8 Reasons Why Customers Abandon Loyalty Programs (And How to Fix Them)
Feb 1, 2025
No business owner wants to discover their loyalty program is haemorrhaging members. You invested time and resources building it, launched with optimism, and expected loyal customers earning rewards and returning again and again.
But the data tells a different story. Members who signed up enthusiastically have gone quiet. Stamps aren't being earned. Rewards aren't being redeemed. Your program isn't dead—but it's not thriving either.
This is more common than you might think. Research suggests that while consumers belong to numerous loyalty programs on average, they actively engage with less than half of them. The rest sit dormant—apps undeleted but unused, cards saved but forgotten.
Perhaps more concerning: consumers are retracting loyalty faster than ever before. Tolerance for disappointing experiences has dropped dramatically. Customers who might have stuck around a few years ago now leave at the first sign of friction or underwhelming value.
The good news: most reasons for loyalty program abandonment are fixable. Understanding why customers disengage is the first step toward re-engaging them—or preventing disengagement in the first place.
Here are eight reasons customers abandon loyalty programs, and what you can do about each.
1. Signup Is Too Complicated
The signup process is the very first experience customers have with your loyalty program. If that experience is frustrating, many won't make it past this initial hurdle—and those who do start with a negative impression.
The Problem
Some businesses treat signup as an opportunity to gather extensive customer data: full address, preferences across multiple categories, detailed demographic information, marketing permissions across various channels.
Each additional field is friction. Each extra step is a potential dropout point. A signup process that takes several minutes loses customers who came with genuine interest.
The Fix
Strip signup to absolute essentials:
Name: For personalisation
Email or phone: For communication
Birthday: For automated birthday rewards (optional but valuable)
That's it. Everything else can be gathered over time through behaviour—what they buy, when they visit, how they respond to promotions. This behavioural data is often more accurate than self-reported preferences anyway.
Target: 20 seconds or less. If signup takes longer, you're asking for too much.
Perkstar's wallet integration exemplifies frictionless signup. Customers scan a QR code, and their card saves directly to Apple Wallet or Google Wallet. No app download, no account creation, no lengthy forms. They're enrolled and earning within seconds.
2. The Rewards Structure Is Too Confusing
Customers lose interest in things they don't understand. If your loyalty program requires a manual to decipher, you've already lost a significant portion of potential participants.
The Problem
Some programs layer complexity upon complexity: base points plus bonus points, tiers with different earning rates, multipliers on certain days, category-specific accelerators, caps and minimums, exceptions and exclusions.
Each addition might seem clever from a business perspective—optimising for specific behaviours, protecting margins, creating excitement. But from the customer's perspective, it all blurs into confusion.
When customers can't quickly answer "What do I get and how do I get it?", engagement suffers.
The Fix
Return to simplicity. The most effective loyalty programs can be explained in one sentence:
"Buy 9, get 1 free"
"Earn 1 point per £1, redeem 100 points for £10 off"
"Every 10th visit earns a free treatment"
You can absolutely add excitement through occasional promotions—double stamp days, surprise rewards, limited-time bonuses—but these should be additions to a clear core structure, not complications of it.
The test: Can a new staff member explain your program in 15 seconds? If not, simplify.
Consider creating an explainer page on your website or a simple guide that walks customers through how your program works. But if you need extensive documentation for customers to understand basic mechanics, the structure itself needs rethinking.
3. Customers Don't Understand What's Available
Sometimes the structure is simple enough, but customers simply aren't aware of what your program offers. They signed up, they technically participate, but they don't know about features that might excite them.
The Problem
The signup moment is brief. Customers might have been in a hurry, distracted by other things, or simply not paying close attention. They caught the basics—earn stamps, get reward—but missed the birthday rewards, the surprise bonuses, the member-only promotions.
Or perhaps your program has evolved since they joined. New features added, new rewards available, but existing members were never clearly informed.
Result: customers engage minimally because they think that's all there is.
