The Engagement Gap in Loyalty Programs
Findings from an Australian study reveal startling numbers.
Salima Nadira
A new study of Australia’s top 52 loyalty programs reveals a sharp reality: sign-ups don’t equal loyalty. While millions of Australians are enrolled in these programs, large portions have checked out, leaving retailers with bloated membership lists but little true engagement.
Membership ≠ Engagement
The numbers tell the story. Attrition is widespread, with disengagement rates at a median of 47%, going up to a whopping 75%. In other words, almost half of the average program’s members aren’t active participants. The best loyalty programs keep their attrition rate down to 9% at the lowest.
The drivers of engagement are straightforward: active engagement is a function of motivation, ability, and prompt. When one of these fails—when customers lose interest, find it difficult to redeem, or aren’t reminded to act—they drift away.
Benefits Don’t Drive Engagement
Many programs try to stack more perks on top of their existing offers, assuming this will spark renewed interest. The data shows otherwise. Neither the type of benefits offered, nor the sheer volume of them, has a measurable impact on spend or engagement. Loyalty built on a catalogue of perks is proving fragile.
Paid Loyalty Programs are Stealing Market Share
Meanwhile, paid loyalty programs are growing fast—especially among younger shoppers.
65% of Gen Z respondents are enrolled in a paid program.
72% of Millennials and 64% of Gen X are also members.
The difference? Paid loyalty programs work much harder to keep their members engaged. As a consequence, members expect to see increasingly more value out of their loyalty programs.
Failing this, the consequences are severe: 71% of respondents expect to be rewarded immediately upon signup, and 63% admit to losing interest quickly if the program doesn’t give them anything new or valuable.
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Consumer Attention Is Finite
Consumers can only juggle about five loyalty programs at a time: typically one paid, three retail, and one from banking, telco, or travel. That limited attention span means many traditional programs are competing for slots they will never win, no matter how many perks they add.
Implications for Retailers
The message for retailers is blunt. Traditional loyalty programs that rely on sign-ups without driving ongoing engagement are running aground. Customers are showing less patience for programs that don’t deliver meaningful value or relevance. To succeed, retailers must shift focus from simply acquiring members to actively engaging them over time.
Final Note
This Australian study makes the point unmistakable: sign-ups don’t equal loyalty. Retailers must find new ways to engage with their customers and stay relevant—or risk losing them to programs that do.
Full report available via Honeycomb Strategy here (registration required).