What: Retailers are being urged to reimagine loyalty programmes beyond traditional point-collection systems, taking cues from airlines' successful frequent flyer programs that have evolved into billion-dollar revenue streams through strategic partnerships and psychological engagement.

Why it is important: With over 35% of loyalty program members planning to cancel memberships, retailers must urgently evolve their approach to match the sophisticated engagement strategies of airline programs, which have proven successful in generating both revenue and customer retention.

The retail industry is witnessing a fundamental shift in customer loyalty strategies, with traditional loyalty cards no longer sufficient to drive engagement. Airlines' frequent flyer programs have demonstrated remarkable success, as evidenced by Qantas' loyalty programs generating USD 1 billion in half-yearly results. This success stems from their ability to cultivate both effective commitment through exclusivity and calculative commitment through fear of losing benefits. While airlines benefit from offering empty seats at minimal cost, retailers must focus on providing cost-effective value to encourage deeper engagement. Industry expert Philip Shelper emphasises that successful programs must be simple to understand, offer valuable rewards, build emotional connections, and differentiate from competitors. Myer's success story, with over 7 million accessible members driving the majority of its USD 1.8 billion revenue, demonstrates the potential of well-executed loyalty strategies. The future of retail loyalty lies in sophisticated data analytics, personalised communications, and strategic partnerships that create incremental value for both customers and retailers.

IADS Notes: The evolution of retail loyalty programs is undergoing a significant transformation, as evidenced by recent industry developments. In December 2024, research revealed that traditional points-based systems were losing effectiveness, with over 35% of members planning to cancel memberships, validating the article's emphasis on reimagining customer loyalty. This trend has driven innovative responses, as seen in February 2025 when Selfridges launched its 'Unlocked' program with digital "keys" that reward both purchases and experiences, demonstrating the shift from transactional to experiential engagement. The success potential is clear: May 2024 data showed Ulta Beauty driving 96% of sales through its loyalty programme, while October 2024 saw retailers like Sephora leveraging sophisticated data analytics for personalised marketing. These developments align with September 2024's Harvard Business Review analysis, which emphasised the need for accurate customer profiling and strategic partnerships - elements that echo the article's insights about airlines' successful combination of effective and calculative commitment strategies.

Frequent flyer initiatives saved airlines – can loyalty programmes save retail?