The Loyalty Illusion

Every time I go to GAIL’s, I tell myself I’ll finally download the app. Surely I’m due a free Chai Latte by now (after hundreds spent on those deliciously addictive feta and spinach rolls). But, I never do. And yet, I keep going back.

I’m not alone. The average Brit is signed up to around nine loyalty schemes but only uses about four regularly. There are brands we love, trust, even advocate for, without ever scanning a card or logging an app. That got me thinking: what does loyalty actually mean today?

Because ‘loyalty’ is a loaded word. And we’ve mistaken its mechanics. We’ve confused it with retention. With points. With perks. But real loyalty isn’t about locking people in. It’s about being chosen; freely, repeatedly, and emotionally. It’s going to GAIL’s without the draw of 10% off. In a world of infinite choice and fractured attention, we need a new model. One that’s less about transactions and more about connection.

Welcome to the era of fan experiences. These aren’t your typical loyalty plays. Fan experiences are immersive, participatory, and emotional. They reward contribution, not just consumption. They’re built for the customers who care most, and designed to grow with them. They turn retention into resonance. And resonance into results. This is a playbook for that shift.

Old Loyalty vs. New Growth: What the Data Actually Says

Retention ≠ Growth

A recent study by Klaviyo (1) and marketing effectiveness expert, James Hurman, found that high customer retention rates don’t correlate with higher revenue growth in e-commerce. Brands with retention above 45% often grew more slowly than those with lower retention.

Customer loyalty should be earned, not assumed. That same study, based on data from over 1.7 million e-commerce customers, found that brands with lower retention rates often outperformed those with higher retention rates in revenue growth. The key difference? These brands increased the value of the customers they retained, rather than simply holding onto more of them.

However, it’s important to acknowledge nuance. For large, enterprise-scale brands with broad awareness and mature customer bases, retention dynamics may look different. The Double Jeopardy Law suggests that bigger brands naturally retain more customers, and their paths to growth depend more on reach and acquisition than customer optimisation. In these cases, high retention is often a function of brand size and category norms.

Still, the principle holds true across the board: retention should be a signal, not the strategy.

Whether you’re a start up or a household name, growth depends on deepening value with the customers who matter most. As a fan experience: focus on deepening value with your most invested customers. Design experiences that reward belief, not just behaviour.

Loyalty Programs: Overused and Underwhelming

Few briefs are as common, or as misguided, as the call for a loyalty scheme. It’s the marketing equivalent of a comfort blanket: easy to request, hard to get right, and more often than not, a distraction.

It can obscure the real work of building emotional connection and brand difference, the things that actually make people want to come back. Yes, loyalty program members tend to spend more, but consumer perception is shifting. Data from the Bond Loyalty Report 2025 (2) shows us that only 21% of Americans say these programs make them feel valued. Just 29% believe the communications they receive are relevant.

As a fan experience, ditch the discount trap. Create moments that feel deeply personal, memorable and culturally relevant. Fans stay not for savings but for the sense of being understood.

Why Meaningfully Difference Beats Familiarity

Kantar’s BrandZ (3) data shows us that brands perceived as meaningfully different grow faster, command better margins, and retain customers for longer. Familiarity alone won’t cut it. Customers need a reason to choose you again.

That reason? Not just recognition, but resonance. Difference that’s felt, and not just seen.
Brands like Octopus Energy and ALDI have mastered this. Octopus gamified meter readings. ALDI reimagined the checkout experience. These aren’t superficial tweaks. They’re strategic moves designed to create lasting impressions.

As a fan experience: bake your brand idea, what makes it meaningfully different, into the experience. Don’t just say what makes you special. Let fans live it, feel it and share it.

Emotion as Infrastructure

Emotionally connected consumers are more valuable. They spend more. They forgive more. They stay longer. Emotionally engaged customers spend up to twice as much as those who are merely satisfied (4). In practice, that means focusing less on functional fixes, and more on how interactions make people feel.

