Loyalty & Rewards

Here’s a number that should confuse you: 71% of Australian consumers say they’re less loyal to brands than they were two years ago. And yet, loyalty program membership just hit a five-year high.

That’s not a contradiction — it’s the most important shift in Australian retail right now. And the brands that understand the difference between brand loyalty and program loyalty are the ones pulling ahead.

The Paradox Every Brand Needs to Understand

M+C Saatchi Group research confirmed what most marketing managers already suspect: Australians are shopping around more than ever. They’re comparing prices online, visiting multiple stores, driving further for discounts, and switching brands without a second thought.

But here’s what the headlines miss. At the same time brand loyalty is collapsing, loyalty program engagement is surging. More than 86% of Australians belong to at least one loyalty program, and active participation is at a five-year high. Australia’s loyalty market is projected to grow at 13% CAGR through 2029, reaching US$1.96 billion.

What’s happening? The cost-of-living crisis didn’t kill loyalty. It redefined it. When household budgets are under pressure — and living costs rose between 2.6% and 5.2% in the year to March 2026, according to ABS data — consumers don’t abandon loyalty programs. They lean into them harder. The program becomes a financial tool, not a nice-to-have perk.

The distinction matters enormously for how you design your program.

Why Points Alone Won’t Save You

Here’s where most programs get it wrong. They were designed for a different economy — one where consumers would happily accumulate points over months for an aspirational reward like flights or electronics. That patience has evaporated.

Research shows 45% of Australians now use reward points specifically to help reduce cost-of-living stress. They’re not saving for a weekend away. They’re trying to shave dollars off this week’s grocery bill.

This shift has consequences. A program that asks a customer to spend $2,000 to earn $10 back — the standard earn-and-burn rate — needs to prove that $10 matters right now, not in three months. The brands winning this game have figured out that perceived value beats actual value, and immediacy beats magnitude.

Woolworths understood this when it launched Everyday Rewards Extras at $7 per month. The deal is simple: 10% off one shop each month, plus double points. For a household spending $200 per week on groceries, that’s roughly $20 saved against a $7 cost. The maths is obvious and immediate. No mental arithmetic about point-to-dollar conversion ratios. No waiting. Just a discount you can see on the receipt.

That’s what a cost-of-living loyalty program looks like.

What Does a Cost-of-Living Loyalty Program Actually Look Like?

If your current program was designed before 2022, it’s probably built on assumptions that no longer hold. Here’s what works when customers are counting every dollar.

Instant Savings Over Deferred Rewards

The single biggest shift in loyalty design is the move from “earn now, redeem later” to “save now.” This doesn’t mean abandoning points — it means supplementing them with immediate, visible savings. Fuel discounts at the bowser. Dollars off at checkout. Personalised coupons that arrive before the shopping trip, not after.

Flybuys’ membership grew 4.4% in 2025, with swipe rates up 6%. That growth wasn’t driven by the promise of future rewards. It was driven by the weekly offers, the fuel discounts, and the partner deals that put cash back in members’ pockets immediately.

Personalisation That Proves You Know the Customer

Generic “10% off everything” offers feel generous but wasteful. Cost-conscious consumers respond better to personalised offers on products they actually buy. When a program surfaces a $3 discount on the exact brand of coffee a customer buys every fortnight, that feels like the program is working for them specifically.

This is where data platforms like Trudy become critical. Predictive analytics can identify not just what a customer bought, but when they’re likely to need it again, what they’d consider switching to, and what discount threshold will keep them loyal. The brands with this capability are turning their loyalty programs into personalised savings engines — and seeing the retention numbers to prove it.

Tiered Value That Rewards Frequency, Not Just Spend

Traditional tiered programs reward big spenders. In a cost-of-living environment, that’s backwards. Your most valuable customers might be the ones visiting three times a week with a $30 basket, not the ones doing a single $300 shop monthly.

Redesigning tiers around visit frequency or engagement — rather than total spend — signals to cost-conscious customers that their consistent business is valued. It also drives the habitual behaviour that makes switching harder.

The Retention Equation Changes Under Pressure

Every marketer knows the old line about retention being cheaper than acquisition. In cost-of-living Australia, the maths has shifted even further.

