Loyalty programs aren’t failing because they lack features: they’re failing because customers don’t feel value fast enough. As consumer budgets tighten and expectations accelerate, patience has become one of the scarcest resources brands contend with. Loyalty is no longer judged by what it promises over time, but by how quickly it proves its worth.
We spoke with Don Smith, Global Chief Consulting Officer at Capillary, about what that shift means for loyalty strategy in 2026, and why speed, relevance, and emotional connection are now deeply intertwined.
Economic Pressure Is Shifting the Loyalty Value Equation
Macroeconomic volatility continues to shape how consumers engage with loyalty programs. As affordability becomes a central concern, customers are scrutinizing programs more closely than ever.
Smith described the moment as an “affordability crisis,” noting that while emotional connection still matters, value has become the entry point.
“There has to be a value proposition where the member says, ‘I’m getting a reward. I’m seeing a savings. I’m getting something tangible,’” Smith said. “Benefits do no good if they’re not achieved or used.”
That reality has shifted loyalty design priorities. Programs that rely on distant or hard-to-reach rewards risk losing relevance quickly, especially when customers are actively comparing options and consolidating spending.
Time-to-Value Becomes Table Stakes
As financial pressure rises, consumer patience continues to shrink. Smith emphasized that getting members to a first moment of value as quickly as possible is now foundational to program success.
“We call it priming the pump. You’ve got to get folks to a reward, to a tier, or to a benefit — and they have to see it and enjoy it,” Smith said.
Capillary increasingly encourages brands to design onboarding journeys where early actions (such as joining, completing a profile, or making an initial purchase), move members close to redemption. First rewards act as catalytic moments, reinforcing the value exchange and creating momentum.
Tier structures are evolving in the same direction. Rather than aspirational but unreachable tiers, brands are experimenting with lower thresholds, milestone rewards, and trial-tier access that allow members to experience benefits sooner.
Relevance Has to Feel Authentic
While personalization remains a priority, Smith cautioned that relevance has become the real differentiator. Too often, brands deliver “personalized” messages that miss the mark because they lack context or intention.
“I think of relevance as being synonymous with authenticity,” Smith said. “Understanding a customer means understanding not just what they bought, but who they are.”
Smith pointed to the importance of zero-party data, information customers explicitly share about preferences and interests, as a critical complement to behavioral data. When brands use that information responsibly, communications feel helpful rather than intrusive.
He also highlighted the growing role of non-transactional messaging in maintaining relevance.
“Celebrate the fact that they did business with you. Tell them how to use the product they just bought, instead of immediately offering them $10 off a $100 purchase.”
As generative AI lowers the barrier to producing content at scale, Smith believes relevance will increasingly be determined by judgment, not capability.
Emotional Loyalty Must Be Designed and Measured
Emotional loyalty has become a focal point for many brands, but Smith stressed it cannot be cultivated without intentional measurement and design.
At Capillary, emotional loyalty is evaluated alongside rational loyalty to understand the customer’s “attachment” to the brand, particularly in comparison to competitors.
“Being willing to recommend a brand is not the same thing as developing an authentic emotional connection that moves beyond the transaction,” Smith said.
True emotional loyalty requires investment in perks, recognition, and moments of delight that feel attainable and on-brand. Programs built solely around transactions may drive short-term behavior, but they rarely sustain long-term preference.
Experiences and Partnerships Only Work When They Fit
Experiential rewards continue to resonate when they feel authentic to the brand and exclusive to members. Smith noted that experiences are most effective when they align naturally with customer passion or brand identity.
At the same time, practical experiences, such as early access, priority shopping windows, or member-only services, often outperform aspirational rewards in value-driven categories.
Partnerships follow the same rule. Generic affiliate offers can feel inauthentic, while carefully curated adjacencies enhance trust and perceived value.
“If it doesn’t feel authentic, it actually chips away at the primary brand relationship,” Smith said.
Smith also pointed to the growing adoption of coalition and group loyalty models globally, particularly in markets where scale and fragmentation make shared ecosystems more effective.
What Brands Are Still Missing
What loyalty strategies and tactics are brands overlooking as they head into 2026? Smith highlighted three areas: human connection, responsible monetization, and continuous listening.
As automation and AI accelerate, empowering frontline employees with meaningful customer insight remains a powerful differentiator.
