Loyalty 2.0: How Consumer Expectations Are Shaping the Future of Rewards
Apr 25, 2025
From Sephora and Target’s Circle revamp to Ulta Beauty’s expanded rewards tiers, 2024 marked a significant chapter in the evolution of loyalty programs. As consumer experience continue to evolve, brands responded by enhancing their loyalty ecosystems. Ushering in a new era of AI-powered engagement, experiential marketing, rewards and point-of-sale redemption flexibility.
This transformation is being driven by consumers' growing demand for convenience, personalization, and seamless experiences across channels. The result? Increased loyalty program participation and deeper brand-consumer relationships.
Heading into 2025, we anticipate that consumers will seek even more behavior-driven and lifestyle-aligned rewards. Innovations in fintech and digital payments—such as real-time point redemption system and predictive reward offers—are also expected to shape the retail loyalty landscape.
For retailers, this creates a critical opportunity to modernize their loyalty strategies—moving beyond points and discounts toward dynamic, relationship-driven platforms that build lasting affinity.
The global loyalty market reflects this shift. It’s projected to grow by 15.9% year-over-year, reaching $93.79 billion in 2025, with further expansion to $155.22 billion by 2029, at a CAGR of 13.4%.
In the U.S., the momentum is even more pronounced. American consumers engage with loyalty programs more frequently than their European counterparts, thanks to high purchase volume and aggressive brand positioning. But with this growth comes greater competition—making innovation, relevance, and emotional resonance essential pillars of success in the loyalty game.
What Drives Loyalty Among U.S. Shoppers? Exploring Key Trends
To understand where customer loyalty is headed, it’s important to start with where it stands today—especially in one of the world’s most dynamic consumer markets: the United States.
Loyalty programs are deeply ingrained in the American retail experience. On average, a U.S. consumer is enrolled in 13 loyalty programs, well above the global average of 10 and Europe’s 9. This reflects a strong cultural acceptance of rewards-based shopping—but it’s not the only factor influencing loyalty.
When making purchasing decisions, product or service quality remains the top priority for 81% of U.S. shoppers, followed by price sensitivity, which influences 74%. Still, discounts (61%) and loyalty programs (58%) play a meaningful role in shaping consumer choices.
Perhaps most notably, convenience is emerging as a major differentiator. 60% of U.S. consumers say convenience is a deciding factor in their shopping experience—far higher than the global average of 43% and Europe’s 35%. This highlights a key takeaway for businesses: loyalty alone isn’t enough. To retain U.S. customers, brands must also deliver seamless, intuitive, and frictionless experiences that align with modern lifestyle demands.
2025: The Year Loyalty Points Go Mainstream
Come 2025, and loyalty points are set to become more ubiquitous, as consumers increasingly look for ways to redeem smaller point balances for everyday purchases.
The rise of micro-redemption options—using points for daily items at checkout—signals a new era where loyalty points are treated like rewards program innovation and more like immediate currency. As this trend accelerates, the demand for frictionless redemption at the point of sale will grow, with consumers expecting to use points just as easily as cash or credit.
Companies like Mastercard are already leading the way, introducing point-to-payment solutions in digital spaces like gaming. To scale this movement, the industry must focus on creating low-barrier entry systems and interoperable standards that allow points to be used across multiple platforms and merchants.
A key enabler of this shift will be POS systems equipped with lightweight, standardized APIs that seamlessly integrate loyalty programs with payment flexibility networks. This kind of infrastructure will make loyalty redemptions not only easier for businesses to implement, but more intuitive and accessible for consumers.
While many consumers still don’t realize they can use their points like currency, ongoing awareness and education, combined with wider retail acceptance, will be crucial in driving adoption. With the right technology and consumer communication, 2025 could mark the tipping point where paying with points becomes not just possible—but preferred.
6 Customer Loyalty Trends to Keep an Eye on in 2025
1. The Power of Personalization
Personalization is rapidly reshaping the retail landscape. As brands shift from one-size-fits-all approaches to creating deeply individualized predictive shopping behavior. 80% of shoppers are more likely to buy from brands that personalize their offerings. And personalization doesn’t just influence decisions—it amplifies them.
In the U.S., 70% of consumers say they want tailored recommendations, offers, and discounts from brands or loyalty programs—well above the global average of 64%. Even more compelling, 74% of shoppers report that personalized experiences encourage them to browse longer and spend more.
But personalization isn’t just about increasing conversion rates. At its core, it humanizes the seamless customer journey in shopping, forging emotional bonds between customers expectation and brands. These connections foster loyalty, trust, and long-term engagement—all of which are critical in today’s competitive AI in retail marketing.
2. Blending the Best of Both Worlds: The Rise of Phygital Experiences
Phygital is no longer a buzzword—it’s the new standard. Retailers that successfully merge the immediacy of digital with the tangible benefits of in-store experiences will be the ones that thrive in a connected, convenience-first retailing.
Retailers like Sephora are leading the charge, transforming in-store visits into tech-enabled retail experiences. With tools like augmented reality mirrors and interactive touchscreens, shoppers can virtually try on products, compare shades, and make more confident purchase decisions—all while standing in the store.
