loyalty metrics all areas where brand leaders are either gaining serious ground or falling dangerously behind Mark. Let's get into it, Absolutely so. We'll start with partnerships. As loyalty ecosystems are expanding, we continue to see that strategic partnerships are increasingly central to delivering value to the end users. What are some critical components of a strong loyalty partnership strategy in 2025?

Speaker 2:

Yeah, I think partnerships are still very impactful. We saw it in the 2025 State of Customer Loyalty survey. It was still a top five area of interest. I think it shifted from maybe three to four or maybe three to five, but it's still a very significant interest. And I think when brands look at partnerships, they're looking at probably two different options right when there may be a currency exchange, a gift card exchange, something simple to start to co-promote the program.

Speaker 2:

But when you look at the integration kind of more of a strategic, long-term partnership, there are a number of different things and we've seen it in the last couple years of the conferences that brands are talking about knowing your customer a little better, maybe some different financial rubric they have to go through. But I think the key three things are alignment internally, so those in the organization understand the partnership strategy, but also with the customers of both programs. And making sure that when you have that alignment internally, that you drive that executive level buy-in initially and you can also do that going forward by showing the value of the program to those internally but also to the program partners. And I think one of the most important things is a mutual value exchange for the programs, understanding that if the customers are alike, does the value, the incrementality of the reward, the incentive, the partnership between the two or three or four brands drive that value exchange for both brands or four brands drive that value exchange for both brands, but also for those customers, definitely and so like.

Speaker 1:

When it comes to the execution of doing that, particularly around the data sharing, across brands and the technology integrations, what barriers are still holding brands back from executing these successful partnerships?

Speaker 2:

You know that's a pretty significant challenge as well. As mentioned this year, we had a panel at the Loyalty Expo around partnerships and the opportunities and challenges. Some of the things that we're seeing right now with the tariffs no tariffs some of the economic uncertainty creates some challenges for brands. But when you have a successful partnership, you don't only have to get the partnership approved. You have to get that alignment we talked about. You have to get that alignment we talked about. You have to get that in the queue. Then, if there's technology that needs to support it, you have to get that in the queue.

Speaker 2:

So many brands are asking their current vendors are there ways to leverage what we have that will enable a starter partnership or some manner of partnership? While we get that technology that we may need to do that of partnership, while we get that technology that we may need to do that, many of the vendors now are looking to create functionality that will allow that, whether it's REST APIs or something in their SDK that would enable those partnership opportunities. But I think there are still pretty significant tech challenges that do that sorry, that are hindering kind of true partnership, but fluidity that many brands are looking for.

Speaker 1:

Yeah, and you know. Speaking of technology and the challenges around it, no conversation in 2025 about trends would be complete without talking about AI and other emerging technologies. You know, right now many brands are struggling with IT bottlenecks or general tech alignment. What advice do you have for loyalty teams who are trying to integrate with broader MarTech stacks, or even those trying to get prioritization and internal queues?

Speaker 2:

Again this year when we did the State of Customer Loyalty paper, which was just out or is just out over the last couple of weeks, one of the things that we saw that those who are looking to enhance, redo or augment their customer loyalty program dropped a little bit this year, I think, from 79% to 63% or 64%.

Speaker 2:

Brands are trying to operationalize what they have, trying to understand what technology works and what doesn't work.

Speaker 2:

So I think one of the biggest challenges is, you know, understand what the weakest link of the technology Martech, the landscape they have internally may be and that can be a challenge is truly understanding what the technology does, what it was supposed to do. But if you can step back and look at the technology stack you have right now and if you know the main loyalty platform, or if your CDP or if your data lake is challenged, you really have to look at that. And it gets back to their operationalizing. If the marketing orchestration piece doesn't work, that really should be addressed first before adding new functionality or new benefits to the program. So many brands the very successful brands are truly looking at their tech stack and understanding what that weak link is within the organization and when they do that I think it helps them. You know truly, not only assess it, but also you know how do you increase the performance, because you know it's the addition by subtraction mantra that we're hearing a good deal about.

Speaker 1:

Interesting and I know during your advisory board meetings you know, ai surfaced as both a game changer and a potential disruptor. What specific risks are brands facing with AI, particularly around disintermediation of the loyalty experience or automation that alienates the customer?

Speaker 2:

Yeah, there's a couple of other things and I'm sure people are familiar with what Google is doing now. They're kind of aggregating some customer loyalty stats from more of the bots or buying services that are out there. You know AI has huge potential. Many brands in the customer loyalty space are challenged on a couple fronts. They don't have the organizational team in place to truly drive a successful AI efforts. They don't have the organizational team in place to truly drive a successful AI efforts. They're concerned about who owns the data and what happens with that data. But there also is a big challenge I think we talked about this a little bit in the first part of this interview is that it has a higher kind of bar to entry and a bar kind of measurement right. So it's akin to the autonomous vehicles.