The Fix
At signup: Clearly communicate the value proposition. What's the core reward? What's the timeline to achieve it? What bonuses exist (birthday, welcome reward, etc.)?
Ongoing: Periodically remind members about program features they might not be using. "Did you know you earn a free birthday treat?" Push notifications are perfect for this—gentle reminders about benefits customers might have forgotten.
In-store/in-person: Ensure staff can articulate the full program. When allocating stamps, they might mention "You're getting close to your reward!" or "Have you claimed your birthday gift yet?"
The goal is ensuring customers understand the complete value available to them, not just the minimum.
4. Rewards Aren't Worth the Effort
This is perhaps the most fundamental reason for abandonment: customers simply don't see enough value to bother.
The Problem
Unappealing rewards: The rewards themselves don't excite customers. A minor discount, an irrelevant product, something they wouldn't choose to receive.
Too much effort required: Even attractive rewards can fail if they require unrealistic commitment. If customers need to spend £500 or visit 50 times to earn a modest reward, most will give up before getting there.
Mismatched preferences: Rewards that appeal to some customers but not others. The hiker gets offered discounts on ski gear; the coffee purist gets offered tea promotions.
The Fix
Make rewards genuinely desirable: Free versions of what customers actually came for. Free coffee at a café, free treatment at a salon, free item at a shop. Don't offer consolation prizes; offer the real thing.
Set achievable thresholds: Consider your typical customer's visit frequency. If most customers come monthly, a 10-stamp card takes about 10 months—that's achievable but requires patience. Consider interim rewards (something at 5 stamps) to maintain momentum.
Offer choice where possible: Let customers choose between reward options. Different preferences can be accommodated without complicating the core structure.
Personalise when you can: If you know what customers typically buy, tailor offers accordingly. Digital programs make this possible by tracking purchase patterns.
Check the ratio: Is the reward proportional to the effort required? A £5 reward after £500 in spending feels underwhelming. Aim for reward values that feel genuinely generous—typically 5-10% of the spending required to earn them.
5. Customer Data Isn't Being Used Well
Digital loyalty programs generate valuable data about individual customer behaviour. When this data is ignored or misused, customers notice—and disengage.
The Problem
Irrelevant communication: Customers receive generic offers that don't match their interests. The vegetarian gets meat promotions. The morning customer gets evening offers.
Disconnected experiences: Progress tracked on one device doesn't appear on another. Information shared in one interaction isn't remembered in the next.
No personalisation: Every customer receives identical treatment regardless of their history, preferences, or value to the business.
The Fix
Use what you learn: If your program shows that a customer always buys a particular product, feature that product in communications. If they visit on weekends, send offers relevant to weekend visits.
Create consistency: Ensure customer information is accessible across touchpoints. Staff should be able to see a customer's loyalty status without asking. Digital progress should sync instantly.
Personalise communications: Birthday rewards are the most obvious example—and Perkstar handles these automatically. But you can go further: congratulate milestones, acknowledge visit anniversaries, recognise top customers specially.
Respect the data: Customers share information expecting it to improve their experience. When it doesn't—when they still receive generic, irrelevant treatment—they feel their data was taken without corresponding benefit.
6. Lack of Communication Causes Customers to Forget
Out of sight, out of mind. If customers don't hear from your loyalty program between visits, they may simply forget about it.
The Problem
Many loyalty programs are passive: customers earn when they visit, but nothing happens between visits. There's no reminder that the program exists, no prompt to return, no ongoing relationship.
When customers have dozens of loyalty programs across various businesses, the ones that communicate stay top-of-mind. The silent ones get forgotten.
The Fix
Communicate regularly (but valuably): Push notifications, SMS, and email keep your program present in customers' awareness. But every communication should offer something: valuable information, genuine offers, helpful reminders. Don't message just to message.
Re-engage the lapsed: Identify customers who haven't visited in a while and reach out specifically. "We haven't seen you recently—here's a bonus to welcome you back" can recover customers who've drifted without consciously deciding to leave.
