End-of-Year Loyalty Scheme Audit: Our 10 Step Process

Loyalty isn’t a set-and-forget function.

Just because your program launched well doesn’t mean it’s still delivering. With customer expectations evolving, competitive pressure rising, and data regulation shifting, it’s critical to assess whether your loyalty scheme is still aligned with what your audience values.

The end of the year is a natural checkpoint.

Campaigns are winding down, budgets are under review, and Q1 planning is underway. That makes now the perfect moment to conduct a loyalty scheme audit, not just to fix what’s broken but to build something stronger for the year ahead.

Loyalty Program Fatigue: A Silent Growth Killer

Many loyalty schemes underperform without anyone noticing. They still have users. They still have redemptions. But they’ve stopped driving meaningful value for both the customer and the business.

A report by Forrester found that over 50% of loyalty programs fail to deliver measurable ROI (source). The reasons vary, but common culprits include:

- Reward fatigue (same offers, no surprise)

- Poor personalisation (generic emails, irrelevant perks)

- Low data capture or usage

- Lack of tier progression or dynamic structure

- A rewards catalogue disconnected from customer values

These aren’t surface-level issues. They erode trust, reduce participation, and turn a potential retention engine into dead weight.

The 5 Core Areas to Audit in Your Loyalty

A true audit goes beyond points and perks. It looks at the full ecosystem of engagement.

1. Customer Experience

Does your program feel seamless or clunky? Can users access it easily, track progress, and redeem rewards without confusion? Friction is one of the fastest ways to kill loyalty.

According to PwC, 32% of customers will walk away from a brand they love after just one bad experience (source).

2. Data Performance

What are you actually learning from your users? Is your loyalty system capturing first-party data, segmenting behaviour, or powering future campaigns? If your platform is just tracking transactions, it’s underperforming.

3. Reward Structure

Are your rewards still desirable? Do they reflect current customer preferences? A strong scheme evolves over time, whether that’s more experiential rewards, seasonal perks, or custom tiers.

McKinsey research shows customers are 2.5x more likely to be loyal when the benefits feel exclusive and tailored (source).

4. Engagement Metrics

Beyond redemptions, how often are customers returning? Are they responding to loyalty communications? Is there progression through tiers or stagnant behaviour?

High participation but low engagement could suggest rewards are being “used” but not appreciated, a massive red flag for long-term retention.

5. Business Alignment

Is your loyalty program serving the company’s current goals? What was valuable in 2022 might not reflect your 2025 strategy. Your loyalty program should evolve with your commercial model, not lag behind it.

Signs Your Loyalty Program Needs a Refresh

You don’t need to see total failure to take action. Subtle signs are often the most telling:

- Redemption rates have plateaued or dropped

- Customers stop opening loyalty emails

- A majority of members remain in entry-level tiers

- You're running out of ways to talk about the scheme

- Internal teams see it as “just admin,” not a growth lever

If any of this rings true, a full audit is overdue.

How to Conduct a Loyalty Program Audit That Delivers Results

Step 1: Define Your Audit Objectives

Before diving into the data, decide exactly what you want to achieve. Are you aiming to boost engagement, improve ROI, refresh rewards, or reposition the program entirely? Clarity here ensures your audit is focused and delivers actionable outcomes.

Action Step: Write down three to five measurable goals for the audit, such as “Increase tier progression by 20%” or “Lift loyalty email open rates from 15% to 25%.”

Step 2: Gather and Analyse Program Data

Collect at least twelve months of performance data to spot both seasonal trends and long-term changes. Look at membership growth, active vs inactive member ratios, redemption rates, tier distribution, and how much more valuable members are compared to non-members.

Action Step: Create a single spreadsheet or dashboard that consolidates all core loyalty KPIs for easy analysis.

Step 3: Map the Member Journey

Metrics only tell part of the story,  the lived customer experience matters just as much. Sign up for your own program or have someone unfamiliar do it, then document the entire process from registration to reward redemption. Note any friction points, unclear messaging, or inconsistent experiences across touchpoints.

Action Step: Record a screen capture of the full digital journey and take photos of any in-store elements to share with your team.

Step 4: Audit Reward Relevance

Even the most sophisticated program fails if the rewards don’t inspire. Use redemption data and customer feedback to assess whether your rewards are still desirable. Ensure you have a mix of quick wins and aspirational goals, and that every reward aligns with your brand identity and customer values.

Action Step: Identify your top three most redeemed rewards and evaluate if they match your promotional focus.

Step 5: Evaluate Communication and Engagement

A loyalty program can’t deliver if customers forget about it. Review email open and click rates, app notification engagement, and participation in loyalty-related campaigns. Assess whether your tone, frequency, and messaging still resonate with your audience.

Action Step: Select one dormant member segment and test two different re-engagement offers to see what drives a response.

Step 6: Check Business Alignment

Your loyalty program should actively support your current business objectives. Consider whether it drives profitable behaviour or simply discounts purchases. Check that it integrates with your CRM and marketing automation so customer insights can be used across the business.

Action Step: List your company’s top three commercial priorities and map how the program contributes to each.

Step 7: Benchmark Against Competitors

Customers compare your program to others they encounter, even outside your sector. Sign up for several competitor programs and track their onboarding flows, engagement strategies, and reward structures over 90 days. Look for elements that inspire, or gaps you can exploit.

Action Step: Create a competitive matrix comparing your program to at least three rivals on ease of joining, reward appeal, and personalisation.

Step 8: Identify Gaps and Opportunities

With all your findings in hand, separate them into quick wins, medium-term improvements, and long-term strategic changes. This makes it easier to decide what to tackle first and prevents overwhelm.

Action Step: Use an Impact vs Effort matrix to prioritise initiatives for the next twelve months.

Step 9: Build Your Optimisation Plan

Turn your insights into an actionable roadmap. Define each improvement, assign an owner, set a timeline, and determine how you’ll measure success. This ensures changes are implemented and not left in a report.

Action Step: Present your optimisation plan to stakeholders with a clear ROI projection for each proposed change.

Step 10: Schedule Ongoing Reviews

An audit shouldn’t be a once-a-year task. Set quarterly mini-reviews to keep your program agile and competitive. Track KPIs in real time so you can react quickly to changes in member behaviour or market conditions.

Action Step: Schedule four quarterly loyalty review meetings in your company calendar now.

Loyalty as a Strategic Asset

At its best, a loyalty scheme isn’t a bolt-on. It’s a strategic pillar.

It drives repeat revenue. It fuels data collection. It empowers smarter personalisation and deepens brand affinity.

But that only happens when it’s maintained, like any high-performing system, loyalty requires tuning, refinement, and sometimes, a full rebuild.

The most successful brands treat loyalty like a product: something to optimise, relaunch, and promote with the same energy as any new offer.

Final Thought: Don’t Let a Good Scheme Go Stale

You’ve invested in your loyalty program. You’ve brought customers into your ecosystem.

Don’t let that go to waste with a passive, outdated structure that no longer serves its purpose.

An end-of-year audit is the simplest way to protect that investment and turn loyalty into a serious revenue engine for the year ahead.

Need help reviewing or relaunching your loyalty program?
Talk to The Loyalty Works team about a full loyalty audit, refresh strategy, or custom scheme rebuild.

Or explore our Services to see what we offer.