The Problems in the Current Loyalty Market


As of December 2017, U.S. consumers hold 3.8 billion memberships in customer loyalty programs, according to the 2017 COLLOQUY Loyalty Census audit coupled with consumer survey research. The 3.8 billion tabulation shows that membership growth continues but has slowed to 15% compared to the 26% growth rate achieved in the 2016 Census when total membership was 3.3 billion. The membership growth slowdown in recent years indicates that the U.S. loyalty market is maturing, and retailers need to up their game on how to attract and retain members within their loyalty programs. The consumer survey research from the 2017 Census showed that 53% of U.S. consumers identified “Lack of Flexibility” and “Low Liquidity” as the key challenges of loyalty programs. In order to improve loyalty marketing, brands must optimize the overall experience by improving Flexibility, and Liquidity of their programs for their existing and potential customers. On the other hand, loyalty rewards programs cost US merchants and brands approximately $60 Billion per year and rising, hence merchants have a need for a low cost and more efficient loyalty program model.

Key Drawbacks of Traditional Loyalty Rewards Model:

The concept of loyalty programs has existed for decades (since the 1980’s). The census made in 2017 shows that 55% of adults in USA are registered in a loyalty program, hence the market is still growing. However, year-over-year growth of 15% in 2017 is much lower compared to the 26% growth shown in 2016. The reason for the growth slowing is rather simple- loyalty and rewards programs are not realizing their full potential, due to account inactivity; low redemption rates; time delays; high transaction, system management and customer acquisition costs; and low client retention.

The following statistics (from recent census) shows some of the key adversely impacted issues in customer loyalty programs in the USA.

● 53% of U.S. consumers participating in a loyalty programs think that the programs lack flexibility.

● 57% of U.S. consumers will abandon a loyalty program if it took too long to earn points or miles.

● 28% of consumers are abandoning loyalty programs without redeeming any points which is beneficial to the business in the short term but detrimental in the long run.

● Since 2010 the usage of loyalty programs has declined at a rate of 2% to 3% per year. Over 50% of accumulated points, with an estimated worth of $50 billion, are never redeemed. Unclaimed rewards deter customers from joining new loyalty programs.

● 57% percent of consumers want to engage with their loyalty programs via mobile devices, but 49% don’t know whether there is an app associated with their loyalty program due to a large number of independent loyalty programs and apps existing in the ecosystem.

● The 2016 Bond Loyalty Report showed that loyalty rewards program members who do not make redemptions are 2.7 times more likely to defect from a program and join another.

● Time Delays- A general lack of adequate digitization across programs precludes interlinking different programs and is a primary cause for loyalty reward programs’ lag times between reward points being made available in a manner that affords customers opportune moments to use them.

As evident above, the future of Loyalty programs demands a novel approach to increasing flexibility and liquidity while raising its significance in business transactions.


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MyntCoinz is a BaaS platform that would replace, consolidate and streamline existing loyalty programs in to a single digital universal loyalty token system.

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