Honeycomb Strategy has released ‘The Science of Loyalty: From Situationship to Relationship,’ a study on Australia’s loyalty program success.
Australians have an average of eight-plus loyalty programs, but only actively use five. Attrition rates are high according to the country’s most comprehensive study on loyalty program success.
While Australians are enjoying a loyalty boom, with almost every brand offering a loyalty program, many are struggling to keep Australians engaged.
The Science of Loyalty study analysed 52 of Australia’s leading loyalty programs across retail, travel, telco/banking/finance, and paid programs. The study evaluated loyalty programs based on three key criteria: membership rates, engagement, and impact on spend to identify the top performing programs.
The top-performing programs saw more than a third of consumers saying they exclusively used that brand as a result of the loyalty program benefits offered, including Bunnings, PowerPass,
Coles Plus, One Pass, Woolworths Delivery Unlimited, Costco membership, FlyBuys, American Express Membership Rewards, eBay Plus, Telstra Plus, and Uber One.
At a time when CMOs and insights leaders are rethinking how to build loyalty in an increasingly fragmented market, The Science of Loyalty provides a playbook for brands.
“For most brands, that challenge isn’t providing the right mix, or more or meaningful benefits, it’s delivering a loyalty program that addresses the other key areas that are commonly overlooked – frictionless engagement and triggers to engage,” Renata Freund, founder of Honeycomb Strategy said.
“The brands that are doing this well are seeing loyalty translate into tangible impact on spend, not just membership vanity rates. The truth is that a large portion of Australia’s loyalty programs are great at driving the initial sign-up with a motivating benefit, but very few are translating that into ongoing engagement that ladders up to meaningful ROI,” Freund added.
Honeycomb Strategy’s study explored engagement data, program structures, and customer perceptions to reveal why some programs influence customer spend, while others fail to sustain engagement.
Key findings include:
Behaviour over benefits; there is no correlation between the number or type of benefits offered and the success of a loyalty program. More benefits do not equal more success.
The five program reality: consumer attention is extremely limited. While consumers may sign up for many programs, they are only actively engaged with an average of five programs.
The rise of paid loyalty: paid loyalty program models are reshaping the market, commanding higher attention and shifting expectations by overdelivering on the value exchange.
72 per cent of Millennials and 65 per cent of Gen Zs now subscribe to paid programs. The top five paid loyalty programs are One Pass, Costco Membership, Coles Plus, eBay Plus, and Woolworths Delivery Unlimited.
The human factor: the programs that outperform align with universal behavioural truths rather than fighting against them.
“Seven in 10 consumers expect immediate benefits from their loyalty program, while 63 per cent quickly lose interest if the program doesn’t give them something new or valuable,” Freund said.
“While consumers join loyalty programs to receive immediate benefits, only a handful of programs make it into active mental rotation, with the rest falling into the noise. Brands are not just competing on benefits, they are competing for attention, and attention is scarce,” Freund added.
The loyalty programs with the highest attrition rates among consumers were Emirates Skywards, Baby Bunting Family, Marriott Bonvoy, H&M Hello Member, and Club BCF.
The study identified five behavioural science principles that underpin the best-performing programs:
Loss Aversion Theory: The top programs are creating a sense of ownership and potential loss by over-delivering on the value exchange. Members are staying engaged to protect what they’ve earned and value.
Mental Accounting: Mental accounting allows customers to create a separate mental bucket for rewards that feel distinct from regular spending. This makes the benefits feel more valuable and satisfying, motivating continued engagement.
Social Identity Theory: Loyalty programs succeed by creating a cognitive “member group” that customers want to remain part of. They maintain engagement because they want to stay part of the community they value.
Reciprocity Effect: By framing rewards as genuine gifts, programs are creating goodwill and positivity towards the brand that motivates members to re-engage and reciprocate with future loyalty.
Cognitive Ease: The top loyalty programs are focused on removing friction and making engagement effortless. The most successful programs have become habitual, with minimal conscious effort required to engage.
“Behavioural Science helps us understand how people actually behave – not just what’s top of mind for them. By applying behavioural science, brands can better diagnose challenges with their existing programs and refine their programs to actively engage customers with a meaningful proposition,” Freund said.
“The Science of Loyalty equips CMOs, customer insights professionals, and marketing leaders with practical frameworks to identify the friction points holding back loyalty program engagement, pinpoint the behavioural levers that top-performing brands use to influence spend and translate insights into strategies that deliver measurable ROI,” Freund added.
The Science of Loyalty is available now as part of Honeycomb Strategy’s Digital Insights Series.
