Unlocking hidden profits: how brands are undervaluing loyalty

With 80% [Mintel] of UK consumers part of a retail customer loyalty or reward scheme, brands have a major opportunity to drive profitability. However, not all loyalty programmes reach their full potential, often failing to deliver a measurable financial impact.

Loyalty programmes are designed to bring members closer to a brand and demonstrate commitment and willingness to engage. Ideally, once you attract a new member, you don’t let them go. As a Harvard Business Review study found, acquiring a new customer can be “anywhere from five to 25 times more expensive than retaining an existing one”. [Harvard]

For those in retail and Consumer Packaged Goods (CPG), the ideal scenario is for members to spending more in regular, frequent transactions and stay faithful to the brand and products. But measuring that accurately and acting on findings to boost profits can be challenging.

Why your loyalty programme isn’t working hard

Research by Collinson International shows 62% of loyalty operators find it challenging to measure incremental profit accurately, while 74% say their programmes run at a limited capacity.[Collinson International] Other issues for retail and CPG brands include a lack of detailed tracking for programme costs and revenues, with only 56% of companies tracking revenues on a high level and 34% at a granular level. Without clear data, the consequence is that businesses end up having to treat their programmes as cost centres rather than revenue-generating tools, damaging profitability.

There are a range of other opportunities that organisations often fail to take advantage of: one is data monetisation, with more than half of companies not realising revenues through third parties.[Collinson International] Additionally, many programmes over-rely on discount-driven incentives, which may drive short-term sales, but will ultimately cut into margins, triggering a growth in customer expectation that discounts will be always available, and resulting in customers developing price-sensitive buying habits.

To compound the issue, only 27% of companies involve finance teams in managing loyalty programmes.[Collinson International] Without structured financial oversight, key metrics such as customer lifetime value, retention rates and revenue impact are often overlooked.

“Loyalty programmes have the potential to be powerful strategic tools for customer retention and revenue growth, but success depends on their execution and financial accountability,” says Stephen Gilbert, VP Salesforce loyalty, at Collinson International.

He continues: “We strongly advocate for involving finance colleagues, particularly the CFO, in developing the loyalty programme strategy. This is for two specific reasons: to ensure alignment with financial goals and to develop formulas that accurately capture incremental profit. It curbs the problem of missing metrics.”

Securing the foundations to encourage sky-high profitability

To overcome these challenges and boost programmes’ profitability, brands should adopt a more strategic and data-led approach to translate investment in loyalty into measurable financial gain.

Implementing detailed revenue tracking and control groups, where a segment of customers is excluded from loyalty incentives, helps distinguish programme impact from natural consumer behaviour. CPG brands with poor access to sales data can gain valuable insights by collaborating with retail partners to track customer spending patterns.

Brands need to move away from price-based rewards, such as discounts. While these are easy to implement and drive short-term sales, they eat into profits and create transactional relationships rather than genuine brand loyalty. Businesses are better served by diversifying rewards to include personalised offers, exclusive experiences, and tiered membership structures that encourage greater long-term spending. Collinson International’s research shows brands that adopt such strategies see much higher engagement and improved profitability.

Data remains a critical – yet often underutilised – asset in loyalty programmes. To monetise their loyalty data or use it effectively for personalisation, businesses should invest in AI-driven insights that allow brands to tailor offers to individual preferences. This increases relevance and response rates, strengthening direct-to-consumer relationships through branded apps, subscription models and digital wallets.

Working in partnership for greater profitability

By working with a specialist partner such as Collinson International, brands can refine their loyalty strategies and improve financial outcomes. Through advanced analytics, data-driven insights, and strategic financial management, Collinson International consults to help businesses unlock the true profit potential of their loyalty programmes and strengthen customer relationships.

Collinson International offers a suite of tools, such as its ROI calculator and Loyalty Maturity Assessment, which identify untapped profit opportunities. These frameworks address all six dimensions of loyalty to maximise a programme’s potential and move it towards the top quartile for performance, where the most successful programmes reside.

“Loyalty programmes have the potential to be powerful tools for customer retention and revenue growth, but success depends on their strategic execution and financial accountability,” comments Gilbert.

“Our focus on ROI measurement, data integration, and financial management equips brands with those tools needed to shift their loyalty efforts from an expense to a revenue-generating asset.”

As market conditions evolve, brands that prioritise financial discipline and customer engagement will be best-positioned for long-term success.

To find out more about how Collinson can help your business boost its loyalty programme, contact Stephen Gilbert, at stephen.gilbert@collinsongroup.com