Australian retailers are attracting record numbers of loyalty program sign-ups but struggling to keep customers engaged, according to new research from Honeycomb Strategy.
The study, titled The Science of Loyalty – from Situationship to Relationship, analysed 52 of Australia’s leading loyalty programs across retail, travel, telco, banking and finance, and paid subscription models.
The research evaluated programs based on membership rates, consumer engagement, and impact on spending to identify the top performers.
Nearly a third of Australian consumers said they exclusively used listed retail brands based on their loyalty program offering. The findings show that retailers delivering strong value such as discounts, exclusive experiences, and a seamless shopping experience are reaping benefits at the register.
However, the report found that most Australians actively use only five loyalty programs at once, with customer attention at an all-time low. Seven in 10 customers expect immediate benefits, while 63 per cent lose interest quickly if the program fails to deliver something new or valuable.
The study also noted no correlation between the number or type of benefits offered and overall success, with programs resonating most when they provide instant value, simplicity, and tangible benefits. Paid loyalty programs are gaining traction, particularly among younger consumers, with 72 per cent of Millennials and 65 per cent of Gen Z Australians now subscribed.
“Paid loyalty programs have rapidly grown in popularity and are fundamentally shifting the market landscape,” Renata Freund, study author and Honeycomb Strategy founder, said.
“They are now extremely effective in driving customer loyalty because they exceed expectations – they communicate an enormous overdelivery on the value exchange. Careful framing of the benefits makes the programs feel like money saved, rather than money spent – this creates both positive validation and stickiness.
“For most retail brands, the challenge isn’t providing the right mix, or more meaningful benefits, it’s delivering a loyalty program that addresses the other key areas that are commonly overlooked — frictionless engagement and triggers to engage.”
Freund noted that many programs fall short after the initial sign-up.
“The reality is that a large portion of Australia’s loyalty programs are great at driving the initial signup with a motivating benefit, but very few are translating that into ongoing engagement that ladders up to meaningful ROI. The retailers that are doing this well are seeing loyalty translate into tangible impact on spend, not just membership vanity rates,” Freund said.
“And for households managing rising costs, loyalty is no longer just about collecting points — it’s about programs that offer meaningful savings, convenience and experiences worth returning for.”
The Science of Loyalty report is part of Honeycomb Strategy’s Digital Insights Series, a collection of studies designed to give brands a competitive edge.
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