Australian brands rethink loyalty as instant value gains ground over points systems

Over 50% of consumers actively look for deals on every purchase.

Loyalty programs in Australia are being reshaped by cost-of-living pressures, rising consumer expectations, and the growing influence of AI in how people discover and choose brands, according to a report by McKinsey.

Consumers increasingly expect loyalty programs to deliver immediate, easy-to-understand benefits rather than long-term point accumulation. More than half of Australians actively look for deals on every purchase, whilst six in ten say loyalty programs have changed their shopping behaviour.

Grocery programs now influence around 60% of members, whilst airline programs influence about 70%, with both seeing significant growth since 2022.

Top-performing loyalty programs are driving outsized results, with members nearly twice as likely to increase spending frequency and 79% more likely to recommend brands compared with lower-performing programs.

However, consumer expectations are also tightening. Many Australians now expect immediate, frictionless value, with 16% of non-participants saying rewards take too long to earn.

More than half of respondents now actively seek deals on every purchase, reflecting a broader shift in how value is defined. Consumers are also “trading down” in some categories whilst “splurging” on experiences such as dining and travel.

Peer influence is growing, with Australians increasingly relying on recommendations and community feedback over traditional marketing.

Subscription and hybrid loyalty models are gaining traction in this environment because they tend to offer clearer, more immediate benefits, and they are scoring 8 to 15 percentage points higher in customer satisfaction compared to traditional loyalty programs.

AI is increasingly shaping how consumers discover and choose brands, pushing companies toward real-time personalisation and predictive engagement.  Companies such as Delta Air Lines and Sephora are using AI-powered tools and machine learning to personalise customer experiences, offers, and recommendations in real time.

Brands are also increasingly integrating loyalty into broader ecosystems rather than operating in isolation. Companies such as Nike and Peloton are linking loyalty to activity, fitness engagement, and digital experiences, whilst LEGO and McDonald’s are using gamification and community participation to deepen engagement.

Meanwhile, retailers such as Tesco and Lululemon are expanding cross-partner ecosystems that allow customers to earn and redeem rewards across multiple industries, including retail, travel, wellness, and financial services.

"As AI plays a greater role in shaping how choices are surfaced and executed, loyalty is likely to increasingly depend on how well organisations remain relevant within those decision environments," the report said. "The brands set to lead the way are those that treat loyalty as a living system, powered by data, sustained by collaboration, and anchored in visible value for every member, every day."