Why do so many of us sign up to loyalty programs and then never use them?

Take out your wallet and count the number of loyalty cards you have. Then, add to this number any others you might have sitting on your phone, in digital wallets or membership apps.

There’s a good chance you’re a member of at least one loyalty program. You may even find some memberships you don’t remember signing up for. If this is the case, you’re not alone.

According to a 2026 annual survey commissioned by consultancy The Point of Loyalty, 93% of Australian consumers were members of at least one loyalty program in 2026.

This was the highest level recorded since 2016. However, only 50% of loyalty program members had actively used all of their memberships in the past 12 months.

Our research set out to answer a simple question: why do so many of us sign up for loyalty programs only to neglect or forget about them? Our findings have lessons both for businesses designing loyalty programs and consumers who want to get more out of them.

‘Are you a member with us?’

We surveyed more than 800 customers of major Australian supermarkets including Coles, Woolworths, ALDI, IGA and FoodWorks.

The popularity of these programs continues to grow. In Australia, the loyalty program market has experienced significant expansion and is expected to continue growing as rising living costs encourage consumers to seek greater value from their purchases.

The Australian supermarket loyalty program is dominated by two major retailers. Woolworths’ Everyday Rewards program has 14 million registered members. Coles’ Flybuys has more than 9 million members.

The loyalty program market in Australia is expected to increase by 13.5% annually, reaching a value of A$1.57 billion by 2026.

Why we join

For some customers, loyalty programs provide clear financial benefits through discounts, cashback, points and vouchers. For others, the appeal lies in more emotional and psychological benefits such as feeling valued, receiving exclusive treatment, gaining early access to products or enjoying a stronger connection with a brand.

Yet when customers do not perceive these benefits – or find it difficult to redeem the discounts – they may lose interest and not engage. In addition, the effort and time to redeem these points may require too much effort and lead to low engagement.

What we found

Our research findings suggest that customer engagement is not driven by rewards alone. While financial savings remain important, three key factors strongly influence whether we will engage with loyalty programs:

1. Customer trust: Customers are more likely to participate in loyalty programs when they trust the supermarket. Transparent pricing, honest communication, reliable customer service and ethical business practices help create confidence that the program delivers genuine value.

2. Customer commitment: Customers engage more deeply when they feel aligned with a supermarket’s values and believe the relationship is meaningful. Personalised offers, relevant rewards and recognition of individual preferences can strengthen this sense of connection.

3. Perceived benefits: Customers remain active when they can clearly see the advantages of participation. These benefits can be economic, such as savings and discounts, or psychological, such as exclusivity, convenience, enjoyment and recognition. Programs that make these benefits visible and easy to understand are more likely to keep customers engaged.

Things to consider as a customer

So, how can we get the most out of loyalty programs?

First, consider the benefits provided by the loyalty programs. Is it worth spending $2,000 to accumulate 2,000 points to get $10 off in future? Is it leading to you buying things you would not otherwise buy?

Second, take advantage of the participating brands that are part of a loyalty programme. For example, Flybuys can be used in Coles, Bunnings, Kmart and Target, meaning you can accumulate loyalty points more quickly. Keep track of the points accumulated and redeem these in timely manner.

Third, be mindful of what data is being collected by supermarkets from the use of loyalty cards. Customers readily surrender their names, contact details, credit card information, location and other personal information for the perceived benefits of a loyalty program.

While most of the time this information is secured, potential data breaches can be expensive and stressful down the track.

Designing better programs

Companies designing loyalty programs need to honour the bargain they have with their customers. If they’re collecting personalised data, they need to deliver better value in return.

Say you’re running low on nappies – which the supermarket knows because you purchase these frequently. You receive a text message from the supermarket saying they will offer you an exclusive discount for your favourite brand.

Because they know you and you’re a repeat customer, they’ve personalised this offering for you. It likely feels better, and more personal, than spending a lot on unwanted items to get a small discount down the track. With the personalised offering, the supermarket isn’t just offering a discount – they’re aiming to make you feel valued.

Overall, our findings show people are more likely to use loyalty programs when they trust the supermarket, feel it is transparent about their pricing and practices, and when customers can see there’s a saving to be made.

In other words, it’s not just about getting discounts; it’s also about how the brand makes the customer feel.