Layers of loyalty: deepening brand loyalty programs with data and AI

Traditional rewards programs results are falling short of modern customer expectations—data and AI can bridge the gap.

Most loyalty programs follow the same formula: customers spend money, earn points, and then exchange those points for rewards.

Here’s the problem: today’s consumers don’t want to be treated like just another punch in the member card. They expect to be rewarded with personalized, relevant experiences that deliver meaningful value.

Indeed, some global companies with the most devoted followings—Apple, Netflix, Nike and Coca-Cola, to name a few—have managed to do just that, building passionately loyal customer bases not with points and perks, but with intangible rewards that demonstrate a deep understanding and emotional connection. 

As traditional loyalty programs become table stakes, it’s time for brands to rethink the loyalty model and all its layers, using data and AI, as well as an extended partner ecosystem, to deliver experiences that feel less like transactions, and more like relationships. In this post, we’ll explore what that entails.

Three key truths guiding modern, multi-layered loyalty programs (hint: it’s not just points)

1.    The future of loyalty isn’t scripted—it’s responsive.

Traditional loyalty programs are built around fixed, pre-mapped journeys: when a customer completes a designated action, they receive a pre-agreed reward. Sephora, for instance, launched their celebrated loyalty program in 2007, offering perks like exclusive promotions, gifts, and discounts to members after reaching certain spending milestones.

However, while Sephora’s Beauty Insider program was very effective at building loyalty through the “purchase-to-perk” model, the retailer also recognized that they could deepen the customer relationship by veering off course from the traditional shopper journey and leveraging the power of their partner ecosystem. For example, in 2020, the brand introduced a new layer to their loyalty model, offering exclusive experiences and events—such as an expert-led “Brow House Call” or a winery tour with Francis Ford Coppola—to high-level members.

This layering concept can play out in many ways across different industries. For example, a telco may notice that a long-time subscriber takes an annual international trip every summer. To strengthen loyalty, the provider can proactively recommend a tailored roaming package before the traveler departs, offering relevance, convenience and personalization that transcends basic perks or discounts.

Knowing what to offer, when to offer it and to whom, all comes down to data, analytics and AI. To add a more personalized layer to existing loyalty programs, brands must build rich, 360-degree customer profiles based on behavior and preference signals from every touchpoint. These profiles, combined with AI-powered intelligent recommendation engines, can dynamically tailor offers based on customer needs, inventory levels, and market conditions—ensuring that the right message or reward reaches the right customer at the right time.

2.    Cultivate loyalty to deepen the relationship, not avoid separation.

Too often, brands wait for signs of trouble or dissatisfaction before engaging with their most loyal customers. A smarter approach looks ahead: How can we strengthen this relationship before it’s at risk?

Enter the loyalty score. By synthesizing weighted data across a customer’s many micro-journeys, this dynamic metric captures real-time engagement and sentiment. A declining score may be a red flag to trigger retention efforts—but a strong one opens the door for a deeper connection.

Consider again our long-time telco customer with an international roaming plan. Loyalty has already been established, meaning retention is not a live concern. Nevertheless, the provider can still take steps to strengthen the relationship: offering deals and opportunities from across the partner ecosystem—access to airport lounges, say, concert tickets—based on the customer’s history or the habits and choices of previous travelers on similar journeys.

Figure 1

3.    Loyalty isn't a one-shot offer—it’s an ongoing dialog.

When a customer rejects or ignores an offer, the journey doesn’t end—it evolves. Today’s real-time offer-positioning systems can analyze current activity and loyalty scores to serve up a smarter, better-fitting alternative, informed by a new and deeper understanding of that customer’s individual needs.

Imagine our telco noticing that a roaming customer is nearing their data cap. The system might offer a top-up and then, if the customer declines, pivot to offering a cheaper option or adjusting the service—perhaps by throttling speeds or applying device-level limits. The point isn’t to force the next sale, but to stay relevant and responsive at every turn.

This concept can also be applied to new customers. For example, an energy company may offer a newly acquired customer who consistently uses above-average electricity in the evenings a time-of-use plan with lower off-peak rates. If the customer ignores the offer, the system could follow up with energy-saving tips or recommend smart home devices that help reduce consumption and manage bills.

This kind of intelligent adaptability turns static loyalty programs into responsive, connected ecosystems, ensuring customers always feel seen, understood, and valued.

The “loyalty tree:” building deep, responsive and continuous loyalty

To earn true loyalty today, businesses must move beyond transactional rewards and adopt a more adaptive model that aligns with meaningful moments in a customer’s life.

For example, an airline might identify that a frequent flyer club member is sending a child off to college through insights gleaned from first-party data and purchase patterns. They can then develop a dynamic list of next-best actions to offer to the customer, such as:

• Offering discounted flights from the college town back home during holidays and breaks.
  
• Prompting the member to set up a family account in which to pool points and earn collective rewards.
  
• Sending exclusive offers from across the partner ecosystem for special events, such as sports games or concerts, to encourage a family visit to the college town.
  
• Promote “empty nest” getaways tailored to the parents.

This shift requires a deeper understanding of behavior, context, and engagement. To capture this thinking, our team has developed what we call “the loyalty tree,” a three-part framework that creates, builds and rewards loyalty by focusing on three critical components: customer experience, engagement and personalized subscriptions/offers.

Unlike traditional programs, which offer transactional rewards, the loyalty tree bears fruit by building deep enduring relationships based on personalized experiences, engagement and offers.

Figure 2

Loyalty, reimagined: Moving from rewards to relationships

True customer loyalty isn’t bought with points and perks. It’s built over time through meaningful interactions, emotional resonance, and consistent value. As brands rethink what it really means to be “loyal,” those willing to invest in relevance beyond simple points programs will be the long-term winners.

Want to lead the future of loyalty? Learn how we leverage data from customer microjourneys to build the loyalty model and deliver the next best offers using the Pega platform to help the world’s leading brands innovate, automate, and deliver stellar customer engagement through next-gen loyalty programs.