Australian retailers might be attracting record numbers of new loyalty members, but few are actually keeping them engaged, finds a new study.

The nation’s “largest ever” loyalty program study from research company, Honeycomb Strategy, shows that while Australians love a loyalty program, they expect retailers to deliver “serious value” to stay in their loyalty program line-up.

‘The science of loyalty – from situationship to relationship’ analysed 52 of Australia’s “leading” loyalty programs across travel, retail, telco/banking/finance, and paid programs. The study evaluated loyalty programs based on three key criteria: membership rates, consumer engagement and impact on consumer spending to identify the top performing programs.

Nearly a third of surveyed Australian consumers said they exclusively used the listed retail brands, based on their loyalty program offering.

“It shows that the Australian retailers delivering serious value – think discounts or exclusive experiences – along with a seamless shopping experience, are reaping the benefits at the register,” says Honeycomb Strategy.

Engagement a struggle

While retailers might be enjoying a loyalty club sign-up boom, many are struggling to keep Australians engaged.

The new report reveals most Australians only actively use five loyalty programs at once, with customer attention at an all-time low. The research shows seven in 10 surveyed customers expect immediate benefits from their loyalty programs, while 63% quickly lose interest if the program doesn’t give them something new or valuable.

Additionally, the research shows there’s no correlation between the number or type of benefits offered and the success of the program; and the retail loyalty programs that do resonate with customers offer “instant value, simplicity and real benefit”.

“For most retail brands, the challenge isn’t providing the right mix, or more meaningful benefits, it’s delivering a loyalty program that addresses the other key areas that are commonly overlooked – frictionless engagement and triggers to engage,” says study author and Honeycomb Strategy founder Renata Freund.

“The reality is that a large portion of Australia’s loyalty programs are great at driving the initial signup with a motivating benefit, but very few are translating that into ongoing engagement that ladders up to meaningful ROI. The retailers that are doing this well are seeing loyalty translate into tangible impact on spend, not just membership vanity rates.

“And for households managing rising costs, loyalty is no longer just about collecting points – it’s about programs that offer meaningful savings, convenience and experiences worth returning for.”

Paid loyalty programs

Paid loyalty programs are also on the rise, commanding higher attention and shifting expectations by overdelivering on the value exchange. Insights show 72% of surveyed Millennials and 65% of Gen Z Australians have now subscribed to a paid loyalty program.

“Paid loyalty programs have rapidly grown in popularity and are fundamentally shifting the market landscape. They are now extremely effective in driving customer loyalty because they exceed expectations – they communicate an enormous overdelivery on the value exchange,” says Ms Freund.

“Careful framing of the benefits makes the programs feel like money saved, rather than money spent – this creates both positive validation and stickiness.”