Understanding Customer Behavior Through Loyalty Programs

I used to think I was measuring customer loyalty the right way. Every quarter, I’d report out our NPS score, and every quarter, I’d get the same pushback from leadership: “If our NPS is so high, why are sales down?” “If customers love us, why is churn up?” And honestly? I didn’t have a good answer. I felt dejected as I could feel my credibility and social capital with the execs slip away. I was stuck in the CX trap of measuring advocacy, not behavior. NPS told me customers said they’d recommend us—but it told me nothing about whether they’d actually buy from us again. The lightbulb moment came when I stopped chasing how much customers liked us and started tracking how much they actually spent. That’s when I realized: Loyalty isn’t a feeling. It’s a behavior. So, I pivoted. Instead of leading with NPS, I built our CX strategy around three core metrics that actually predict revenue: 🔺 Likelihood to Purchase Again (Intent) – Are they signaling they’ll come back? 🔺 Repeat Purchase Rate (Behavioral) – Are they actually returning? 🔺 Time to Repeat Purchase (Behavioral) – How long does it take? And guess what happened? 💡 Our CX efforts finally had credibility in the boardroom. When we improved post-purchase experience, I could prove it led to faster repeat purchases. 💡 Marketing and Finance finally saw CX as a growth lever. Instead of reporting on ‘customer happiness,’ I was driving revenue conversations. 💡 We made better investments. Instead of obsessing over ‘improving NPS,’ we focused on shortening the time to second purchase—and sales shot up. The reality is: NPS won’t save you when revenue is down. If you want to be taken seriously as a CX leader, you have to connect the dots between emotion, intent, and action. It’s time to stop measuring how much customers like you and start measuring how much they buy from you. If you’ve had this realization too, let’s talk. Let’s get your CX unf*cked.

What we once celebrated as 'data-driven' was really just data-curious. I recall an article we wrote in 2012 about how smaller restaurant chains could compete with industry giants through what we then deemed innovative digital loyalty programs. We called it a "Moneyball" approach—using scrappy tactics to punch above your weight class. Back then, we considered it a breakthrough to connect social media engagement with loyalty rewards. When a guest tweeted about their order, a restaurant could respond not just with thanks, but with action—loading a reward directly onto their loyalty card. The focus was on program enrollment and transaction-based rewards. Success meant getting guests signed up and coming back to earn their next free item. In reality, transactional loyalty programs were just the warm-up act for today's comprehensive guest data platforms. Here’s how: From program-centric to guest-centric ⬅️ Then: Focus on loyalty program members and their point balances ➡️ Now: Focus on all guests and their individual preferences, regardless of program status From reactive rewards to proactive personalization ⬅️ Then: Rewarding guests after they engage ➡️ Now: Anticipating and offering guests’ favorite orders, based on historical data and behavioral patterns From transaction tracking to experience orchestration ⬅️ Then: tracking purchases to award points and trigger rewards ➡️ Now: Using comprehensive guest data to personalize everything from menu recommendations to ordering experiences across all channels Here’s how our earlier example would play out today: 2012: Guest tweets about their order → restaurant responds with a free reward → guest returns to redeem 2025: Guest orders → System notes preference and ordering patterns → Next time they open the app, menu item is prominently featured alongside complementary items they're likely to enjoy → If they haven't ordered in their typical timeframe, they might receive a personalized message about a limited-time offer → The experience feels curated, not automated The best restaurant brands today aren't just running loyalty programs; they're building comprehensive guest data platforms that make every interaction feel like coming home to your favorite neighborhood spot. The "Moneyball" approach has evolved, but the underlying truth remains: the scrappy operators who use data will always have a competitive edge.

Most brands reward customers for what they buy. H&M is rewarding them for who they become! This is the shift we’re seeing in the smartest loyalty programs today. Loyalty is not just about purchases or spends, it is about behavior! Let's take a look at H&M’s Conscious Points model, built into its free membership program. Sure, at H&M, members earn points when they shop. But they also earn rewards for sustainable actions, such as recycling clothes, using eco-friendly delivery, and skipping single-use bags. ♻️ So, why does this approach work? 📌 It turns values into action - Customers don’t just hear about H&M’s sustainability goals. They become an integral part of it, every time they engage. 📌 It drives smarter personalization - The program collects data on members’ sustainability choices, allowing H&M to tailor offers, messaging, and incentives based on what each customer actually cares about. 📌 It deepens emotional loyalty - When your customer believes their actions with your brand are making a positive impact, they stick around for more than just the discount. 📌 It tackles head-on, a key criticism of fast fashion, that it adversely affects the environment. So how do you apply this to your business? Ask yourself: → What actions (not just purchases) do you want to encourage in your customers? → What deeper purpose or value does your brand stand for? → How can your membership program turn the answers to above, into a daily habit for your customer? Because the next era of loyalty programs isn’t about accumulating points. It’s about building a shared identity between the brand and the buyer. That’s how H&M is turning fashion into a movement - one conscious customer at a time. #hm #membershipprogram #memberships #ecommerce