When 60% of APAC consumers say they’ll switch brands for better value — and 72% of Australian shoppers now prefer store brands — acquisition costs are climbing because everyone is chasing the same deal-seeking consumers. Meanwhile, a well-designed loyalty program that delivers genuine financial utility creates a switching cost that price alone can’t overcome.

Think about it from the consumer’s perspective. If switching supermarkets means losing three months of earned benefits, a personalised offer feed that actually saves money each week, and a fuel discount that knocks 10 cents per litre off the family car — the competitor needs to offer more than just cheaper milk.

That’s the strategic value of loyalty in a downturn. It raises the switching cost without raising your prices.

The Brands Getting It Wrong

Two common mistakes stand out.

First, cutting loyalty budgets during tough economic periods. This is spectacularly backwards. The moment your competitors are tightening their programs is exactly when generous, well-designed loyalty creates the most differentiation. Industry data consistently shows that loyalty program members spend 12–18% more than non-members. Cutting the program saves a little on rewards liability. It costs far more in lost frequency and basket size.

Second, clinging to aspirational rewards when customers need practical value. If your top-tier reward is a spa voucher and your members are worried about electricity bills, you’ve lost the room. The best programs right now offer choice — let members convert points to grocery discounts, bill payments, or gift cards for everyday retailers. Flexibility signals that you understand what your customers are actually going through.

The Opportunity Is Now

Australian consumers haven’t stopped being loyal. They’ve stopped being loyal for free. They want programs that work as hard as they do — that deliver visible, immediate, financial value every time they swipe.

The brands that redesign their loyalty mechanics around this reality — instant savings, personalised offers, flexible redemption — won’t just retain customers through the cost-of-living crunch. They’ll build habits that persist long after household budgets recover.

The brands winning in cost-of-living Australia aren’t the cheapest. They’re the ones that make customers feel financially clever for staying loyal.

If your loyalty program still relies on aspirational rewards and deferred gratification, it’s time for a rethink. Trevor Services works with brands across Australia to design promotional and loyalty mechanics that drive genuine retention — not just membership numbers. Get in touch to talk about what a cost-of-living loyalty strategy looks like for your brand.

The $1.13 Billion Market You’re Underestimating

Flybuys has 8.8 million active members. If your brand just spent eighteen months and a few hundred thousand dollars building a proprietary loyalty app, you probably have about 40,000. You’re not competing — you’re whispering into a hurricane.

This is the uncomfortable reality facing Australian marketing teams in 2026: the loyalty landscape is dominated by coalition programs that operate at a scale individual brands simply cannot match. The question is no longer whether coalition loyalty works. It’s whether your brand can afford to keep pretending it doesn’t need one.

Australia’s loyalty market hit US$1.13 billion in 2026, growing at 13.5% annually according to the latest Consumer Loyalty Databook. By 2029, it’s projected to reach US$1.96 billion. Those aren’t niche numbers. That’s a market bigger than most Australian brands’ entire marketing budgets combined.

What’s driving the growth isn’t just more programs — it’s the consolidation of programs into larger ecosystems. Flybuys, jointly owned by Coles Group and Wesfarmers, now spans supermarkets, hardware, office supplies, fashion, and fuel. Woolworths’ Everyday Rewards is embedding itself into everything from insurance to mobile plans. Over 86% of Australian consumers belong to at least one loyalty program, and most of them belong to one of these two giants.

If you’re a mid-market brand trying to build loyalty from scratch, you’re not competing against a program. You’re competing against an entire consumer operating system. That’s not a technology problem. It’s a physics problem.

What Is a Coalition Loyalty Program?

A coalition loyalty program is a shared rewards ecosystem where multiple brands — often across different categories — allow customers to earn and redeem points through a single platform. Instead of each brand building and maintaining its own loyalty infrastructure, they pool resources to create something bigger than any individual participant could afford alone.

Flybuys is the textbook Australian example. A member earning points at Coles can redeem them at Kmart. Someone shopping at Bunnings accumulates the same currency they spend at Target. The program creates a closed loop that keeps customers circulating within the coalition’s orbit — and away from competitors outside it.

The model isn’t new — Flybuys launched in 1994. What’s new is the velocity at which these ecosystems are expanding. In April 2026, Wesfarmers launched an enhanced OnePass offer giving members 5x Flybuys points per dollar spent across Kmart, Target, Bunnings, and Officeworks, plus free delivery on eligible online orders. That’s not a loyalty program anymore. That’s an entire retail operating system with loyalty baked into its foundation.

