In loyalty marketing, some beliefs have stayed untouched for decades. But as customer behaviors evolve, digital disruption accelerates, and AI reshapes the landscape, it’s time to ask: Are the loyalty models we trust still serving us? That was the spirit behind our recent webinar with The Wise Marketer, titled “Challenging Traditional Loyalty and Assumptions” where loyalty leaders Mark Sage (CXO, Masan Group), Siddhant Jain (Chief Customer Officer, Capillary), and Santosh Reddy (VP – Sales and Marketing, Capillary)—came together to challenge conventional wisdom and redefine what loyalty success should look like in 2025 and beyond.

Here’s a deeper look at the conversations that unfolded—and the profound shifts they signal for the future of loyalty.

1. The 80/20 Rule Doesn’t Tell the Full Story Anymore

For decades, loyalty strategies were built on the foundation of the Pareto Principle: the belief that 80% of revenue comes from just 20% of customers.

Naturally, loyalty programs evolved to reward the top tier—the heaviest spenders, the most frequent visitors—with the richest benefits and the most targeted attention.

But today’s dynamic, digitally fragmented marketplace demands a different view.

The reality is that modern consumer behavior doesn’t conform neatly to the 80/20 split anymore, given that they have more choices than ever. Brand loyalty today has become more fragile and is often more opportunity-driven than status-driven.

Light buyers — those who engage less frequently or spend modestly — are a critical strategic segment, easier to win back with small nudges, vital for brand awareness and market share stabilization, and capable of driving scalable, incremental revenue growth over time.

Yet too often, brands still focus loyalty investments on protecting their top 10% of customers, unintentionally neglecting the wider opportunity.

The concept of light buyers is becoming more important, especially in growth economies where new customers are coming into the market. Brands are starting to look at that segment much more closely.  – Santosh Reddy

2. Personalization Alone Won’t Win Customer Loyalty

Personalization has long been celebrated as the magic bullet of loyalty marketing:
The promise of one-to-one messaging, hyper-targeted offers, and perfectly timed nudges designed to captivate individual customers.

And yes, personalization does matter—when done thoughtfully.

But our panelists raised an important and often overlooked warning: More personalization does not automatically create more loyalty.

An overreliance on micro-targeting shrinks the brand’s reach and dilutes its long-term connection with customers who are not yet in the buying cycle but could be influenced with the right brand storytelling.

While AI can empower incredible relevance at scale, over-personalization, especially through direct channels like emails and SMS, can easily slip into over-communication where customers feel stalked rather than served and their trust with the brands starts to erode.

What is more dangerous is that when brands focus exclusively on precision personalization, they risk sacrificing the emotional storytelling, category entry-point building, and broader brand relevance that drive true, enduring loyalty.

In a loyalty landscape where consumer attention is fragmented and AI-driven filters are growing stronger on the customer side, context, timing, and emotional resonance matter as much as transactional relevance.

While personalized offers help convert today’s transactions, emotional brand narratives build tomorrow’s loyal advocates.

If loyalty smarts get too smart, you end up targeting people who were going to buy anyway — and patting yourself on the back without delivering any true incrementality. – Mark Sage 

3. Loyalty Is a Retention Engine, Not a Business Fix

When growth slows or competition heats up, it’s natural for brands to look inward and ask: “Should we invest more in loyalty to boost performance?”

But as our panelists emphasized, that reflex misses a fundamental truth: Loyalty programs cannot fix broken business models.

Loyalty does not exist in a vacuum.  It amplifies the existing customer experience—it doesn’t overwrite it. If customers love your brand, loyalty programs deepen the bond. If customers are frustrated or disappointed, loyalty programs only hasten disengagement, because loyalty members often expect even more, not less.

The COVID-19 pandemic provided a real-world stress test: Across the 400+ brands Capillary supports, it wasn’t new customer acquisition strategies that kept businesses afloat during shutdowns. It was loyalty members—those with existing emotional ties and trust—who returned first once markets reopened.

These brands didn’t “buy” loyalty during the crisis. They harvested it because they had earned it long before.

In today’s market:

• Product excellence is non-negotiable.
• Customer experience is brand-defining.
• Price-value perception can swing decisions in seconds.

Loyalty cannot compensate for a lack of any of these pillars. Instead, loyalty acts as a force multiplier:

This is why investing heavily in loyalty mechanics without first ensuring brand and experience excellence leads to disappointing results and wasted budget.

