Australian retailers are attracting record numbers of loyalty members, but most are failing to keep them engaged, new research shows.

The nation’s largest loyalty program study, released by research firm Honeycomb Strategy, found that while Australians embrace loyalty programs, they expect genuine value such as discounts or exclusive experiences to stay active.

The Science of Loyalty – from Situationship to Relationship report analysed 52 leading programs across travel, retail, finance and paid subscription models. It revealed most Australians only use five loyalty programs at once, with seven in 10 customers expecting immediate benefits. Some 63 per cent quickly lose interest if programs fail to deliver something new or valuable.

Renata Freund, Founder of Honeycomb Strategy, said paid loyalty programs were reshaping the retail landscape.

“Paid loyalty programs have rapidly grown in popularity and are fundamentally shifting the market landscape.

“They are now extremely effective in driving customer loyalty because they exceed expectations – they communicate an enormous overdelivery on the value exchange. Careful framing of the benefits makes the programs feel like money saved, rather than money spent – this creates both positive validation and stickiness.”

Freund said retailers risked focusing too heavily on sign-ups without building long-term engagement.

“The reality is that a large portion of Australia’s loyalty programs are great at driving the initial sign-up with a motivating benefit, but very few are translating that into ongoing engagement that ladders up to meaningful ROI.

“And for households managing rising costs, loyalty is no longer just about collecting points – it’s about programs that offer meaningful savings, convenience and experiences worth returning for.”

The report also showed that nearly a third of consumers exclusively use brands based on their loyalty program offering, while paid subscriptions are gaining ground with younger Australians. Seventy-two per cent of Millennials and 65 per cent of Gen Z reported subscribing to at least one paid program.

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