Why Building Your Own Program Probably Costs More Than You Think

Here’s the maths most marketing teams don’t do honestly.

A standalone loyalty platform — the technology stack alone — costs somewhere between $200,000 and $500,000 AUD to build, depending on how custom you go. Then add the customer acquisition cost: getting someone to download yet another app, create yet another account, remember yet another password. Your cost per enrolled member will land somewhere between $15 and $40 AUD, and roughly 60% of them will never make a second transaction through the program.

Meanwhile, a coalition program provides the same technology infrastructure for a fraction of the cost because it’s shared across multiple brands. More importantly, you inherit an active member base. You’re not starting from zero — you’re plugging into millions of existing, spending-active consumers who are already in the habit of scanning, tapping, and earning.

The brands that insist on building their own loyalty infrastructure from scratch in 2026 are the same ones that insisted on building their own CRM in 2010. They’ll get there eventually, but they’ll spend three times as much and arrive five years late.

The Build, Buy, or Join Framework

Not every brand should rush to join a coalition. The decision depends on three factors: your category position, your data maturity, and your customer purchase frequency. Here’s a practical framework for making the call.

When Building Your Own Makes Sense

Proprietary programs work when you have high purchase frequency — multiple transactions per month — when your brand is the primary relationship in the customer’s life, and when you have the data infrastructure to actually use the insights you’ll generate. Woolworths can justify Everyday Rewards because people shop there weekly. Your artisanal sauce brand cannot.

Building also makes sense in categories with high emotional involvement — luxury, wellness, premium fashion — where the loyalty experience is itself a brand expression. A coalition can’t deliver that kind of bespoke, curated engagement. If your brand story is part of the value proposition, own it end to end.

When Joining a Coalition Is the Smarter Play

Join when your purchase frequency is moderate (monthly or less), when you’re competing against bigger players with established programs, when your marketing team is lean and can’t support a dedicated loyalty operation, or when you want cross-category customer insights you’d never access on your own.

Most Australian brands — and this is the part people don’t want to hear — fall into the “join” category. If you’re not a top-three player in your category with a purchase cycle under 30 days, the economics of building from scratch rarely stack up. The sunk cost of a failed proprietary program isn’t just the technology spend. It’s the eighteen months of opportunity cost while your competitors were acquiring members through an existing ecosystem.

The Third Option: Embedded Payment Loyalty

There’s a growing middle ground reshaping the landscape: embedded loyalty through payment systems. Commonwealth Bank’s CommBank Awards program integrates rewards into everyday card transactions without requiring any additional consumer action. High card penetration rates and routine spending on essentials like groceries and fuel make payment systems a natural trigger for loyalty engagement.

This model is particularly relevant for brands that partner with financial institutions rather than retail coalitions. The loyalty currency flows through spending behaviour rather than deliberate program participation — which means engagement rates can dramatically outperform traditional opt-in models.

How Does Cross-Category Data Change the Game?

Here’s where coalition programs deliver value that no proprietary program can match — and it’s the advantage most brand managers chronically underestimate.

When your brand participates in a coalition, you don’t just see your own transaction data. You see the broader spending patterns of shared members across categories. You learn that your best customers also over-index on home renovation spending, or that your highest-value segment shops for premium pet food at a partner brand. That insight reshapes everything from media targeting to product development.

This cross-category behavioural data is gold for audience building, campaign attribution, and strategic planning. It’s the kind of insight you’d need to spend six figures on market research to approximate — and it arrives passively, in real time, as a byproduct of program participation. Trevor Services sees this pattern repeatedly when building analytics dashboards for loyalty programs: the brands with access to coalition-level data make faster, more confident decisions about where to invest their next marketing dollar. Platforms like Trudy can surface these cross-category patterns automatically, turning raw transaction data into segments you can act on tomorrow.

The Coalition Risk Nobody Talks About

Coalition programs aren’t without risk, and any honest assessment needs to address it directly: you don’t own the customer relationship.

When Plenti — the US coalition loyalty program backed by American Express — shut down in 2018, partner brands were left scrambling. Members who’d accumulated points across multiple retailers suddenly had nowhere to redeem them. The program collapsed partly because anchor brands like Macy’s decided they could generate more value going solo.