Loyalty isn’t a Band-Aid for brokenness. It’s a growth accelerator for brands already built to win.

If your product quality is weak, if your customer experience is frustrating, if your pricing is out of sync—no loyalty program can save you. – Siddhant Jain

4. AI is Not Just Buzz—It’s the Engine of Loyalty’s Next Chapter

In today’s marketing world, “AI” is everywhere. But when it comes to loyalty, it’s not just buzz. It’s already reshaping the fundamentals of how loyalty programs are designed, executed, and optimized.

Download our eBook: The Definitive Guide to AI in Loyalty Programs: Building Lasting Customer Relationships

Our panelists made this transformation very real, drawing from live client experiences across industries and geographies.

Brands that have embraced AI-driven loyalty strategies are already seeing measurable uplifts:

• Campaign outcomes have improved dramatically, with 3x ROI gains achieved through AI-led audience segmentation compared to traditional methods.
• Discount optimization has evolved from broad, static offers to dynamic, individualized incentives, like tailoring a 5% discount for one customer while offering 10% to another, thereby maximizing influence while minimizing costs.
• Communication costs have dropped significantly, as AI enables brands to target smarter, not louder, reducing wastage and elevating overall campaign efficiency.

Siddhant Jain summarized this shift by sharing:

“It’s not theory anymore. We’re seeing real results—costs down, ROI up. AI is helping loyalty move from being cost-heavy to being margin-positive.”

But internal optimization is only half the story.

Mark Sage introduced a critical and often overlooked perspective: While we’re getting smarter internally with AI, consumers are also getting smarter externally. Their devices, inboxes, and future AI agents will increasingly decide what they see—and what gets filtered out.

Already, mobile operating systems automatically sort promotional emails into separate folders. Imagine the next phase, where AI-based personal agents actively curate, filter, and prioritize every brand message a consumer receives—across all channels.

In this future, brands will not just compete with each other for attention. They will compete against their own customers’ AI gatekeepers.

In the AI-powered future, loyalty will be won not by those who automate better—but by those who connect deeper.

The real transformation will come when AI doesn’t just make workflows faster, but fundamentally changes how brands engage consumers. Interfaces, channels, even consumer expectations—they’re all about to shift dramatically. – Santosh Reddy

5. Email’s Era as a Loyalty Communication Channel is Fading

For years, email marketing was the bedrock of loyalty communication strategies: Birthday rewards, special offers, points balances — all neatly packaged into the customer’s inbox.

But the reality today, especially in mobile-first markets like Asia, is starkly different.

Siddhant Jain pointed out how in Asia, email as a promotional tool is already dead. Most brands now rely on real-time, mobile-first channels instead.

Even the best-crafted promotional emails increasingly go unopened—or worse, get automatically routed into promotions folders that customers rarely check. Why? Because today’s consumers live inside apps, not inboxes. 

Transactional emails—such as e-receipts, password resets, or account notifications—will remain functional and necessary. But using email as the primary vehicle for engagement, emotional connection, or loyalty storytelling is increasingly a losing proposition.

In an AI-curated world, loyalty communication strategies must evolve dramatically:

• Push notifications become vital for short-term nudges and time-sensitive offers.
• In-app messaging powers personalized, contextual interactions based on real-time behavior.
• Owned ecosystems—branded apps, loyalty hubs, mobile wallets—become the new loyalty battlefields where brands must earn everyday presence.

Loyalty must move from “sent to inbox” to “integrated into daily life.”

The brands that win will be those that create native, seamless engagement inside the environments where their customers already spend time, not those still trying to pull them back into old channels. – Santosh Reddy

Loyalty is Entering Its Most Dynamic Phase Yet

Loyalty is no longer about points.

It’s about people. It’s about platforms. It’s about progressive strategies powered by AI and customer insight, but rooted in timeless truths: Trust, relevance, and experience.

If brands want to thrive in this new era, they must:

• Engage light buyers and heavy buyers alike.
• Balance personalization with brand storytelling.
• Treat loyalty marketing as a strategic discipline, not an add-on.
• Master AI internally while anticipating consumer-side AI filters externally.
• Move beyond emails to mobile-first, owned ecosystem engagements.
• See loyalty not as a standalone program, but as a core growth strategy.

The brands that adapt will build not just programs, but platforms for lasting customer love.

And those who cling to outdated models? They risk being filtered out by customers, by algorithms, and by time.