AI Loyalty Programs: How AI Is Changing Customer Loyalty

Points and discounts are losing their sparkle. In SAP’s Customer Loyalty Index 2026, rewards-based loyalty fell to 38% of consumers, the first time in six years of the research that it has dropped below 40%. What grabs (and holds) people’s attention now is being recognized as an individual: 60% say they’re more loyal to brands that make them feel personally valued.

Let’s say Lena and Marcus belong to the same sportswear loyalty program. Lena buys new running shoes every spring and has a stack of points she’s never spent. Marcus hasn’t bought anything since the summer, but he opens every training guide you send him.

A traditional loyalty program would probably offer them both the same double-points weekend. An AI loyalty program would have enough personalized information about Lena to show her the new season’s shoes she can get with the points she already has. For Marcus, it would offer him early access to the trail range he’s been reading about.

This guide is for the marketing, CRM and loyalty teams who run programs like Lena and Marcus’s. It covers what AI can potentially add to the program you already have, seven ways to use AI in your loyalty program, and the ways in which loyalty members still want a choice in what they’re being offered.

An AI loyalty program uses AI to choose which reward, offer or message each member gets, and when, based on their purchases, engagement and preferences. AI works within the program you already run, whether it’s points-based, tiered, cashback, experiential or a paid membership.

The big boon of AI is that it takes over the menial matching work that rules and manual segments can’t keep up with: identifying members who are drifting away, choosing rewards each member will use and selecting the channel they’ll respond to. Your team still sets the program’s rules, budget and tone.

Rewards carry less weight

Lena gets a “double points this weekend” email from her sportswear brand most months, and she stopped opening them a while ago. Yet another chance to earn points is giving her little reason to engage when she’s got a big stack of them piling up in her account.

From 2021 to 2025, Incentivized Loyalty stayed between 45% and 56% of consumers, then dropped to 38% in 2026. SAP’s research puts it plainly: “Incentivized loyalty continues to lose ground.” Michelle Grant, Global Head of Consumer Industries Go-To-Market at SAP, explains why: “Discounts can influence behavior, but they don’t create lasting loyalty.”

Fewer consumers identify using a loyalty card or scheme as a way they show loyalty: 36%, down from 41% in 2025.

Lena hasn’t given up on the program. She’d still happily spend those points on the right pair of shoes. So, for the team running her program, the task is to connect her existing balance with something she wants to buy.

Members expect personal value

Ask Lena and Marcus what they want from the program and you’ll get two different answers. Lena wants a good price on the shoes she buys every year anyway. Marcus would trade every bonus point for a first look at a new range.

SAP’s research says that “in return for their loyalty, customers expect more than discounts and rewards,” and lists several expectations. These can be grouped into three kinds of value:

• Financial value: better deals (46%) and personalized rewards or cashback (37%)
• Service value: great customer service (43%), priority delivery and free returns (30%), and early access to products and offers (28%)
• Experience value: seamless experiences across interactions (25%) and more personalized experiences (23%)

There isn’t a single reward that covers all three types of value. For example, priority delivery means nothing to a member hunting for deals, and double points mean nothing to one who wants early access.

Personalizing the program requires marketers to choose among those benefits for each member. So, as membership grows, the team has more purchase histories, preferences and responses to review before it can make those choices.

Friction drives members away

Picture a member who finally decides to spend their points, then finds the reward they wanted can’t be redeemed online. Some won’t try again. In SAP’s research, 32% of consumers say they switched brands because loyalty rewards were difficult to use, and 30% say irresponsible data use breaks their loyalty.

Those frustrations leave traces in your data: unredeemed balances, ignored offers and members who browse but stop buying. The good news is that AI can pick up those patterns early, while there’s still time to fix them.

1. Personalized rewards

With personalized rewards, each member gets the reward they’re most likely to value and use, chosen from what they buy, browse and redeem. The program does the work of matching members to rewards instead of leaving everyone to search the same catalog. For example:

• When Lena opens the app, she sees the new season’s running shoes priced in points she already has.
• The member after her sees free returns.
• The one after that gets cashback on the category they buy most often.

Since different types of customers seek those three different types of value: financial, service and experience, personalized rewards are usually the first place that some under-the-hood investing in AI can pay off. Personalization in SAP Engagement Cloud enriches customer data and segments with AI-driven insights and personalizes rewards and messages across all your channels.

2. Predictive retention

A member who bought every month last year has bought twice since January and hasn’t redeemed anything. Nobody on your team has noticed yet. Predictive retention scores each member on how likely they are to lapse, so you can make them an offer they (hopefully) can’t refuse before they leave.

Predictive analytics looks for the drops in purchase frequency, engagement and redemption that tend to come before churn. It then moves at-risk members into a retention journey with an offer that gives them a reason to come back.

Australian youth fashion retailer City Beach shifted to a predictive marketing approach with SAP Engagement Cloud. Its published result: “+48% win back from defecting customers within 90 days with SAP Engagement Cloud AI.”

In a loyalty program, timing is what makes this work: the retention offer reaches a member who still has points to spend and a reason to return. The offer connects that unused balance with a reward, giving the member a reason to use the program again.

3. Dynamic segmentation

On paper, Marcus looks lapsed. He hasn’t bought since the summer, and a Gold tier list refreshed once a quarter would drop him at the next refresh. But he reads every training guide you send and a static segment completely misses that continuing interest.

Dynamic segmentation, powered by AI, updates segments automatically as members act, so each segment reflects what’s happening now.