Ask for feedback: Even customers who won't return might share why they disengaged. This feedback helps you improve for others—and sometimes the act of asking rekindles interest.
Progress updates: Remind customers how close they are to rewards. "You're just 2 stamps away from a free coffee!" creates motivation to return.
Perkstar includes unlimited push notifications on all plans. You can message members as often as makes sense—promoting slow days, announcing new offers, re-engaging lapsed customers—without worrying about per-message costs.
7. Customers Can't See Their Progress
Motivation requires visibility. When customers can't easily see how far they've come or how close they are to rewards, they lose the psychological drive to continue.
The Problem
Hidden progress: Customers have no easy way to check their stamp count or point balance. They must ask staff or dig through unfamiliar app interfaces.
No milestone acknowledgment: Customers reach significant points (halfway to reward, loyalty anniversary, membership milestones) without any recognition.
Unclear path forward: Customers don't know what they need to do next or how close they are to their goal.
The Fix
Make progress visible: Digital loyalty cards should display progress clearly and accessibly. Perkstar's wallet integration means customers see their stamps or points every time they check their phone.
Celebrate milestones: Acknowledge when customers reach significant points. "You're halfway there!" notifications maintain momentum. "Congratulations on your 100th visit!" makes long-term customers feel valued.
Communicate proximity to rewards: As customers approach reward thresholds, tell them. "Just 2 more stamps!" creates urgency and motivation that general reminders can't match.
Show what's possible: For tiered programs, let customers see what awaits at higher levels. Occasionally preview higher-tier benefits so customers understand what they're working toward.
The best motivation comes from seeing results. Make sure your program consistently shows customers how far they've come and how close they are to earning what they're working toward.
8. Competitors Are Doing It Better
Sometimes the problem isn't what your program does wrong—it's that competitors are doing more right.
The Problem
Customers compare experiences. If your competitor's loyalty program is easier to use, offers better rewards, communicates more valuably, or simply feels more modern and professional, customers notice.
In a competitive market, merely having a loyalty program isn't enough. It needs to be at least as good as alternatives—ideally better.
The Fix
Monitor competitors: Know what loyalty programs your competitors offer. What structure do they use? What rewards? How do they communicate? What do their customers say?
Identify gaps: Where is your program weaker? Where is it stronger? Focus improvement efforts on areas where you're falling behind while emphasising advantages you already have.
Keep innovating: Loyalty programs shouldn't be static. Add features, refresh rewards, test new approaches. A program that hasn't evolved in years feels stale compared to one that's continuously improving.
Emphasise your advantages: If you can't match competitors on every dimension, double down on where you excel. Maybe your rewards are more generous, or your program is simpler, or your communication is more personal. Make these advantages clear.
Consider platform capabilities: Modern loyalty platforms offer features that older systems can't match. Wallet integration, push notifications, automated birthday rewards, flexible card types—these capabilities can create competitive advantage.
Preventing Abandonment: The Bigger Picture
These eight reasons share common themes:
Simplicity matters: Complicated signup, confusing structures, unclear value—all stem from making things harder than they need to be. Simplify relentlessly.
Communication is essential: Programs that go silent get forgotten. Regular, valuable communication keeps your program present in customers' minds.
Value must be obvious: Customers need to clearly see what they get and believe it's worth their participation. If value isn't obvious, they won't engage.
Progress creates motivation: Visible advancement toward rewards drives continued participation. Hide progress, and motivation fades.
Data should improve experience: Digital programs generate insights. Use them to make customers feel known and valued, not surveilled and ignored.
If your program is struggling with abandonment, audit it against these eight areas. Often, one or two specific issues are driving most of the disengagement. Fix those, and participation typically rebounds.
Perkstar was designed with these principles in mind. Frictionless wallet signup eliminates enrollment barriers. Simple stamp and points structures are immediately understood. Push notifications enable ongoing communication. Progress is visible every time customers check their phones. And features like automated birthday rewards use customer data to create personal, valuable experiences.
The 14-day free trial lets you build and test a program designed to avoid these abandonment triggers—before committing.
