The loyalty secret nobody wants to talk about

April 28, 2025

What I want to talk about this time is “loyalty”.

There are many, many myths and misunderstandings about brand loyalty. Too many to cover in one article, maybe it’s a future book, who knows.

But here I want to focus on loyalty programmes, and the one thing that the vendors and agencies never want to tell you.

Ultimately, the simple truth about loyalty is that it cannot be engineered.

I say this as someone who ran a promotions and loyalty agency for 10 years, and as someone who proudly worked inhouse on one of the greatest loyalty programmes in the world at the LEGO Group, but I want to share is the truth about loyalty.

Brand loyalty, as with almost everything when you are market orientated, doesn't begin on a spreadsheet. It doesn't begin on a technical solution or an expert vendor. It begins in the mind of the consumer.

Loyalty programmes as we usually know them reward you with points. They reward you with the chance to win things.

But here's the real killer, someone cannot be loyal to your brand if they don't have a net positive experience with your brand.

By which I mean if you make it difficult for them, if you try to nickel and dime them, if you're difficult to connect with when customer service is needed, you inherently cannot build in loyalty.

You can't engineer loyalty out of nothing.

Broadly, I believe that loyalty is more likely to succeed in some categories over others. So let's examine one example. Perhaps the world's greatest toy brand, which also happens to be one of the world’s most collectible brands, and somewhere I know very well: The LEGO Group.

The business has to be right for loyalty to succeed. And that means a real focus on the experience of the customer. Customer service, the retail experience, the quality of the product - all of the things that would actually make someone come back and buy from you again in the first place.

Only after you've got that in place can you engineer a programme or a platform to build a community, or to monetise that loyalty. 
You can't build it on sand.

So I'm going to talk about my old friends at LEGO and a recent experience I had with them as a customer.

We had a LEGO set at home - OK, I have a lot of LEGO sets at home, but bear with me. My son had decided, having first opened the box some time ago and not bothered completing the build, to revisit the set.

He started building it again, and found that he didn't have a sheet of stickers that were needed. What to do?

Let’s be honest, with a lot of retailers or brands, you either wouldn't bother because you expect them not to care or they would have made it difficult getting help. But Not The LEGO Group.

They have a dedicated area on their site where you tell them what's missing or what you've lost and they send it to  (and it’s almost always lost, not missing, trust me I worked there), so I did that and few days later the stickers turn up in the post.

No questions. No, ‘send your receipt’. No, ‘is this really you?’ No, ‘you have to pay delivery costs’.

You might say that there's a simple commercial fact that nobody would want that sticker if they didn't have the set it belonged to, but equally there are lots of businesses that just wouldn't entertain sending out elements on trust alone.

But The LEGO Group is not one of them.

From my time working at The LEGO Group I can truly say that the customer service and the buying experience in the LEGO brand retail stores is a thing of wonder.

I loved going into our stores and observing the retail team interact, and engage with customers.

You could see the how positive the experience was right there on the customer's faces.

As a loyalty programme we really only had to build on that, and we did build on that. It took and continues to take a lot of hard work, a lot of smart people and time, but it's why it’s one of the top loyalty programmes in the world.

Yes, it's well engineered, but it's built on real values.

OK, customers often complain that the product is too expensive, and it is not cheap. It doesn't have to be cheap. Nothing has to be cheap if it's good value, if the customer service is right, and you don't have a net negative experience.

That is the inherent value of brand. It's all about that price elasticity.

And if you're as good a brand as LEGO has been, certainly since the reinvention around Bionicles, it's completely obsessed by the consumer.

We used to regularly have voice of the consumer sessions, where marketers from all teams including loyalty would listen to phone calls and look at feedback from customers.

We were constantly looking and listening. We had teams that engaged with fans, and all of that came to feed what we were working on to make sure that we were giving people what they wanted and what they needed, what they couldn't maybe get elsewhere.

All of that helped build a really successful programme. Not all loyalty programmes do that.

So if you're considering loyalty, firstly, ask yourself ‘if the answer is loyalty what is the question?’

But also, do you have a right, have you got the hygiene factors and basic table stakes of your customers, or people purchasing from you having a net positive experience to start with?

Because if you don't, you've got an operational issue that you need to fix before you think about the tactics and loyalty.
 

Cheers

Right. The Obvious Questions Answered.

Do loyalty programmes actually work?

Yes, but only when the underlying experience is already worth being loyal to. A loyalty programme built on top of poor customer service, a frustrating product, or a brand that nickle-and-dimes its customers won't produce loyalty. It'll produce transactional behaviour — people collecting points while remaining entirely indifferent to the brand. The moment a competitor offers a better deal, they're gone. The programme is a tool for deepening loyalty that already exists. It can't engineer it out of nothing.

What's the real secret to building customer loyalty?

Make it easy to have a net positive experience. The product has to be right. The service has to be right. The buying experience has to be right. When something goes wrong, fixing it quickly and without friction is more loyalty-building than any points mechanic ever invented. Loyalty is built in the moments where the brand is tested. LEGO sending missing stickers without asking for a receipt is a more powerful loyalty intervention than a double-points weekend.

Which businesses or categories are most suited to loyalty programmes?

Those where repeat purchase is natural, where the buying experience has genuine emotional dimension, and where the brand already commands some affection or preference. Collectible, experiential, and high-involvement categories tend to work well — toys, travel, food and drink, entertainment, retail with strong community dimensions. Commoditised categories where price is the primary driver tend to produce loyalty programmes that are just discounting with extra steps.

Can small businesses run meaningful loyalty programmes?

Yes, though the most powerful loyalty mechanics available to a small business aren't programmes at all — they're relationships. Remembering a customer's preferences, acknowledging their history, responding quickly when something goes wrong, doing slightly more than expected. These things build the kind of genuine loyalty that no points card replicates. The programme formalises and scales what already works. If what already works is nothing, formalising it achieves nothing.

Why do most loyalty programmes fail to actually build loyalty?

Because they're designed to drive transaction frequency rather than genuine affinity. A programme that rewards points per purchase trains customers to optimise for points, not to develop preference for the brand. When the programme ends or a competitor offers more points, the behaviour stops. That's not loyalty — it's bribery on a longer payment schedule. The programmes that do build loyalty create community, recognition, and a sense that the brand genuinely values the customer beyond the transaction. Those things are harder to design and harder to scale, but they're what actually moves the needle.