Meanwhile, mobile commerce trends are turning into powerful retail hubs. This allows brands to offer their entire store experience in the palm of a customer’s hand. From browsing and wishlists to real-time inventory and in-store navigation, mobile tech is extending the retail experience beyond physical walls.
Yet, technology alone isn’t driving this evolution—physical retail still plays a vital role. Research shows that 85% of shoppers prefer to see, touch, and try products before buying, reaffirming the value of sensory and in-person interactions. To bridge the gap, many retailers now offer Buy Online, Pick Up In Store (BOPIS model) options, giving consumers flexibility and instant gratification. According to Shopify, 59% of consumers express interest in BOPIS, signaling its growing importance in omnichannel strategy.
3. The Rise of Data-Driven Loyalty
Loyalty programs have evolved significantly in recent years, with retailers increasingly turning to data-driven marketing to enhance customer engagement. These modern programs harness the power of data analytics to track purchasing behaviors, preferences, and interaction patterns—enabling brands to deliver highly personalized rewards, targeted promotions, and relevant communications.
The foundation of a truly successful loyalty strategy lies in a mutual customer value exchange. Customers must feel confident sharing their information in return for meaningful benefits. Interestingly, attitudes toward data sharing in the U.S. are notably diverse. While 46% of American consumers are open to sharing their data without incentives, 29% are willing to do so in exchange for rewards personalization. However, 14% remain firmly opposed to sharing their data, highlighting the need for brands to clearly communicate the value proposition and privacy safeguards in place.
As data becomes the currency of modern loyalty, brands that strike the right balance between personalization and privacy will be the ones that earn long-term customer trust—and the returns that come with it.
4. The DTC Shift
In today’s evolving retail landscape, many traditional brick-and-mortar brands are embracing the direct-to-consumer strategy (DTC) model as a way to connect with shoppers more directly and efficiently. By bypassing intermediaries, retailers gain greater control over the end-to-end customer experience with purchase behavior insights—from discovery to post-sale engagement.
This shift isn’t just about logistics or margins—it’s about building deeper, more personal relationships with customers. With DTC, brands can tailor communications, gather valuable insights, and ultimately foster consumer trust and long-term loyalty.
A notable example is Birkenstock, which launched its own DTC e-commerce platform in 2020. By selling directly through its website, the iconic footwear brand was able to curate the shopping experience, capture first-party customer data, and use that feedback to inform both marketing and product development strategies.
DTC brands are also leading the way in retail innovation. With the freedom to test exclusive launches, real-time offers, and targeted promotions, DTC players can quickly respond to consumer demand while keeping engagement high. This level of agility not only enhances brand authenticity but also helps create a sense of exclusivity and community among loyal shoppers.
As more brands explore the DTC route, it’s clear that this model offers more than just a sales channel—it’s a strategic advantage in cultivating direct, lasting customer connections.
5. Retailers are embracing subscriptions
Subscriptions offer retailers a strategic way to build long-term, recurring relationships with their customers. When a shopper signs up for a subscription, they’re not just making a one-time purchase—they’re making a commitment. This consumer engagement trend allows brands to create a loyal customer base while ensuring a more predictable recurring revenue model.
Beyond financial stability, subscriptions unlock access to rich customer data. Retailers can analyze purchasing patterns and preferences to deliver a more personalized shopping experience. This deepens loyalty and increases lifetime value.
But subscriptions aren’t just transactional—they’re emotional. By becoming a regular presence in their customers’ lives, brands can strengthen their emotional brand connection. This can be done by delivering value at consistent intervals and making the shopping experience feel seamless and convenient.
6. Values-Driven Retail & Cause-driven Branding
According to recent insights, 88% of consumers are more loyal to brands that support social or environmental causes. Furthermore, 68% of U.S. shoppers factor sustainable shopping habits into their buying decisions—a figure that surpasses both the global average (64%) and European average (59%). Perhaps even more telling, U.S. respondents say they're willing to pay up to 58% more for eco-conscious branding, products and services.
In an increasingly competitive marketplace, brand loyalty can no longer be taken for granted. Consumers have the freedom—and the will—to support companies whose values align with their own. As such, sustainability is a contributor to brand preference and customer retention strategies, shaping not just what people buy, but who they buy from.
Transform Loyalty into Lasting Growth with Market Xcel
As loyalty continues to evolve from transactional rewards to meaningful, data-driven engagement, brands need more than just tools—they need a partner who understands the pulse of the global consumer.
At Market Xcel, we bring together deep consumer insights, cutting-edge research methodologies, and a global perspective to help brands rethink and reshape their loyalty programs for lasting impact. From the U.S. to emerging markets, we’ve empowered retailers, fintech innovators, and CPG giants to craft loyalty strategies that resonate locally and scale globally.
Whether it’s building behavior-based rewards, integrating loyalty with POS experiences, or leveraging data for hyper-personalized journeys, our expertise ensures your program isn’t just current—it’s future-ready.
Explore how we’re helping brands worldwide redefine customer loyalty and drive sustainable growth.