Is Your Loyalty Program Draining Your Budget? 6 Red Flags For CMOs To Watch For

When Domino’s Pizza revamped its rewards program, it wasn't merely a routine update. The relaunch aimed to enhance customer engagement by simplifying point redemption and integrating with third-party delivery services, reflecting a strategic move to stay competitive in a rapidly evolving market.

This underscores the reality that even well-established loyalty programs must evolve to meet changing consumer expectations and market dynamics. What worked just a few years ago may no longer resonate with today's customers or align with current business objectives.​

If your customer loyalty program has remained unchanged for several years, it might be time to reassess its effectiveness.​ Here are six indicators that suggest your loyalty strategy may need a refresh — and how leading brands are leveraging these indicators to innovate and drive growth.

1. Low Enrollment, Engagement, or Redemption

The most obvious signal a program needs attention is poor performance across key metrics: enrollment, engagement, and reward redemption.

• Low enrollment may suggest unclear value or a poor sign-up experience.
• Low engagement indicates a lack of relevance.
• Low redemption can mean earning points is too hard or rewards aren’t motivating enough.

According to McKinsey, programs with high perceived value see members spend 60% more and are two times more likely to choose the brand over competitors. If your KPIs are stagnant, it’s time to audit the full experience — from onboarding to ongoing participation — and understand where friction or fatigue is setting in.

2. The Economics No Longer Work

Many early-stage customer loyalty programs are built with broad incentives and minimal guardrails. Over time, however, the cost of participation can erode margins, especially when repeat customers are being rewarded for behavior they would have done anyway.

If you find yourself cutting back benefits or over-relying on promotions and discounts to prop up performance, it’s a sign the current mechanics are no longer sustainable. Customer loyalty should be an investment in incremental behavior, not a tax on your most loyal customers. Refreshing your strategy allows you to rebalance economics — using segmentation, dynamic rewards, and data-driven ROI modeling.

3. You're Forced to Double-Down Without Strategic Clarity

In periods of pressure — whether from competitive threats, shifting customer behavior, or internal growth goals — brands often lean harder on their loyalty programs. But without a clear roadmap, this usually leads to tactical fixes rather than strategic shifts.

If your team is constantly reacting (“we need more sign-ups this quarter”) without a long-term vision, it’s a signal that a program reset is needed. A mature loyalty strategy aligns with broader brand and CX goals, not just quarterly KPIs.

4. Your Program Is Too Transactional and Not Emotional

Transactional programs can drive short-term lift, but emotional customer loyalty is what builds long-term value. In fact, Capgemini research shows that emotionally connected customers have a 306% higher lifetime value than those who are merely satisfied.

If your current program is focused solely on discounts or earning points, it may be missing opportunities to build deeper connections. Modern loyalty is about more than purchases — it’s about recognition, access, values alignment, and experiences that reinforce why a customer chose your brand in the first place.

5. Lack of Personalization

Generic rewards, perks, and communications are quickly becoming a liability. According to Salesforce’s 2024 State of the Connected Customer report, 73% of consumers expect companies to understand their unique needs and preferences. Yet most loyalty programs still treat members as monoliths.

A loyalty refresh should leverage your first-party data to tailor offers, experiences, and journeys. From dynamic rewards to AI-powered communications, personalization is no longer a nice-to-have — it’s table stakes.

6. There's No Clear Roadmap or Maturity Model

Finally, even well-performing programs need regular reassessment. Most leading brands reevaluate and optimize their loyalty programs every two to three years. Without a maturity model or clear roadmap, it’s easy to stagnate.

Whether that means re-platforming your tech stack, integrating loyalty across channels, or launching new features like tiers, challenges, or surprise-and-delight moments, it’s essential to build toward the next version of your program with a clear understanding of customer needs and market context.

Making the Case for Reinvestment

Refreshing a loyalty program isn’t just a cosmetic change — it often requires reinvestment in tools, data infrastructure, and partner capabilities. But the upside is substantial. Bain & Company found that increasing customer retention rates by just 5% can boost profits by 25 to 95%.

Choosing the right strategic partner can help your brand:

• Define and model program ROI through robust performance measurement, customer insights, and financial forecasting — ensuring loyalty investments are tied to measurable business outcomes.
  
  
• Design and concept the next generation of your program, including updated mechanics, features, and customer experiences that reflect your brand positioning, customer segments, and market opportunity.
  
  
• Deploy the right technology stack and manage operations, from platform selection and systems integration to digital product delivery and marketing execution.
  
  
• Orchestrate cross-functional alignment and in-market rollout, helping your teams navigate organizational change, train internal stakeholders, and execute a phased go-to-market plan that delivers impact from day one.
  

As customer loyalty moves from a promotional lever to a strategic pillar of brand growth, now is the time to ensure your program is built for what’s next.