Customer loyalty programs are intended to give people an additional reason to continue choosing a brand. From my experience in marketing, companies use different incentives to achieve this, including discounts, points, cashback, gifts, free shipping, exclusive offers, etc. However, loyalty should go beyond encouraging the next transaction. The real opportunity is to understand what makes customers want to come back and use that knowledge to strengthen the relationship with them.
Loyalty programs can provide valuable information about customer preferences, purchasing frequency, preferred shopping periods, and the types of offers that generate stronger responses. Kowalewski, McLaughlin, and Hill (2017) discuss how customers increasingly expect personalized rather than simply segmented offerings and how loyalty programs can move beyond one-size-fits-all structures. This means that collecting customer data is not enough; brands need to use it to understand what each customer actually values.
This is especially relevant in luxury, where the customer journey includes multiple touchpoints and not all of them have the same importance for every client. Schwager and Meyer (2007) explain that not all touchpoints are of equal value and that companies need to understand where customer expectations and experiences matter most. For one luxury customer, value may come from early access to a collection, while another may care more about a private appointment, a dedicated advisor, or invitations to exclusive events.
This also changes how luxury brands should think about loyalty itself. Research on loyalty programs found that customers can become more frustrated when service failures make them feel unrecognized or undervalued, especially when they already have a stronger relationship with the brand (Maganize, 2021). For luxury brands, this means loyalty should not be designed mainly around points or spending thresholds. It should be built around recognition, access, personalization, and service in ways that make customers feel known as individuals rather than simply categorized by how much they spend.
Bibliography
Kowaleski, D., McLaughlin, J., & Hill, A. J. (2017). Hardvard Business Review.
Schwager, A., & Meyer, C. (2007). Undestanding Customer Experiene. Hardvard Business Review.
Maganize. (2021). Why Customer Loyalty Programs Can Backfire. Harvard Business Review.