In Australia, the risk is somewhat mitigated by the dominant duopoly structure. Flybuys and Everyday Rewards are backed by Coles/Wesfarmers and Woolworths respectively — companies with multi-decade commitments to their loyalty ecosystems. But smaller coalitions or emerging programs carry genuine uncertainty.

The practical mitigation is straightforward: never make a coalition your only loyalty strategy. Use it as your reach and acquisition engine, but maintain your own first-party data layer and direct communication channels. The coalition gets customers in the door. Your CRM keeps them coming back. That combination — coalition scale plus proprietary depth — is where the real competitive advantage lives.

Where Australian Loyalty Is Heading

The next evolution isn’t bigger coalitions — it’s smarter ones. The programs that will win over the next three years are those integrating real-time personalisation, predictive analytics, and payment-embedded rewards into a single experience that feels invisible to the consumer.

For most Australian brands, the strategic question in 2026 isn’t “should we have a loyalty program?” It’s “which ecosystem gives us the best combination of reach, data, and cost efficiency?” The answer, more often than not, points toward coalition — or at minimum, a hybrid model that borrows coalition scale while maintaining proprietary intimacy.

The brands still debating whether to build their own from scratch are solving yesterday’s problem. The market has already moved on.

Evaluating your loyalty strategy? Trevor Services helps Australian brands design, launch, and optimise loyalty and rewards programs — whether proprietary, coalition, or hybrid. Get in touch.

Loyalty programs have long been a cornerstone of customer retention, but the old earn-and-burn model is losing its edge. Australian consumers now expect brands to know them, anticipate their needs, and deliver rewards that feel genuinely relevant. The catalyst making this possible at scale? Artificial intelligence.

In this article, we explore how AI-driven personalisation is reshaping loyalty programs across Australian retail, hospitality, and FMCG sectors, and what marketing leaders need to do to keep pace in 2026.

What Is AI-Driven Loyalty Personalisation?

AI-driven loyalty personalisation refers to the use of machine learning, predictive analytics, and real-time data processing to tailor every aspect of a loyalty program to individual members. Rather than offering the same catalogue of rewards to every customer, AI enables brands to personalise the products recommended, the rewards offered, and even the actions required to earn them.

This goes well beyond inserting a first name into an email. True AI personalisation analyses purchase history, browsing behaviour, location data, and engagement patterns to deliver offers that resonate with each customer’s preferences and habits. The result is a loyalty experience that feels curated rather than generic.

Why Personalisation Has Become Non-Negotiable

Consumer expectations have shifted dramatically. Research shows that around three-quarters of shoppers now expect personalised experiences from the brands they engage with, while 60 per cent report frustration when offers feel irrelevant to them. For loyalty program operators, this means a one-size-fits-all approach is no longer just suboptimal; it actively drives disengagement.

The commercial case is equally compelling. Companies implementing AI-powered retention strategies report up to a 30 per cent decrease in churn rates and a 50 per cent increase in customer lifetime value. Early adopters of AI in loyalty contexts are seeing 41 per cent better retention metrics than those yet to invest, according to 2026 industry benchmarks.

For Australian brands competing in increasingly crowded markets, these numbers represent a significant competitive advantage that cannot be ignored.

How AI Personalisation Works in Practice

Understanding the mechanics helps demystify the technology. Here are the core ways AI transforms loyalty program delivery.

Predictive Offer Targeting

Rather than blasting the same promotion to every member, AI models analyse individual purchasing patterns to predict which offers will drive action. A customer who consistently buys premium coffee beans receives a targeted reward for a new single-origin blend, while a price-sensitive shopper gets a compelling discount on their regular purchase. The offer, the reward value, and the earning mechanic are all tailored.

Real-Time Engagement

AI enables what loyalty experts call “in-the-moment” experiences. As a member browses an app or walks into a store, the system can serve contextually relevant offers in real time. This shift from batch-and-blast to real-time responsiveness creates a loyalty experience that feels dynamic and attentive rather than static and predictable.

Churn Prediction and Prevention

Perhaps the most valuable application is identifying members at risk of lapsing before they disengage. AI models can detect subtle behavioural signals, such as declining purchase frequency, reduced email engagement, or smaller basket sizes, and trigger targeted re-engagement campaigns automatically. Platforms like Trudy from Trevor Services use predictive intelligence to surface these at-risk segments, enabling marketing teams to intervene with precision rather than guesswork.