Whether a customer is ‘loyal’ or not rarely breaks with a bang. It unravels silently, in small moments. An unexpected delay. A dead-end chatbot. An email that never gets a reply. Having to repeat the same details every time you call.

According to Hurman’s research, 32% of consumers will walk after just one poor experience. In contrast, service done well isn’t just functional, it’s emotional infrastructure. It builds trust. It signals care. And over time, it compounds into something stickier; genuine brand equity.

2025 is a turning point. Agentic AI is quietly reshaping service from reactive to anticipatory. These systems don’t wait for tickets. They act. Rerouting issues, resolving friction, and freeing up humans to do what machines can’t. Connect with nuance. This isn’t about automation for automation’s sake. It’s about raising the floor so clever marketers can raise the bar.

As a fan experience: make service feel like care. Remove friction before it happens. Use tech and AI to anticipate needs, and people to connect with empathy. When support becomes emotional infrastructure, it builds trust that lasts.

The Rise of Community Co-Creation

2025’s most resilient brands aren’t just retaining customers - they’re collaborating with them. Community is a capability that requires a clear and consistent strategic approach.

Here are just a handful of examples of brands doing it well:

• LEGO Ideas transforms fan concepts into official sets. A standout recent example? The X-Files: The Truth Is Out There, by Brent Waller (aka WetWired). It won LEGO’s Build Your Nostalgia – '90s Throwback challenge and was greenlit as an official set for release in 2026.
  
• Percival’s The Membership introduces a community currency that goes beyond points. Members earn coins for purchases, referrals, reviews, and more. They can convert coins into PerciBonds to enter monthly raffle ballots, with prizes like £1,000 gift cards, exclusive clothing drops, and hotel stays.
  
• Starbucks has a long history of being community-centric, lest we forget that the now infamous Pumpkin Spiced Latte was a customer suggestion. The Starbucks app, now the epicentre of their customer strategy, continues to build on their community’s needs - 28% of total transactions via mobile order-ahead functionality. A customer suggested feature, so they didn’t have to wait in long queues.
  
• e.l.f. Beauty’s Beauty Squad engages members in product development. For instance, the Camo CC Cream was launched following community feedback, reflecting the brand's commitment to co-creation. Unusually, members can also earn points by uploading receipts from third-party retailers - not just from e.l.f.’s own site. It’s sadly a rare move in loyalty design, prioritising accessibility and brand love over margin protection.
  
• Porsche’s Pioneers Circle connects enthusiasts with the brand through track days, design input, and direct interactions with drivers. Importantly, offering immersive experiences to those who don't even own a Porsche (yet).
  
• Lacoste’s Undw3 community uses NFTs as access cards to a gamified loyalty experience. Members are rewarded not just for purchases, but for engaging in brand storytelling - through games, content creation, and feedback loops. It's a blockchain-backed bet on participation over points.
  

As a fan experience: move beyond schemes. Build participatory systems of belonging that reward curiosity, creativity and contribution. Let fans shape the brand, not just shop it. Give fans the chance to earn cultural currency for their contributions. After all, fandoms are built on agency.

A Strategic Reframe: Don’t create schemes. Design for participation.

Retention isn’t the goal. It’s the outcome of doing everything else right. Delivering value, building emotional connection, and offering a clear point of view.

Perhaps the better question is…how do we build the infrastructure for our biggest fans, and move from one-way messaging to a living, evolving brand experience ecosystem? Because brands that shift from transactions to participation, from passive loyalty to active co-creation, aren’t just driving retention. They’re building relevance, community, and finding scalable growth.

References:

1. It's What You Do With Them, James Hurman with Klaviyo (2025)

2. The Bond Loyalty Report (2025)

3. Kantar, Beyond Satisfaction: How Meaningful Difference Drives Brand Growth (2025)

4. IPA - The Long and Short of It, Peter Field & Les Binet (2013)