The state of customer loyalty has shifted quickly over the past year, forcing brands to reassess long-held beliefs about personalization, value, and engagement. Assumptions that AI alone could transform loyalty programs, or that promotional intensity would protect retention, have aged fast. In this conversation, Sydney Shapiro, Account Manager of Customer Engagement and Strategy at Baesman, outlines what brands got wrong, what’s working now, and how loyalty strategies must evolve heading into 2026.
State of Customer Loyalty & Market Environment
Loyalty360: Looking back at 2025 predictions, which industry assumptions or expectations have aged the fastest and why?
Sydney Shapiro: One of the fastest-aging assumptions from 2025 was that AI would quickly “fix” loyalty and personalization challenges. In reality, brands that struggled with data hygiene, identity resolution, and operational ownership saw limited impact, while those with strong fundamentals used AI as an accelerator, not a replacement, for strategy.
Another assumption that aged quickly was that deeper discounting would sustain loyalty in a value-conscious market. Consumers remain price aware, but programs built primarily on offers often trained customers to wait for promotions, putting pressure on margins. Brands that focused on recognition, relevance, and experience performed more sustainably than those chasing short-term conversion.
Loyalty Strategy & Program Design
Loyalty360: Companies are increasingly blending membership, subscription, and loyalty. What benefits and complications are you seeing from this convergence, and how do you help them address those issues?
Sydney Shapiro: The convergence of loyalty, membership, and subscription models has created opportunities for more predictable revenue, clearer segmentation, and stronger long-term engagement. When designed well, paid or premium layers can accelerate loyalty by offering experiential value, such as exclusivity, convenience, or service—not just discounts.
The challenge is clarity. Many brands struggle to define distinct value across free loyalty, paid membership, and subscription tiers, which can lead to benefit overlap, customer confusion, and internal complexity. We help brands address this by clearly defining the value exchange at each level, mapping lifecycle journeys across channels, and aligning benefits to customer behaviors rather than spend alone. Measurement and governance are critical to ensure these models drive incremental value rather than cannibalization.
Differentiation, Value & Experience
Loyalty360: What are some of the most effective ways you see brands embedding community, identity, or belonging into their loyalty experience?
Sydney Shapiro: The most effective loyalty programs move beyond transactional rewards and focus on recognition and relevance. Brands that succeed in building belonging do so by acknowledging customers’ identity, behaviors, and milestones—not just their purchase history.
This often shows up through recognition-based perks, status tied to engagement rather than spend, early access, and personalized moments across channels. We also see strong performance when community participation—such as referrals, reviews, content engagement, or events—is treated as a form of value creation. Loyalty becomes less about “earning points” and more about feeling understood and included.
Partnerships & Collaborative Models
Loyalty360: What partnership categories (retail, travel, financial services, lifestyle, entertainment, etc.) do you believe will see the fastest growth in 2026?
Sydney Shapiro: Partnerships that reinforce customer identity and lifestyle will continue to grow in 2026. Lifestyle and wellness, and experience-based partnerships are particularly compelling when they extend loyalty value beyond a single brand interaction.
From a loyalty perspective, the most successful partnerships are those that feel natural to the customer and add experiential or functional value rather than short-term incentives. Brands are increasingly selective, focusing on fewer, more meaningful partnerships that support retention and lifetime value rather than broad, promotional collaborations.
Loyalty360: What emerging partnership “red flags” should brands be watching for?
Sydney Shapiro: Key red flags include unclear data ownership or consent, misaligned customer value propositions, and operational complexity that creates friction in the customer experience. Partnerships that look attractive from a reach or revenue perspective can fail when redemption is difficult, attribution is unclear, or customer service responsibilities are poorly defined.
We also see risk when partnerships are pursued without a clear measurement framework. If success metrics aren’t established upfront, brands can overestimate impact and underestimate cost or liability.
Data, AI & Personalization
Loyalty360: When it comes to AI, where are you seeing the biggest organizational readiness gaps – technology integrations, resources, talent, governance, data hygiene, etc.?
Sydney Shapiro: The most significant readiness gaps are rarely about technology itself. Instead, brands struggle with data quality, fragmented systems, unclear ownership, and governance. Without clean, connected customer data and defined processes, AI initiatives tend to stall or produce limited value.
We also see gaps in workflow and talent—teams may have access to advanced tools but lack repeatable processes for testing, learning, and scaling personalization responsibly.
Loyalty360: What are the ongoing misconceptions about AI in loyalty, and how are you advising brands to rethink their approach?
Sydney Shapiro: A common misconception is that AI can replace strategy. In practice, AI is most effective when applied to clearly defined use cases, such as churn risk identification or next-best-action recommendations, supported by strong segmentation and measurement frameworks.
Another misconception is that more personalization is always better. We advise brands to focus on meaningful personalization—delivering relevance and timeliness—rather than excessive complexity that can overwhelm teams and customers alike.
Loyalty360: With stricter privacy expectations, how are you helping brands handle data exchanges to earn deeper zero/first-party data?
Sydney Shapiro: Brands earn deeper data by being transparent and intentional about the value exchange. We help clients design progressive data capture strategies tied to moments in the customer journey, clearly communicate how data improves the experience, and give customers control over their preferences.
Trust is built through consistency across channels, thoughtful messaging, and ensuring data use aligns with customer expectations—not just compliance requirements.
Loyalty360: As technology stacks are becoming more consolidated and information exchange becomes a priority, what capabilities will define a modern loyalty ecosystem?
Sydney Shapiro: A modern loyalty ecosystem is defined by a unified customer profile, real-time segmentation, and the ability to orchestrate journeys across channels with consistent logic. Equally important are governance, measurement, and visibility into reward liability and customer value.
Rather than relying on a single platform, leading brands focus on interoperability—ensuring their loyalty strategy can evolve as tools, channels, and customer expectations change.
What’s Next
Loyalty360: If you could eliminate one outdated assumption about loyalty, what belief should the industry leave behind going into 2026?
Sydney Shapiro: That loyalty is primarily about points and discounts. In 2026, loyalty should be viewed as a relationship strategy built on recognition, relevance, and trust. Programs that focus solely on transactions risk short-term gains at the expense of long-term value, while those designed around experience and customer understanding are better positioned to drive sustainable growth.