Why retailers are moving from mass perks to precision loyalty

Marks and Spencer has dropped its Sparks delivery pass, which could feel like a tactical change. In reality, it signals something much broader about how loyalty is evolving.

Marks and Spencer’s loyalty programme is built around personalisation rather than points, using customer data to deliver tailored offers, surprise rewards and early access to products or events. Sparks has grown to over 18 million members, reflecting how central loyalty has become to M&S’s customer strategy, but also raising the stakes on ensuring the value it delivers is both meaningful and commercially sustainable.

So why the change?

For years, retailers have relied on mass, high-cost perks to drive engagement. Free delivery, blanket discounts, and convenience-led benefits became the backbone of loyalty programmes. They were easy to understand, easy to communicate, and effective at driving short-term behaviour. But they were never especially precise, and increasingly, they are proving difficult to sustain. Many loyalty programmes are really just pricing tiers rather than drivers of behavioural change – and the two things are very very different both in terms of how they are delivered, and the long-term revenue impact.

The issue is not that customers do not value these perks. It is that retailers struggle to justify the impact they have on the bottom line. Free delivery is a good example. It reduces friction, but it often subsidises behaviour that would have happened anyway. If a customer is motivated enough to make a purchase, there is a strong chance they would have paid for expedited shipping regardless. That leaves the retailer absorbing the cost without necessarily strengthening the relationship.

As margin pressure increases, those trade-offs become harder to ignore. This is why broad, transactional perks are often the first to be pulled back. They are expensive, difficult to attribute, and rarely build meaningful loyalty on their own. What they tend to create instead is a form of dependency, where engagement is driven by incentive rather than affinity.

At the same time, the role of loyalty programmes is becoming more important. Our research of over 4000 consumers shows that 85% say a loyalty programme influences their decision to make a repeat purchase. In uncertain economic conditions, that importance increases further, with 71% more likely to join a programme and 64% prioritising brands that offer one.

That combination of rising importance and rising cost – on both sides – is forcing a reset in how brands and retailers structure their programmes. Loyalty programmes becoming more deliberate with an emerging shift towards precision.

Rather than offering the same reward to every customer, retailers are using loyalty programmes to shape behaviour over time. That means moving away from one-size-fits-all perks and towards targeted and experience-led incentives that reflect how different customers engage with the brand, driven by data and customer feedback.

Tiered programmes are a key part of this shift. Instead of rewarding a single action, they encourage progression and ongoing engagement and behavioural change. Customers are incentivised to engage more frequently, spend more, or interact in different ways in order to unlock additional value. That structure creates a sense of momentum and aspiration, but it also allows brands to differentiate what they offer based on customer value.

Beauty brand Medik8 offers a strong example of this approach. Their programme is designed around long-term skincare routines rather than one-off purchases. Customers earn points not just through spending, but through behaviours such as leaving reviews or engaging with educational content. As they move through tiers, they unlock rewards that support that journey, including early access to new products and personalised recommendations that reflect their routine.

Experiential rewards are playing a much bigger role in loyalty programmes as a whole, particularly for younger consumers. Early access to sales is important to 72% of shoppers, early access to new products to 65%, and invitations to in-store events to 54%. More than half of consumers also value opportunities to engage with a brand beyond the transaction, whether that is through content, community or contributing feedback. People want to feel part of something, a sense of connection, and the more touchpoints they have to do this, the more that emotional and behavioural reinforcement plays out.

This matters commercially because these rewards often carry a lower cost to deliver while creating a stronger sense of connection. They move loyalty away from pure price sensitivity and towards something more embedded in the customer experience. It also reflects how people actually shop. 79% of consumers say they want to be able to use loyalty programmes in-store, while 74% value a consistent experience across online and offline channels. That creates an opportunity to design rewards that bridge those environments, from member-only in-store events to early access tied to physical retail moments. We’ve become so used to e-commerce that it’s easy to forget that just 30% of shopping is online.

The brands performing best in this space are already building programmes that reflect this balance.

The INKEY List is another strong example. Their loyalty programme focuses on education, engagement and product discovery alongside purchase. Members are rewarded for behaviours such as completing skincare quizzes and profiles, learning about skincare routines, leaving reviews, or interacting with content, not just spending. In return, they receive early access to launches, tailored recommendations and rewards that reflect their relationship with the brand.

The result is that loyalty drives 41% of peak period revenue, with engaged members spending significantly more. What sits underneath all of these examples is data, but used in a more intentional way. Loyalty programmes are one of the few places where customers actively choose to share information about themselves. That includes not just purchase history, but preferences, interests and intent.

There is a clear appetite for this value exchange. 78% of consumers say they would complete a quiz or profile in return for loyalty points. But there is also a gap in how well brands are using that data. Only 61% of shoppers feel they receive a personalised experience as a loyalty member, and just 59% say loyalty emails feel personalised. Brands and retailers need to be doing more.

This is where precision becomes tangible. The next phase of loyalty will be defined by how well brands use this data to create relevance. That means segmenting customers based on lifetime value and behaviour, tailoring communications at an individual level, and designing rewards that reflect what different groups actually value. Undertaking focus groups to really get to the why behind the what. Email, SMS and app experiences are becoming more personalised, but there is still significant room to improve.

There is also a risk in this transition. Removing high-visibility perks without replacing the perceived value they offered can expose any weaknesses in the underlying strength of the customer relationship. If engagement has been driven primarily by discounts or delivery, taking those away can lead to immediate drop-off.

The brands navigating this well are using their loyalty programmes as a feedback loop. They are testing different rewards, gathering insight from their most engaged customers, and iterating based on what drives behaviour. They use sales data and data given willingly because they are trusted. Loyalty becomes less of a fixed proposition and more of an evolving system. The era of mass perks is giving way to something more targeted, more measurable and ultimately more valuable.

Precision loyalty is not about removing value. It is about redefining it, in a way that works for both the customer and the business.