Most of the world’s great consumer-facing brands have a loyalty program to encourage customer retention, reward desired behavior, and add value to the brand-customer relationship. But while we instantly associate giant companies with their loyalty initiatives—Target and Target Circle, Walmart and Walmart+, to use two highly visible examples—it’s worth remembering that loyalty programs are massive enterprises in their own right. And for massive enterprises, transformation is always a challenge.
Given the complexity of modern large loyalty programs, which technological capabilities are necessary to effect digital transformation? What does the scale of that effort look like? And how can your technology partners catalyze that process?
Executing a digital transformation for an established loyalty program is like steering an ocean liner—it requires foresight, patience, and careful coordination of many moving parts. The challenges are formidable: organizational inertia creates resistance to change; cost concerns can delay necessary upgrades; securing institutional buy-in demands political savvy; custom requirements often conflict with standardized solutions; and ROI concerns can keep leadership hesitant.
The challenges multiply for non-travel brands contemplating the introduction of direct-purchase travel or travel rewards. Travel is a complex vertical with specialized technology requirements, inventory management challenges, and customer service expectations that differ dramatically from retail or service industry norms.
Despite these obstacles, forward-thinking programs recognize that transformation isn't optional; it's essential for maintaining competitiveness and meeting customer expectations. The question isn't whether your program needs to transform but how to navigate the process effectively.
Successful transformation requires an embrace of flexible technology. Large loyalty programs operate in dynamic environments where market conditions, competitive pressures, and customer expectations constantly shift. Technology investments must prioritize configurability and flexibility to accommodate changes without requiring extensive redevelopment.
According to our Tipping Point for Loyalty 2025 Report Series, 43% of all North American loyalty programs with more than 50 million members say "more configurable business rules" is the area of their program technology that needs the most improvement, compared to the 29% survey average. This gap highlights how acutely large programs feel the need for greater technological adaptability.
Configurable technology empowers your program to adapt its UX for personalized, branded customer journeys without waiting for developer resources. It enables quick launches of new content, promotions, and features, allowing programs to respond nimbly to market opportunities. Perhaps most importantly, flexible platforms accommodate complex business rules and custom requirements—essential for large programs with unique value propositions and member segments.
For any loyalty program manager considering new technology, AI will undoubtedly figure into their plans. How you deploy this tech strategically to enhance program operations and member experiences will determine whether AI accelerates your transformation effectively.
AI and machine learning are essential for personalizing loyalty program interactions and delivering dynamic content, especially for programs with over 50 or 100 million members. From intelligent recommendations to predictive analytics that anticipate member needs, AI can help your program deliver relevance at scale.
Interestingly, only 12% of the largest U.S. loyalty programs captured in our Tipping Point report say AI capabilities are where their platforms need the most improvement, compared to 21% of all U.S. programs. This suggests that larger programs may be further along in their AI implementation journey. However, 33% plan to invest in AI and machine learning within 6-12 months, compared to the 30% survey average, indicating a continued commitment to advancing these capabilities.
Finding optimal ways to integrate AI into a loyalty strategy is challenging, with 45% of U.S. businesses identifying this as a top challenge. Meanwhile, the Tipping Point also shows that consumer adoption is on the upswing: 47% of American consumers have used AI to plan travel within their loyalty program, including 64% of households with children. Their primary reasons for using AI? Saving money and accessing customer support.
UX has emerged as a critical differentiator for loyalty programs, particularly when it comes to high-value redemptions or transactions like booking travel. Friction in these experiences can undermine even the most generous reward structures and diminish how your members perceive program value.
This is especially evident among large loyalty programs, 44% of which said their number one travel-related loyalty challenge is outdated UX on travel reward sites or microsites. This statistic underscores how UX challenges can overshadow other program aspects, potentially negating the value of even the most generous reward structures.
Modern travel and loyalty platforms prioritize intuitive interfaces, streamlined booking processes, and mobile-optimized experiences that meet today's consumer expectations. These platforms recognize that every interaction shapes members’ perception of program value, making UX improvement a strategic imperative rather than a cosmetic enhancement.
UX addresses function, while the broader member experience includes managing expectations around reward choice, booking options, and redemption quality. Technology investments aimed at digital transformation should prioritize capabilities that highlight your program's value proposition and expand the variety of choices available to your members.
This priority is reflected in program goals, with “building a more robust earning and redemption portfolio” (23%) emerging as the top objective for the largest programs. This focus recognizes that modern consumers expect both breadth of choice and depth of value from their loyalty memberships.
Successful transformation initiatives balance technological improvements with strategic enhancements to reward offerings, creating compelling experiences that strengthen member relationships and drive engagement.
Loyalty programs embarking on digital transformation face a fundamental choice: build a new solution in-house or partner with an established provider. While building in-house may promise customization, it typically involves significant costs, extended timelines, and diverting resources from core business operations.
Partnering offers a more cost-effective and efficient alternative, providing access to proven tools, scalable technology, and specialized expertise. This approach is particularly valuable when introducing travel purchasing and booking capabilities for non-travel brands, where domain knowledge and established supplier relationships are critical success factors.
Larger U.S. programs appear to recognize these trade-offs, with 25% of those captured in our survey reporting that they created their loyalty strategy but outsourced the technical development of the platform to a vendor, compared to the 12% survey average. This mixed approach leverages internal strategic knowledge while accessing external technical expertise—potentially offering the best of both worlds.
For large loyalty programs navigating the complexities of digital transformation, partnering with technology providers like iSeatz—offering flexibility, AI-powered personalization, thoughtful UX design, and diverse reward inventory—can accelerate progress and deliver superior outcomes.
iSeatz helps loyalty programs advance their digital strategies with the right technology and expertise. Learn how we can support your loyalty program’s transformation and digital journey today.
Want more news and insights from iSeatz? Sign up for our newsletter.
To learn more about our work with travel and financial services brands and their loyalty programs, contact us here.