Speaker 2:

There's been four or five deaths over the last few years, a few accidents, but in the US daily there are 10,000, 13,000 accidents a day. So we've had a few deaths and we have probably more daily deaths in the US from the traditional driver than the autonomous vehicles. And the same thing for AI. And they're building out teams to kind of manage the AI because there's a trust factor, right. Oh, if I send you Ethan an email or offer a personalized offer for diapers.

Speaker 2:

That's wrong and obviously you want to understand the root cause, which is the AI technology. That may have kind of created that from the analytics, the orchestration, but at the end of the may have kind of created that from the analytics, the orchestration, but at the end of the day, it's no different than the mistakes that currently happen. You know everyone gets that email, say dear x, but whoops, I saw that you were looking at our uh, porsche, nope, you know. But now, right now, with the ai, they've just there's a higher threshold to get it truly trusting and I think a lot of that is just kind of the sanctity the data and and, and new brands are trying to get their arms around that yeah, and I know that's definitely true.

Speaker 1:

I just recently started getting SMS messages from random people and all of them are addressed to William. I don't know where they got that from, but they sure have it out there. So those risks are real and that's happening every day. So, as our programs are, you know, exploring these technologies and things, they're ultimately looking to battle for attention in a crowded landscape. Right, you know what approaches are brands using to meaningfully differentiate their program benefits right now.

Speaker 2:

As mentioned earlier, I think some of the economic uncertainty we have for brands. Are they going to have, you know, from a product, but also from a customer perspective? Are the customers going to want the same products? Are they tightening their belt? Potentially Many brands are trying to get to the value equation right. So if customers are telling them that they are having some challenges financially, how can you leverage a loyalty program to kind of backfill that?

Speaker 2:

You hear that in grocery, you hear that in CSR, you hear that in retail. So you know, kind of leaning into the customer loyalty program, offering products or reward options that have higher perceived value. And you know that can take many forms and factors as well that could be branded products, that could be branded products, that could be partnership products too, that, that that enable that higher perceived value. But also trying to push up the redemption options earlier into the sweet states brands. That that did really well in the little 360 awards this year. They were pushing those reward opportunities up, whether they're sweet stakes or swipe to win.

Speaker 2:

Where you get that engagement earlier in that customer lifestyle life cycle, that will have, you know, kind of very advantageous behavioral patterns going forward. So you know this all kind of falls under this larger rubric of personalization. But you know understanding what the customers have. If they're telling you they're having some economic challenges or uncertainties, how can you lean into the customer loyalty program to offer maybe discounts or offers or higher reward options or more rich reward options that can help navigate this economic uncertainty, because longer term that will have some pretty beneficial outcomes for the customer from an emotional engagement and connectivity perspective, from an emotional engagement and connectivity perspective and, to that point, we've seen some rising popularity of alternative rewards.

Speaker 2:

What's your take on the brands offering things like exclusive experiences and exploring brand partnerships, sustainability-driven incentives, things like that that are outside the normal incentive structures we've seen One of the things that we've heard over the last year from our growing brand membership is that they may have some tier fatigue, tier malaise, depending on who you're speaking with at that. You know the upper tiers gold, platinum, whatever it may be. So, again, getting to this, listening to and understanding the customers from a personalization perspective, some of these alternative incentive reward options have that higher perceived value. They have that emotive connection, you know, ethan, with you and some things your wife focus on from a. It could be something from a. You know, a very unique house offering right. That drives unique kind of engagement with your audiences and I think that that is a great opportunity.

Speaker 2:

Personalization, as we mentioned, is very key to higher tiers. If customers tell you that they're focused on sustainability or CSR, it's something brands should look to because it's a great way to address that tier malaise or that kind of tier fatigue that they're having at the higher levels. And sweepstakes they add a great deal of value, especially if you have a good partnership offering. But it's a great way to burn some points you know a thousand points to enter a sweepstake that the customer, so they start to engage with the brands as well and it really pushes up that reward opportunity and engagement opportunity that customers are looking for, especially today.

Speaker 1:

Awesome. Yeah, and I know that everyone's kind of looking at how those things are going to impact programs. And as we evolve into this space, you know metrics and measurements of loyalty programs are also evolving Right. You know we've seen attribution can be especially challenging, you know, across different departments. So how are loyalty teams building a stronger ROI case within their cross-functional organizations to promote loyalty?

Speaker 2:

Well, there's a couple of things that you mentioned there. I think the cross-functional organization that's still pretty rare within customer loyalty. But those who do, I mean those are the ones that are seeing great success, right. So they have the finance guys in there all the time, they have the operation guys and then the marketing guys, the product guys. So they're talking about customer loyalty a little bit differently.

