How retailers should rethink loyalty programs in the age of AI

With consumer confidence dipping to its lowest since early 2024 and the persistent hum of economic uncertainty, shoppers are turning to loyalty programs — not only for financial value, but for the sense of stability and familiarity they provide. 

This shift isn’t just speculative: 92% of consumers belong to at least one loyalty program, while 81% of Millennials and 75% of Gen Z say engaging with others in a loyalty program is important—underscoring that younger U.S. consumers are seeking connection and community as much as financial rewards. In fact, most Gen Z and Millennial shoppers are more likely to join programs that make them feel part of an active brand community, not just a customer database. In short, with confidence low and uncertainty high, shoppers are leaning on loyalty programs not just for savings, but for stability.

With this increased reliance comes higher expectations. Today’s consumers no longer settle for basic points or punch cards — they expect loyalty experiences that feel personal, effortless, and connected across every channel. In fact, 70% of consumers say they’ll abandon a brand after just two negative experiences, underscoring how fragile loyalty has become. To keep pace, brands must evolve, fast. That means using optimized and connected data, automation, and agentic AI to create experiences that adapt in real time. Those that get it right will earn more than repeat business. They’ll earn trust going forward.

Turning data into loyalty

To meet the evolving expectations of today’s consumers, brands need to power their loyalty programs with data integration — converting previous customer behavior patterns into actionable insights into actions that anticipate what each customer actually values.

Consumer data insights allow brands to create more personalized content to target specific audiences and understand which medium it is best to share that information through. For example, Gen Z tends to prefer receiving information through social media, while older generations are more likely to engage with email. This ensures content is relevant and easily accessible, increasing the likelihood of sales conversions. By taking this approach, instead of standard loyalty perks like blanket product discounts, brands can customize offers around what matters to each shopper, turning a generic discount into a personal connection

When shoppers receive timely, relevant rewards, satisfaction rises, and with it, long-term loyalty. By embedding data analytics into their loyalty tech stack, retailers shift from reactive to proactive engagement, strengthening retention and driving revenue growth. In short, data turns loyalty from a guessing game into a growth engine.

Hyper-personalization through AI and automation

AI-driven automation empowers loyalty schemes to deliver dynamic, personalized value at scale. In fact, 73% of buyers say perks such as early access, exclusive product input, and tailored discounts motivate them to sign up for loyalty programs. 

Agentic AI enables real-time strategic decision-making across rewards, marketing messages, and even inventory management. For example, if an item is out of stock a retail AI agent can alert a consumer agent when it becomes available again, seamlessly matching customer needs. Similarly, by analyzing purchase history, browsing behavior, and social engagement, AI agents can trigger the right reward or offer at the exact moment of interest — turning data into immediate, actionable insights that meet customers right at the moment of intent.

Accuracy is critical, just as inconsistent pricing erodes trust in e-commerce, outdated or misaligned loyalty offers also reduce engagement. Automated feeds and real-time analytics ensure offers are relevant, timely, and trustworthy. That’s why at Commerce, we focus on data quality first, because in the agentic era, data is the foundation of success in the agentic future. With agent-to-agent (A2A) commerce, rewards and redemptions can happen directly within AI assistants, search interfaces, or other platforms. Imagine a world where loyalty points are redeemed instantly, inside the same chat where a customer discovers a product.

Brands that embed AI-driven automation into loyalty programs can deliver seamless, personalized experiences at scale — driving conversions, building trust, and fostering long-term loyalty in this new way that feels personal, immediate, and human amongst an agentic future.

The power of seamless omnichannel experiences

Consumers value consistent and convenient loyalty programs across both digital and physical channels. More than 80% of shoppers say they’ll download an app if it means their loyalty travels with them. For e-commerce brands, this means unifying loyalty data across apps, websites, and physical locations, while designing mobile-first experiences that allow customers to redeem rewards instantly, whether they’re in a store, browsing online, or shopping through social commerce platforms. Whether they’re scrolling TikTok, chatting with an AI assistant, or walking into a store, the experience should feel seamless.

By delivering this seamless, omnichannel experience, brands not only build trust and satisfaction but also generate richer, real-time datasets. These insights fuel more accurate personalization, predictive marketing, and ultimately, stronger long-term engagement. The easier loyalty feels, the more loyal customers become.

What’s next for loyalty programs?

Loyalty programs aren’t just about rewards, they’re a mechanism which can turn one-time shoppers into repeat customers and passionate brand advocates. The best programs will blend AI and empathy, using data to create authentic, enduring connections.

Those that take this approach will build a community of advocates who promote, protect, and grow their brands organically. Those that don’t evolve will get left behind.