In the modern retail era, loyalty is still a tool that works to reward the most frequent buyers and retain them as customers. But many retailers now take loyalty further, turning it into something much bigger: the customer data that powers the rest of the business.

Steph Hoppe, vice pres­ident of omnichannel marketing at Casey’s General Stores, recently described that company’s loyalty program as “one coordinated system designed to acquire new guests, engage them across touchpoints, and ultimately drive them back into the ecosystem.” That sure sounds like infrastructure language as opposed to a simple retention play. Rewards, exclusive offers, and status tiers are the visible elements of a loyalty program. But under the surface a more important asset is being created: a continuously updating record of customer information.

Loyalty data now powers far more than just the loyalty program. It also feeds personalization, product recommendations, and retail media. Sephora’s Beauty Insiders program, capturing data from its 34 million members, is the textbook example of the power of personalization. From member data, including purchases, browsing behavior, quizzes, and product reviews, the program now drives 80 percent of the retailer’s transactions.

Retail media benefits from loyalty program data as well. Macy’s used its loyalty audience data to improve its retail media network’s targeting, resulting in a 12.5 percent increase in the company’s retail media revenue in a single quarter of fiscal year 2025.

In both of these examples, data from the loyalty program was what made everything else more valuable.

The Exchange Has to Keep Paying Off

However, none of this works unless customers agree to it. Customers today are generally aware they’re sharing their information when they enroll in a loyalty program. As such, they expect personalized, relevant value in return. That’s the basic understanding behind loyalty program information usage. However, the exchange isn’t one-and-done. Retailers have to keep proving that their usage of customer data provides value every single time a customer engages with the brand.

Kobie’s Heart of Loyalty 2026 report illustrates this well. The report found that consumers are far more willing to share information through small, repeated interactions such as quizzes and answering questions in preference centers (71 percent), as opposed to filling out a comprehensive profile one time (55 percent). Customers seem to prefer offering their information as an ongoing exchange instead of providing a one-time “data dump.”

That ongoing exchange only works if the retailer holds up their end of the bargain. As Lanna O’Connor, director of loyalty and digital marketing at convenience store chain RaceTrac, put it, “When you share your data with us, we can give you a better experience … we can serve up offers that match how you shop.”

The payoff for using the data well has a compounding effect, according to O’Connor. “When you get it right, you’re not just driving one transaction. You’re building a habit and an ongoing relationship.”

Retailers must keep this principle in mind when expanding the information collected from loyalty programs. Asking for data but failing to turn it into more relevant or more valuable offers means customers will notice. Providing value in exchange for these insights is an ongoing obligation to be good data stewards and truly deliver for customers.

The Org Chart is the Real Obstacle

Now that there’s a framework for the progressive collection of data to build out profiles and help personalize offers, perhaps the data itself isn’t the hard part anymore. Instead, the organization may create issues leveraging that data. The Kobie report also found that when loyalty practitioners answered the question on why customer recognition (the highest-impact personalization lever) doesn’t scale, 40 percent cited resource constraints and 42 percent blamed operational complexity. This means many retailers still treat loyalty, customer insights, and retail media as separate departments with completely separate priorities and success measures.

When loyalty was a standalone program, keeping those departments siloed might have made sense. But now that data from a loyalty program is powering everything from offer personalization to discount strategies to retail media monetization, companies need to start breaking down departmental walls.

Retailers getting loyalty data right in this new era aren’t necessarily using better technologies or platforms. But they have learned how to unify their approach, with loyalty data being treated as a shared asset that teams and functions across the organization, including personalization, insights, media sales, and beyond, can build on.

What This Means Going Forward

Loyalty programs will keep issuing points and perks to loyal customers, and customers will keep expecting and using them. However, the program itself is no longer the goal. Retailers must treat loyalty data as shared infrastructure, not a single department’s asset, to make it pay off across the entire business.

This article was originally published by Total Retail, which is the sister brand of Women in Retail Leadership Circle. 

Michelle Wood is senior vice president of merchant development at Wildfire Systems, a white-label loyalty and rewards platform.