Speaker 2:

And one of the things that we've seen over the last year is this whole idea of understanding what those within the organization know about the program. Right, if you've come into a new program, does the CFO know about the program? What are the objectives for the program? So those organizations who have high performing, you know pod structures I'll talk about this later and what you know cross-functional teams, they're doing it quite differently, uh and and they're leading into customer loyalty, right.

Speaker 2:

So you've seen this kind of maybe pull back from, kind of the growing the program at the base level let's lean in to. If we have 40, 50, 100 million people in the loyalty program, let's offer them something very unique, very distinguished from giving discounts to someone who just signed up for the program. And those brands who are kind of leaning in understanding that, ethan, you may only need a 5% discount at Sephora, or you can give me some lipstick for my kids at Ulta every other week and it keeps me happy. And I think that's what they're looking for, because they're looking at data differently. They're sharing within the organization. These pod structures are starting to come out more and more, so it's kind of that chicken or egg. Do the metrics drive the cross-functional team or does the cross-functional team drive the metrics?

Speaker 1:

Interesting. So, from what you're seeing, are brands finally making progress on integrating that customer data across systems, or is data fragmentation still the norm?

Speaker 2:

Yeah, there's still a great challenge, or a significant amount of challenge, with regard to data attribution, especially when you get into PII, and how brands are even looking at some of their reporting. So if you're using different tools a Domo, a Snowflake you're obviously going to kind of anonymize that data. You know, you're obviously going to kind of anonymize that data. But they are definitely making significant challenges because there are very, very unique reward opportunities.

Speaker 2:

But data lakes data technologies like a snowflake that allow kind of flexibility and scalability to these brands and and and getting Kind of understanding where the data lies many brands now are working on or have organizational data maps, everything from kind of the call center to, you know, when you engage with the website for the first time. You know they're using kind of these, these tools that allow them to see that customer cross-channel, cross-device. And you know the CDPs are getting better and I think the CDPs too are, you know, personalization engines. You know, like a snowflake, they offer the scalability and flexibility, but they're also a little more holistic right now. So you know they can take this different data and, you know, help the customers PII that data and tie it back to a customer, which they can make kind of a deeper, you know, kind of decision on, which is very important.

Speaker 1:

Definitely, and I know we heard about all of those things from multiple different vendors at the expo. Those are all the things that we continue to hear that people are looking for those solutions. So well, I think that we've made it through all of the trends, but before we close, I wanted to end on a forward-looking note. We just came out of being in the rooms with some of the biggest leaders in customer loyalty. Based on your conversations with Loyalty's 360s advisory board and other attendees from the expo, what's one emerging loyalty trend or challenge that brands absolutely must act on within the next six to 12 months? You know?

Speaker 2:

AI seems to be all the rage right now. Last year hyper-personalization was all the rage, but it was interesting when we do kind of a recap series with some of our technology partners. Don from Briarley, slash Capillary. He talked about how hyper-personalization never came to fruition last year and he was waiting for it. But you know, I think AI is something everyone's talking about.

Speaker 2:

But with this economic uncertainty we have again, and we've talked about leaning into the customer loyalty program, making sure the program is working well.

Speaker 2:

And one of the topics we heard about is operationalizing the program, making sure from a partnership or the program itself, that it's performing well or adding more. And we saw that in the state of customer loyalty paper there's a little bit of retrenchment with regard to kind of redoing, blowing up or enhancing the program. You know, let's figure out what we have, let's figure out where the dead bodies lie, and then you know can we have and can we see or can we drive improvement in the current program, and that's really what I think is kind of the secret sauce. Technology yeah, there's a lot of great technology out there. Ai everyone's looking to lean into AI, but with some of the challenges we mentioned about kind of that trust factor. It's really about making sure you have the organizational alignment that the program is performing, addressing some of that tier malaise and that quote-unquote sea of sameness. Everyone has Build those effective pod structures that allow more focus and kind of a deeper dive and understanding into the program.

Speaker 1:

Definitely. I think that's awesome, and that's exactly why the CEO's desk exists to spotlight the conversations that matter most to loyalty leaders. And Mark, thank you so much for your insights and for helping us navigate these rapidly shifting priorities in the space. I don't think anybody has the bird's eye view to it and the input from so many people like you do, so thank you for sharing that with the audience.

Speaker 2:

Absolutely. Thank you, Ethan, for taking the time to put this together.

Speaker 1:

Yeah, and to our listeners. Thank you for tuning in to part two and just remember whether you're reevaluating your tech roadmap, rethinking your metrics, exploring new partnerships. We hope that our content and today's discussion is giving you practical strategic guidance for what's ahead. Be sure to subscribe to Leaders in Customer Loyalty, wherever you get your podcast, follow us on YouTube and check out all of the amazing strategic insights that Loyalty360 is bringing to you week in and week out. Until next time, stay focused, stay strategic and, as always, stay loyal. Thank you.