The So Many Points newsletter highlighted data from Antavo’s Global Consumer Loyalty Report which shows a real disconnect between how marketers view their loyalty programs, and how members view them. It’s striking:
83% of program owners are satisfied with their programs, up substantially year over year, and a similarly high 83% believe their members feel valued. But flip the coin, and only 56% of members actually feel that way.
Meanwhile, the report cites that 74% of loyalty members “quiet quit” within two months of joining, and only about 3% bother to formally cancel.
Stephanie Meltzer-Paul, whom I first met as an executive with Starwood Preferred Guest, concludes that programs are using self-serving metrics, and gaming the metrics. How often do we see hotel loyalty programs tout their huge membership numbers, when people are just ‘joining the program’ to save 2% with a ‘member discount’? And now how often are airline programs just ‘signing people up’ who are getting free wifi? These people don’t see themselves as members, and putting their e-mail in a database doesn’t mean engagement:
[W]e keep measuring our success with the wrong metrics: total number of members, percentage of sales from loyalty members, points earned. In the modern digital age, these are easy to inflate through auto-enrollment, apps, and one-click checkout.
Even where there’s modest ‘engagement’ customers may not trust the brand. So they redeem at low value to cash out their points and stop thinking about the program. They get something because they don’t trust that higher value will still be there later. Starbucks is the perfect case – people keep repeating that this progam is a success, because Starbucks says that it is, when in truth it’s a dumpster fire.
Look at Starbucks’ recent announcement that its new 60-stars-for-$2 reward is now the program’s most popular redemption, accounting for 60% of the total. It’s the worst possible value for members, and it’s the one they’re choosing. Starbucks framed it as a win. I think it’s a consumer confession.
Members don’t trust the brand enough to save up for the aspirational, higher-value rewards. Points are here today, gone tomorrow. Award charts get devalued constantly. So consumers said, ‘to hell with patience’ and took something back from the program now. That’s not loyalty, and it’s not engagement.
Starbucks revamped their program to give everyone less value. They introduced a new top elite tier, but those members get roughly what general members used to get. It wasn’t an improvement. The app is good for finding Starbucks locations, their hours, and mobile ordering. But anyone chasing low value stars at this point is just making poor life choices.
There are two things that occur to me thinking about the Starbucks problem, but also about what they do well.
- Loyalty is fundamentally intertemporal. Brands ask customers to show their loyalty behavior first, and trust that there will be rewards later. That’s also why they have to flip the script with cobrand products and offer such big initial bonuses (it’s why card acquisition is so expensive). They front the value, so consumers don’t have to trust them. And they front the first redemption, so consumers can prove to themselves adopting the cobrand was a good decision. But devaluations, especially repeated stealth ones, erode trust – and ultimately drive up costs.
- Partnerships aren’t bolt-ons and a true mobile first ecosystem captures value. Starbucks happens to have an easy product that consumers seem to like, and their mobile app is a convenient gateway to interacting with that product – even if I have a hard time understanding much of the appeal.
United Airlines gets a lot of love for its mobile app, but that’s really only a good way of interacting with United (and, if we’re honest, only great for trips already-booked). Loyalty is the biggest driver of profit, but most of loyalty is still seen as a commercial relationship between the brand and the partner, with the customer almost an afterthought. So each relationship gets bolted on, and exists in a separate ecosystem.
A program really wants to live in the member’s day-to-day life. Imagine if American’s mobile app were rebuilt customer-first, so that all of their loyalty partnerships existed as a tool to better accomplish all of the things that members actually do in their lives. Instead of having separate AAdvantage eShopping as a site you go to, and SimplyMiles as merchant-funded offers you add, the starting point was ‘what are you looking to buy’ (and, based on we know about you, here are some things you’d like) and here are the best offers for that? And elite members of AAdvantage get a better deal?
The Bilt Rewards app has gotten a bit cumbersome, because they’ve grown so quickly with so many partnerships, and only some of their partner commerce can be transacted inside their app – but I still think it comes closer than any other program in the U.S. to this ideal. I know I find myself in the Bilt app more often than any other – checking my cobrand card spend, redeeming partner offers, booking travel. Their restaurant relationships allow payment inside the app, comped Lyft rides, and even picking up someone else’s check.
Maybe the next-best app is American Express’s that melds managing their core financial products with tracking benefits and entering their lounges in one place.
But what these have in common is starting with a strong value proposition, and giving customers a tool to maximize that experience. And Bilt is slowly (rapidly) building out an entire ecosystem that moves from home to being away from home and everything in-between, with increasing value for members as they grow their engagement. Sometimes I wonder if they even realize exactly how strong an engagement vehicle they’ve stumbled into – and how they’re able to succeed because most of the industry has simply been complacent.
When Starbucks starting expiring points, I stopped caring about their “loyalty” program.
Previously every vacation started with Hyatt.com.
I was VERY loyal to Hyatt. After the last atrocious devaluation (and it’s not even just inflation – it’s ripoff) I’ve started staying at whatever hotel has what I want. I went fork 100% Hyatt to almost nearly zero overnight.
They have become penny wise and pound foolish.
I went from +-$20k in 2024/2025 with a bunch of partner award redemptions to $0 in 2026 .
I take issue with the “quiet quit” phrasing. I would call it a failure to actually engage with a program (potentially just joining for e.g. free wifi or a room discount).