Dynamic Reward Optimisation

AI continuously tests and optimises reward structures based on member response data. Instead of relying on quarterly reviews and manual adjustments, the system learns which reward types, values, and redemption mechanics drive the strongest response from different customer segments, then adjusts accordingly.

The Shift from Transactional to Relational Loyalty

One of the most significant trends in 2026 is the move away from purely transactional loyalty models toward relational ones. Traditional programs focused almost exclusively on purchase frequency: spend more, earn more points, redeem for discounts. While straightforward, this approach creates little genuine brand affinity.

AI-powered personalisation enables a fundamentally different relationship. Programs can now recognise and reward a broader range of engagement behaviours, from writing reviews and referring friends to attending events and engaging with branded content. The program becomes less about transactions and more about building an ongoing relationship with the brand.

Leading programs in the Asia-Pacific region are delivering seamless, end-to-end customer journeys across digital, in-store, and partner ecosystems while creating genuine emotional engagement. The top-performing programs achieve 7.2 times return on investment through increased purchase frequency, larger basket sizes, and reduced churn.

What Australian Brands Should Prioritise

For marketing managers and heads of loyalty looking to implement or upgrade AI-driven personalisation, several priorities stand out.

Invest in First-Party Data Infrastructure

AI is only as good as the data it learns from. Brands need robust systems for collecting, unifying, and activating first-party customer data across all touchpoints. This means investing in customer data platforms (CDPs) that consolidate online and offline interactions into a single member profile. Without clean, comprehensive data, even the most sophisticated AI will underperform.

Start with High-Impact Use Cases

Rather than attempting to overhaul everything at once, focus on the personalisation use cases that deliver the fastest return. Churn prediction, targeted offer optimisation, and personalised onboarding journeys are typically the highest-impact starting points. Trevor Services works with brands to identify these quick wins and build momentum before scaling to more advanced applications.

Balance Personalisation with Privacy

Australian consumers are increasingly conscious of how their data is used. The most successful programs are transparent about data collection practices and give members meaningful control over their preferences. Personalisation should feel helpful, not intrusive. Brands that get this balance right build trust alongside engagement.

Measure What Matters

Move beyond simple enrolment numbers and point redemption rates. AI-driven programs should be measured on customer lifetime value, engagement depth, churn reduction, and incremental revenue per member. Industry data shows that 92.7 per cent of loyalty program owners report positive returns, with an average ROI of 5.3 times, but only when they track the right metrics and optimise accordingly.

The Role of Generative AI in Loyalty

Looking ahead, generative AI is opening new frontiers for loyalty personalisation. Enterprise adoption of generative AI is expected to exceed 80 per cent by 2026, enabling capabilities like automated content personalisation, conversational loyalty interactions, and hyper-personalised member communications at scale.

For loyalty programs, this means the ability to generate personalised reward descriptions, create tailored member communications, and even design individualised challenges and gamification elements, all without manual intervention. Younger demographics are particularly receptive: 55 per cent of Gen Z and 53 per cent of Millennials say they are more likely to join a loyalty program that uses AI to enhance their experience.

Getting Started with AI Loyalty Personalisation

The gap between brands using AI in their loyalty programs and those relying on traditional approaches is widening rapidly. The technology is no longer experimental; it is delivering measurable, proven results across Australian retail, hospitality, and FMCG sectors.

The key is to start with a clear strategy, invest in the right data foundations, and partner with specialists who understand both the technology and the Australian market. Whether you are launching a new program or evolving an existing one, AI-driven personalisation is the capability that will define competitive loyalty programs in the years ahead.

Want to explore how AI-powered personalisation can transform your loyalty program? Talk to the Trevor Services team about building a smarter, more responsive member experience.

Related Reading

More insights from Trevor Services:

• Real Time Data and Predictive Analytics
• Retail Media Networks in Australia: What Brands Need to Know
• Omnichannel Engagement: What Australian Brands Need
• 7 Benefits of Real Time Data for Campaigns

Ready to build a smarter loyalty program? Talk to Trevor Services about how our Trudy platform delivers AI-powered personalisation and real-time engagement.