The golden age of retail loyalty programs is here

Despite the cost, retailers are eager to unveil splashy loyalty programs for their highest spenders because they work. Many customers, once they’re involved in a loyalty program, do tend to spend more. Prime subscribers, for example, spend almost twice as much as non-subscribers, according to Consumer Intelligence Research Partners.

The overwhelming majority of retail companies now have loyalty programs that they’re constantly refreshing — the next step is to try and get as many members as possible who actively spend, spend, spend. A growing number of stores are offering a paid subscription alongside their free-to-join tiered loyalty programs, as Target recently did. The hope is that consumers might be so enamored with buying more to unlock better service that they decide to pay out of pocket for extras like free shipping, which is perhaps the ultimate sign of a customer’s commitment to a retailer. Younger consumers especially, Canaves notes, appear primed to be dedicated loyalty program members. “There’s a significant share of Gen Z consumers who will consider themselves loyal to brands that they don’t even purchase from,” says Canaves. “They’re just engaged in brand fandom.”

But the value of a good loyalty program isn’t just higher sales. It offers retailers something possibly even more precious than an extra transaction: customer data. “Ulta has talked about how 95 percent of its sales come from loyalty program members,” says Canaves. “That’s really wild. Think about how much data they can get from their members — they’re learning from their members, they can actively get information from their members.”

Loyalty memberships help brands figure out exactly which customers are willing to pay more — sometimes a lot more — for which services or products, and they’re getting this info straight from consumers. This wealth of data can be used to improve their own business, or even sold to other advertisers to make a pretty penny. “A lot of retailers establish retail media networks, and they want to be able to show that they have very fine-tuned data that can be used for targeting for their advertisers,” says Canaves, citing examples like Amazon and Walmart. Walmart recently bought the TV manufacturer Vizio for $2.3 billion, a move that experts say is about gaining even more information on customers to sell more targeted ads.

For shoppers, the fact that everything is much more expensive now means that they’re more drawn to opportunities to be loyal. “Consumers are citing that loyalty programs are becoming more important to them,” says Canaves. “People are trying to stretch their budgets more, and they’re looking to save.” The rewards give the sense that your money is worth way more at the store that treats you like royalty, compared to the inflation-riddled battlefield that is the rest of the consumer marketplace.

The loyalty program Gilded Age just underscores a fact many of us have long known: People love getting congratulated for spending money. Shopping can be a hedonistic pleasure; loyalty rewards add a tinge of virtue to it, because you’re getting added value (in theory). It’s not just the value of the discounts and perks — the exclusive nature of the rewards can itself motivate people to consume more. As if the dopamine hit of clicking “purchase” isn’t reward enough, you can feel better than others who aren’t in the Platinum tier. It’s a win-win for consumerism.