Loyalty programs are undergoing a transformation, driven by shifting consumer expectations, technological advancements, and an increased focus on delivering real value. As brands navigate this evolving landscape, they’re making bold moves to refine, reinvent, and, in some cases, completely overhaul their loyalty strategies.
In this installment of Leaders in Customer Loyalty: Industry Voices, we sit down with Mladen Vladic, General Manager of Loyalty Services at FIS, to discuss what’s driving this industry-wide shift. From the growing emphasis on non-transactional rewards to the role of AI in shaping personalized customer experiences, Vlad shares key insights on where loyalty is headed in 2025.
Loyalty360: In the 2024 State of Customer Loyalty report, 79% of brands expressed interest in updating, enhancing, or redoing their customer loyalty programs. Are there specific industries leading the charge in loyalty program innovation? What are they doing differently?
Mladen Vladic: That’s a great data point. Let’s start by acknowledging that 79% of brands looking to update their programs is very telling. It’s an exciting time to be in this industry because of rapidly shifting consumer expectations, which impact the way brands design their loyalty programs.
The overarching focus is enhancing customer experience based on evolving preferences, while also right sizing the economics of their loyalty value propositions. Some great examples:
- Banking: A renewed emphasis on merchant-funded rewards, where merchants help offset some of the costs related to loyalty.
- Retail: Many programs are integrating subscriptions and streaming access as part of their value proposition.
- Starbucks: They are simplifying their program, focusing on making it easy to understand and use while delivering strong value. They even announced during their earnings call that they are cutting their menu by 30%, which I find very telling.
These trends from 2024 will certainly carry into 2025.
L360: Looking back at 2024, what predictions about customer loyalty proved to be accurate? How are these developments shaping brand strategies for 2025?
MV: The biggest thing that proved accurate is the ongoing quest to reimagine and redesign loyalty programs. Brands with existing programs are evaluating how to refine them, while those without are conducting deep research before launching a new value proposition.
Reinvention remains the dominant theme. Disruption and evolving customer expectations will continue shaping how brands modify their programs in 2025.
L360: On the flip side, were there any trends or predictions that didn’t materialize?
MV: If I had to pick one, it would be the integration of social media into loyalty programs. We had higher expectations for social engagement driving loyalty, but what we’ve seen so far has been clunky at best.
Some factors influencing this:
- Shifting brand priorities
- Regulatory uncertainties going into 2025
These elements have impacted how brands focus on social-driven loyalty strategies.
L360: Non-transactional rewards—such as referrals, social engagement, and exclusive experiences—are increasingly important. How can brands integrate these elements effectively?
MV: The industry has historically over-indexed on transactional loyalty. Reciprocity is important, but in 2025, it’s simply not enough.
A more holistic approach is now becoming the norm. It starts with mapping out the customer journey and understanding what defines ideal engagement for each brand.
For example:
- Financial institutions: The focus is on securing a primary bank account, then
- layering in additional financial products.
- Retailers: Securing payment information and customer preferences allows brands to build emotional loyalty over time.
L360: Brand partnerships are a major topic in loyalty discussions. While they offer great potential, they can be complex to execute. What is the state of customer loyalty partnerships, and what are you seeing?
MV: Partnerships are a huge part of the loyalty ecosystem, and their importance will only grow in 2025. Two key reasons:
1. Value-conscious consumers appreciate partnerships that provide additional value across multiple brands they interact with.
2. Execution challenges: No single brand can keep pace with evolving consumer preferences alone. Partnering with others allows for greater specialization while expanding the customer experience. At FIS, we see strong engagement metrics from partnerships, helping us build business cases for expansion.
L360: AI is a big discussion in loyalty, but it means different things to different people. How do you see AI impacting customer loyalty programs in 2025?
MV: I’m very bullish on AI. Consumers interact with AI in other areas of their lives, and they will expect loyalty experiences to evolve similarly.
AI’s potential in loyalty includes:
1. Autonomous decision-making for personalized experiences
2. Advanced segmentation and targeting
3. Real-time offer optimization
We’re still in the early days, but AI will fundamentally change how loyalty programs
operate. The big unknown is whether we’ll see full-scale adoption in 2025, 2026, or later.
L360: Balancing AI investments while proving measurable value is a challenge. How should brands approach this?
MV: It starts with stakeholder buy-in at the highest level. Since AI deployments are often multi-year strategies, measuring ROI on a 12-month budget cycle is a mistake. Evolution, rather than revolution, is key.
Staying ahead of the curve in customer loyalty requires continuous innovation, strategic partnerships, and a deep understanding of evolving customer expectations. Mladen Vladic’s insights shed light on the key trends shaping loyalty in 2025, from AI-driven personalization to the growing importance of non-transactional rewards.
To hear the full conversation and gain even more expert perspectives, listen to the complete episode of Leaders in Customer Loyalty: Industry Voices—available now on your favorite podcast platform.