Content engagement like Marcus’s is one of the signals worth segmenting on: 21% of consumers now show their loyalty by engaging with brand content, up from 17% in 2025. SAP’s advice is to “use AI to identify emerging signals of loyalty beyond purchases, such as content engagement, subscription interest, and channel preferences.”

So instead of a win-back discount, Marcus gets an early-access invitation to the trail range he’s been reading about. A member who’s gone quiet everywhere, however, gets a different message entirely.

4. Product recommendations

Members show you what interests them long before they buy. Every trail-running guide Marcus reads and every trail category he browses is a hint about his next purchase. AI turns browsing and purchase history into product recommendations in each member’s emails, app and site visits, so the next offer features products they already want.

Mizuno uses category browsing to shape its email:

“SAP Engagement Cloud has helped enhance our ability to target users browsing our site. When they go to different categories, we know what they’re interested in, and we can personalize each email to those consumers with the category-based targeting that SAP Engagement Cloud offers.”
– Lisa Fair, Growth Marketing Specialist, Mizuno

In a loyalty program, the same signal can decide which bonus-points products or member previews each person sees.

5. Automated engagement

Lena’s points are due to expire at the end of the month. That loyalty milestone can trigger a reminder showing the shoes she could get before the points lapse.

A tier upgrade or a membership coming up for renewal creates another reason to contact a member. In SAP Engagement Cloud, intelligent automated workflows activate based on real-time business events, “such as orders, inventory, service tickets, and loyalty milestones.” These events trigger messages through marketing automation without anyone scheduling them one by one.

Village Roadshow Theme Parks, the group behind Sea World and Wet’n’Wild on Australia’s Gold Coast, emails members whose membership is expiring. Its success story reports a 20% renewal rate for those “membership expiring” emails.

CHRIST, Germany’s largest jewelry retailer, uses Mobile Wallet as another channel for its program:

“[With Mobile Wallet] I can send notifications to a lot of customers, it’s essentially a new channel we can use. It’s very beneficial, especially for our loyalty program.”
– Melanie Kordel, CRM Team Lead, CHRIST

6. Loyalty assistants

At 10 p.m., Marcus wants to know whether his points cover the new trail shoes. He doesn’t want to dig through an account page or wait for customer service to open.

An AI assistant can answer the questions members ask most often, such as how many points they have, what they can redeem and when their tier renews. In SAP’s research, 31% of consumers say interactions with AI assistants make them more loyal to a brand.

Consumers also know what they want an assistant to remember: 32% say past purchases and order history, and 29% say loyalty points and rewards. An assistant that knows Marcus’s balance and history can suggest a redemption that fits, so he doesn’t have to look it up.

7. Real-time experiences

Lena moves up to Gold with a Saturday purchase. When she visits the site that evening, the web channel already shows her new benefits.

Real-time AI responds to what a member is doing right now. When an order ships or a service ticket closes, the next message can take that into account.

SAP Engagement Cloud works natively with SAP Commerce Cloud, Service Cloud and core SAP systems, so “every interaction is tied directly to what’s happening in the business.” That stops a program from sending a bonus-points offer to a member whose last order still hasn’t arrived.

The app suggests that Lena put her points toward the new running shoes. She can confirm, pick a different pair or save the points for later, and no points leave her account until she decides they do.

This gives AI the work of finding a suitable reward while leaving Lena in charge of spending her points. In the Customer Loyalty Index 2026, 60% of consumers want shared control with AI, 20% want full human control, 16% want AI to lead with oversight and only 4% want it fully autonomous.

Consumers want convenience and the ability to intervene: 56% want to be able to reverse AI decisions when needed, and 50% would rather a brand “just gets it right” without needing to engage. For a loyalty program, that means automating routine work while making consequential decisions easy to review.

Apply shared control to three parts of the program:

• Redemption: AI suggests the best use of a member’s points, and the member confirms before anything is spent, as Lena does.
• Preference updates: members can see and change the interests, categories and contact frequency the program has inferred about them.
• Channel choice: members decide where they hear from you, and AI picks the timing within those choices.

Consumers say these things build their trust in AI: human support if something goes wrong (42%), the ability to review or override decisions (36%), data privacy and security assurances (35%), and clear explanations (31%). For a member receiving an AI-chosen reward, the practical questions are why it was chosen, how to change it and where to get help.

For the wider case beyond loyalty, see our guide to AI personalization and shared control.

One day Marcus may simply tell an assistant to buy the new trail shoes with his points the moment they launch. The next step for loyalty programs is AI agents like that, acting for members to check balances, apply rewards and complete purchases on their behalf.

Some consumers are ready: 33% trust AI assistants to complete purchases on their behalf, and among Gen Z, 44% would trust an AI assistant to buy an item for them. Those consumers are still a minority, and only 4% want AI fully in charge.

For now, agent-run membership works best as an option members can elect to choose for themselves. Every customer should be able to review and reverse any AI-led decisions that don’t feel right.

SAP Engagement Cloud’s native customer loyalty solution helps you engage customers and build brand loyalty across every customer interaction. Its workflows activate on real-time business events, including loyalty milestones, so each tier upgrade, renewal and redemption reflects what’s happening across orders, inventory and service.

With connected data and agentic workflows, SAP helps you use customer and business signals as they happen to deliver loyalty experiences that reflect each customer’s circumstances. It also helps you scale programs with trusted AI and built-in governance.

SAP is a Leader in the 2026 Gartner Magic Quadrant for Personalization Engines, for the seventh consecutive time.