As brands enter 2026, loyalty is being reshaped by a blunt reality: customer acquisition costs keep climbing, and retention is now a core growth lever. Loyalty programs are no longer viewed as optional perks or promotional add-ons. They’re becoming strategic moats, powered by first-party data, lifecycle marketing, and increasingly, AI-enabled decisioning.
We recently spoke with Luke Kline, Founding Marketer at Hightouch and author of the Lifecycle Leaders newsletter, about how loyalty strategies are evolving in response to rising costs, changing consumer expectations, and the accelerating pace of marketing technology.
First-Party Data Becomes the Competitive Moat
Rising customer acquisition costs continue to put pressure on marketing teams, forcing brands to rethink how they grow. Rather than chasing new customers, companies are doubling down on what they can control: engagement, frequency, and lifetime value.
For Kline, that shift makes first-party data the defining advantage in modern loyalty strategy.
Each brand’s data footprint is unique. What Starbucks knows about its customers is fundamentally different from what Dunkin’ Donuts knows about theirs. That difference matters. It’s what enables brands to build personalized experiences competitors simply cannot replicate.
“It’s a huge competitive advantage. That’s what lets you build those personalized experiences that keep customers coming to you,” Kline said.
In frequent-purchase categories like coffee, loyalty becomes particularly powerful because it reinforces habit. If a customer is already buying multiple times a week, even small, strategically timed incentives can make one brand feel like the default choice.
Brands are increasingly modeling exactly how much reward they can offer while maintaining profitability. The result is a steady rise in sophisticated offer strategies, localized campaigns, bonus-point days, and personalized incentives that feel timely rather than generic.
When executed well, those interactions don’t feel promotional. They feel intuitive.
“Whenever I log into my coffee app, it feels like they know me,” Kline said.
Loyalty Wins When It Removes Friction
When Kline evaluates loyalty programs, one of the biggest red flags is operational friction. He described the common scenario of programs forcing users into unnecessary steps, navigating to a website, converting points into a gift card, then manually entering the gift card at checkout. Those kinds of mechanics erode confidence in the value of the program.
In contrast, brands making redemption seamless, by applying rewards directly at checkout, letting customers use variable amounts, making progress visible, reducing dropout points and strengthening engagement.
This connects to a broader shift in 2026: loyalty is increasingly being judged on time-to-value. Consumers want to understand what they’re getting and how quickly they’ll feel it, especially in an environment where budgets are tighter and options are endless.
Faster Campaign Execution Improves Customer Experience
Time-to-value also matters internally. According to Kline, marketing teams struggle with execution velocity.
“Marketers want to move fast. But they’re locked in these legacy systems and platforms built for yesterday,” Kline said.
He shared an example from a conversation with a marketer at a Fortune 500 company: it can take weeks to move from campaign idea to launch due to workflow complexity and approvals.
Hightouch’s approach, Kline explained, focuses on removing the bottleneck by letting marketers activate the full breadth of data they already have, including data that’s typically hard to access.
When marketers can self-serve audiences, move faster, and personalize with deeper context, customers experience more relevant offers and stronger loyalty moments. A favorite example is cart abandonment. Many brands stop at the obvious: “You left something in your cart.” But customers already know that, they left for a reason.
“What you need is an actual compelling reason to purchase,” Kline said. That might be urgency (“it won’t arrive in time for Christmas”), or scarcity (“items like this usually sell out”). The differentiator is having access to the right contextual data and delivering it at the right moment.
Community, Identity, and “Wrapped-Like” Loyalty
While loyalty programs often focus on transactions, Kline sees growing opportunity in identity-driven experiences, where the brand turns customer data into something emotionally valuable.
He pointed to Spotify Wrapped as the clearest modern example. It isn’t a classic loyalty exchange, but it delivers a highly personalized reward experience that customers anticipate, share, and connect with emotionally.
“They take all that data they collect all year, and they repackage it in a way that it is a product for the customer,” he said.
The takeaway for brands is to ask: what data does our business have that competitors don’t, and how can we “productize” that into a unique customer experience that creates belonging and stickiness?
In Kline’s view, this is where loyalty moats are heading: less generic gamification, more proprietary value tied directly to a brand’s product and customer relationship.
AI’s Next Stage: Agentic Workflows and One-to-One
As AI matures, Kline believes the biggest shift will be how marketing teams work, and how quickly they can move.
Hightouch is bullish on agentic workflows: specialized AI agents that support different parts of lifecycle execution, such as building creative, analyzing data, recommending audiences, and validating content against brand guidelines.
Instead of replacing marketers, Kline framed it as multiplying their capacity.
“How can we supercharge marketers?” he said. “Great technology doesn’t work without great people.”
Beyond workflow acceleration, Kline also sees loyalty moving away from “batch-and-blast” (one message to a list) toward true one-to-one personalization, messages tailored for each individual based on what the brand knows about them.
The practical concern, of course, is control. How do you approve a million unique messages?
Kline emphasized the need for transparency and guardrails. Brands should be able to inspect why a decision was made for any individual customer, pilot carefully, and define the rules the system must operate within.
“It’s never a black box. Marketers set the guardrails,” he said.
Start With the Real Problem
When loyalty underperforms, Kline believes leaders should step back before adding features and ensure they understand what problem they’re trying to solve.
Sometimes it’s not the program itself, it’s the execution system behind it. If marketing teams can’t move fast enough, can’t access data, or have overly complex journeys, loyalty results will lag even with a strong concept.
A first-principles approach, clarifying the outcome, simplifying what doesn’t matter, and prioritizing quick wins, often reveals the real constraint.
In 2026, loyalty’s next will be defined by how effectively brands activate first-party data, build experiences competitors can’t replicate, and give marketers the tools to deliver value faster at scale.