“Don’t take the AI bus so fast that you forget about the human connection,” Smith said.
Smith also emphasized that loyalty programs now have unprecedented access to customer feedback through virtual focus groups, real-time surveys, and ongoing voice-of-customer tools.
“There’s no excuse for not constantly taking the pulse of your program and talking to your members,” he said.
Smith described the moment as an “affordability crisis,” noting that while emotional connection still matters, value has become the entry point.
“There has to be a value proposition where the member says, ‘I’m getting a reward. I’m seeing a savings. I’m getting something tangible,’” Smith said. “Benefits do no good if they’re not achieved or used.”
That reality has shifted loyalty design priorities. Programs that rely on distant or hard-to-reach rewards risk losing relevance quickly, especially when customers are actively comparing options and consolidating spending.
Time-to-Value Becomes Table Stakes
As financial pressure rises, consumer patience continues to shrink. Smith emphasized that getting members to a first moment of value as quickly as possible is now foundational to program success.
“We call it priming the pump. You’ve got to get folks to a reward, to a tier, or to a benefit — and they have to see it and enjoy it,” Smith said.
Capillary increasingly encourages brands to design onboarding journeys where early actions (such as joining, completing a profile, or making an initial purchase), move members close to redemption. First rewards act as catalytic moments, reinforcing the value exchange and creating momentum.
Tier structures are evolving in the same direction. Rather than aspirational but unreachable tiers, brands are experimenting with lower thresholds, milestone rewards, and trial-tier access that allow members to experience benefits sooner.
Relevance Has to Feel Authentic
While personalization remains a priority, Smith cautioned that relevance has become the real differentiator. Too often, brands deliver “personalized” messages that miss the mark because they lack context or intention.
“I think of relevance as being synonymous with authenticity,” Smith said. “Understanding a customer means understanding not just what they bought, but who they are.”
Smith pointed to the importance of zero-party data, information customers explicitly share about preferences and interests, as a critical complement to behavioral data. When brands use that information responsibly, communications feel helpful rather than intrusive.
He also highlighted the growing role of non-transactional messaging in maintaining relevance.
“Celebrate the fact that they did business with you. Tell them how to use the product they just bought, instead of immediately offering them $10 off a $100 purchase.”
As generative AI lowers the barrier to producing content at scale, Smith believes relevance will increasingly be determined by judgment, not capability.
Emotional Loyalty Must Be Designed and Measured
Emotional loyalty has become a focal point for many brands, but Smith stressed it cannot be cultivated without intentional measurement and design.
At Capillary, emotional loyalty is evaluated alongside rational loyalty to understand the customer’s “attachment” to the brand, particularly in comparison to competitors.
“Being willing to recommend a brand is not the same thing as developing an authentic emotional connection that moves beyond the transaction,” Smith said.
True emotional loyalty requires investment in perks, recognition, and moments of delight that feel attainable and on-brand. Programs built solely around transactions may drive short-term behavior, but they rarely sustain long-term preference.
Experiences and Partnerships Only Work When They Fit
Experiential rewards continue to resonate when they feel authentic to the brand and exclusive to members. Smith noted that experiences are most effective when they align naturally with customer passion or brand identity.
At the same time, practical experiences, such as early access, priority shopping windows, or member-only services, often outperform aspirational rewards in value-driven categories.
Partnerships follow the same rule. Generic affiliate offers can feel inauthentic, while carefully curated adjacencies enhance trust and perceived value.
“If it doesn’t feel authentic, it actually chips away at the primary brand relationship,” Smith said.
Smith also pointed to the growing adoption of coalition and group loyalty models globally, particularly in markets where scale and fragmentation make shared ecosystems more effective.
What Brands Are Still Missing
What loyalty strategies and tactics are brands overlooking as they head into 2026? Smith highlighted three areas: human connection, responsible monetization, and continuous listening.
As automation and AI accelerate, empowering frontline employees with meaningful customer insight remains a powerful differentiator.
“Don’t take the AI bus so fast that you forget about the human connection,” Smith said.
Smith also emphasized that loyalty programs now have unprecedented access to customer feedback through virtual focus groups, real-time surveys, and ongoing voice-of-customer tools.
“There’s no excuse for not constantly taking the pulse of your program and talking to your members,” he said.