Unlock the Value of Loyalty
Global Loyalty Program Benchmark Study Early Insights
Loyalty programs have become a cornerstone of customer engagement strategies across industries globally. But how do you know if your loyalty initiatives are truly delivering value? What metrics should you be tracking, and how do you compare to industry peers? Is your program’s performance exceptional or merely average?
At the Loyalty Science Lab at Old Dominion University, we have been working on the first global loyalty program benchmarking study specifically to address these pressing questions faced by loyalty practitioners. In partnership with the Customer Strategy Network and Epsilon, we aim to build the knowledge base needed to elevate loyalty program performance across industries and regions.
Establishing a Global Benchmark
Until now, loyalty program operators have lacked comprehensive data on how their programs stack up against others, leaving significant gaps in our collective understanding of what constitutes “good” performance in such programs.
Our pioneering research project aims to establish operational and performance benchmarks for loyalty program operators worldwide, offering participants a unique opportunity to compare their program’s metrics against industry averages. This global approach provides a more robust set of reference points than previously available, helping loyalty managers and business executives make more informed decisions about program design and resource allocation.
A Comprehensive Measurement Framework
Our study examines key dimensions of loyalty program performance that matter most to program operators. Through careful research design and consultation with industry experts, we’ve developed a measurement framework that captures the multifaceted nature of loyalty program success.
The framework explores three critical areas:
- Scope and Growth — How effectively is your program capturing your customer base, and what trajectory is it on?
- Member Engagement — How actively are members participating in your program across different types of behaviors?
- Business Impact and Operational Efficiency — What tangible results is your program delivering, and how efficiently is it structured?
By examining these dimensions through multiple complementary metrics, our study provides a comprehensive assessment of loyalty program health, effectiveness, and operational efficiency that goes beyond individual measures.
Early Insights: The Power of Loyalty
Our preliminary findings from 62 loyalty programs across multiple industries and geographic regions reveal compelling evidence for the business value of loyalty initiatives:
Loyalty Program Members Drive Significant Revenue
For the programs in our study, loyal members are worth, on average, 3.5 times more than non-members. While this partly reflects self-selection (better customers are more likely to join loyalty programs), it also demonstrates the revenue potential of effective loyalty strategies. Some exceptional programs are achieving ratios as high as 12.6x, suggesting significant upside potential for many loyalty initiatives.
Additionally, programs are seeing an average 35% revenue lift attributable to their loyalty initiatives, with top performers achieving up to 91% lift. This substantial impact underscores why companies continue to invest in loyalty despite the operational complexity.
The Transaction-Redemption Gap: A Hidden Opportunity
One of the most interesting early findings from our research is what we call the “transaction-redemption gap.” While transaction-based active membership (members making at least one purchase in the past 12 months) averages 53%, redemption-based active membership drops to just 35%.
This 18-percentage point difference represents a significant opportunity for programs to drive more value through increased redemption-based engagement. When members redeem rewards, they experience the program’s benefits directly, potentially strengthening emotional connections with the brand.
Programs that close this gap may see stronger customer relationships and better long-term retention than programs that allow earned points to sit unused in member accounts. The question becomes: is your program designed to encourage meaningful redemption experiences that reinforce brand relationships?
Program Economics: The Breakage Conundrum
Our data reveals a substantial average breakage rate of 26% (with a median of 30%), indicating that more than a quarter of all issued loyalty points are never redeemed by members. Programs naturally count on some expected non-redemption when building their financial models, but this raises important strategic questions.
Should high breakage rates be viewed as a financial benefit to the program or as an indicator of engagement failure? The best programs need to balance financial sustainability with encouraging meaningful redemption that strengthens brand relationships.
With an average funding rate of 6.9% (median: 2.4%), loyalty programs are making significant investments in their member relationships. The wide range (from 0.02% to 38.3%) suggests very different approaches to program design and generosity across our sample.
Reward Timing: The Customer Journey
Our data reveals an average reward velocity of 7 months (median: 6 months), meaning it takes a typical member about half a year to earn their first reward. This represents a crucial planning metric for loyalty program design and management.
This 6–7 month window necessitates thoughtful interim engagement tactics to maintain member interest during the accumulation phase. Programs might consider implementing milestone achievements, progress notifications, or smaller “quick win” rewards to bridge this gap.
Global Participation, Diverse Insights
Our study has drawn participation from across the globe, with particularly strong representation from Europe, Sub-Saharan Africa, and Southeast Asia and Oceania. Industry participation has been led by retail (44% of participants), followed by travel & hospitality, financial services, and food & beverage.
This diverse participation enhances the value of our benchmarks, allowing for more nuanced comparisons across different business contexts. As our participation grows, we’ll be able to provide even more granular insights by industry, region, and program maturity.
Join the Conversation
As we continue to collect data and refine our analysis, we invite loyalty program operators worldwide to join this important research initiative. Participation is free, confidential, and can be completed at your own pace. All participants receive a customized benchmarking report showing how their program metrics compare with established benchmarks.
Whether you’re launching a new program, optimizing an existing one, or making the case for additional investment, these benchmarks provide valuable context for your loyalty strategy decisions.
Visit https://bit.ly/lpbenchmarking to participate in the study or scan the QR code below.
About the Loyalty Science Lab
The Loyalty Science Lab at Old Dominion University (USA) is a not-for-profit research initiative dedicated to advancing knowledge in customer loyalty through rigorous academic research. The lab conducts studies that bridge academic theory and industry practice to provide valuable insights for loyalty marketers worldwide.
For more information, visit https://www.odu.edu/loyalty-science-lab or email us at loyaltysciencelab@odu.edu.