And very few of us will actually quit – having a residual membership means we get those benefits if we do end up at that chain again, and often keep any points earned barring inactivity expiry. I only quit one program (Panera) and that was because the benefits were so hard to predict that it wasn’t even funny.
@Gene — Starbucks is basically McDonalds, these days. (And Micky D’s is still ‘just fine.’) No, @George Romey, it ain’t a Wawa…
@ 1990 — Ha, I also stopped caring about McD rewards when my points expired. I so rarely eat there, that the program is only good for the coupons, which can be excellent. They should allow members free restroom access in Europe…
@Gene — I’m still a sucker for the occasional egg McMuffin and hash browns (I know, not healthy, at all.) On a recent flight through CDG 2A/C, the only decent option for food is ironically an in-terminal McDonalds (ask me how I know…), better than SkyTeam lounge.
Starbucks lost me as a customer this year once they stopped double points for using the digital gift card. It was a nice triple dip with other programs. Their loyalty program is now worthless and I won’t bother renew status.
@ 1990 — I too love an EggMcMuffin + hasbrown + ginormous coffee. Better than any mid- to low- grade hotel buffet, and certainly far less expensive.
Can you blame people for giving up on activities that are not rewarding.
People are becoming less and less engaged in reward programs or collecting points. You can see social media forums where people used to go to find the latest news on maximizing points accrual and spending. A lot of them just do not see the participation they used to. The past few years its been a never ending stream of devaluations or outright benefit cuts.
I just look for a discounted J fare nowadays when in the past i would look for a points booking as my first move. Now its not just worth the time and effort.
Is this no different with airline credit card sign-up for frequent flier points or cashiers at department stores offering discounts on purchases if you sign up for a store credit card? Once you leverage the sign up bonus, the card stagnates.
I once developed a cache of points, medallions, coupons, & credits with an airline only for it whittle down service to two flights a day. I applaud myself for not signing up for their corresponding credit card.
As of late, have given up on all loyalty programs!! Not worth the effort!!
As a follow up to the above, what info you provide will be sold to advertisers.
Yes, I too have given up these programs. They devaluate more and more. Loyalty is becoming a thing of the past. Expiring points is so upsetting.
When Starbucks started expiring stars after 6 months (plus reduced earning & no more prize-winning games), I stopped engaging. Let some stars expire w/o using, oops. But so what, I would have gotten a pastry or $2 off some overpriced item? There’s a Starbucks 1/4 mile from my house too, but hard pass. I’ll still get my free Starbucks b’day drink if I remember, since it’s only good on your actual b’day now (which I’ve forgotten to redeem many times). Same non-engagement w/ McD’s with their expiring pts, though I do still keep the membership for the coupons/deals, which someone else mentioned. As for Panera, I used to do their Sip Club (unlimited drinks for a monthly fee), but all their drinks are pretty bad & I quit that. I never quit being a member tho’, and they send a free drink or free pastry or $$ every few months to try to get me to re-engage.
No loyalty program is worth anything these days. I buy airfare & hotel based on schedule, price, and location. So sad. I have lifetime status on AA and it’s the last major airline I would choose to fly today. I used to choose AA/partners all the time in the way past.
Yes, expiring points is so upsetting. AA & Alaska expire points/miles as I’m sure you know. I wasn’t paying attention & my SO had over 100K miles EXPIRE with AA! They said he could ‘reinstate’ them for $1K+… uh, no thanks. AA would not reinstate the miles w/o this fee. But – maybe this will help someone – they have a ‘challenge’ where if you open an AA credit card & spend $1K on the credit card, they will reinstate the miles without a fee. You also get to earn the SUB for the AA credit card, too. Of course he did that, then burned the miles on an overpriced Asian flight for our daughter. Not the best return for the AA miles, but it was some return, and don’t have to think about AA miles expiring anymore.
Loyalty? These days thats a fool’s errand.
I did once get excited Starbucks about 5 years ago when I calculated about a 14% return when buying and redeeming for basic coffee. Said to self, that is not going to last and it was quickly gutted several times since then so now I simply do not bother.
Maybe I am just a rube, but loyalty used to actually come with at least a little something. An actual hard card with your status and the elite member phone number, personalized luggage tags (that had the year!), a differentiated card (Starbucks Gold cards), actual differentiated service versus an empty “thank you for being a ____ member” that comes with nothing.
Some of these seem kind of goofy; but arriving at a Hilton brand hotel with two water bottles and a snack item waiting in your room, or ticket counter agents actually going out of their way to help you even when it was your fault.
My best example happened at SNA. I had overslept on a Sunday morning and ran into single lane freeway traffic to the airport. After returning my rental car, I was never going to make my flight. I checked in standby for the next flight, but it was high Disneyland season. After two failed standbys, the ticket counter agent looks at my reservation and says:”You’re Gold WorldPerks?” Yes, I am. Within 20 minutes I was rebooked on United direct to SLC even though I really had a return to MSP and a new flight MSP-SLC.
@Melody
You’re wrong about Alaska Airlines miles expiring. If don’t have activity in 2 years you need to call in to transition from inactive to active but if you can’t bother to do that you seem to be giving zero value for your miles.
@Jim I don’t have any problems with Alaska miles expiring as I fly them enough, so I am just remembering their rules of miles expiring(I guess ‘inactive’) in 2 years of no activity (not like from personal experience with my SO’s AA miles expiring). If you can just call to get the Alaska miles to not expire/become active again, that’s great.