Loyalty programs remain a powerful tool for businesses. According to last year’s Statista survey, a third of marketers believe their company earns five to seven times more from these programs than it spends implementing them. But the bigger picture is less optimistic: The Bond Loyalty Report 2025 shows that even in mature markets, user satisfaction is low — only 48% of Americans and 32% of Canadians are happy with their loyalty programs. Why? People expect more.
If all you offer is point accumulation for future discounts or cashback, you don’t stand out among dozens of other programs. Rational benefits still matter, but they no longer motivate repeat purchases.
Retailers recognize the problem and try to address it through personalized offers. I’ve worked in retail for over 15 years and repeatedly seen loyalty program managers celebrate a 5% conversion rate. But look at it from another perspective: that means 95% of your customers found the message irrelevant. The issue isn’t targeting quality — traditional point-based loyalty programs simply cannot capture the attention of someone who interacts with dozens of brands daily.
The signal for retailers is clear: it’s time to rethink not the size or frequency of discounts, but the entire approach to loyalty programs — the choice of mechanics and how they’re executed.
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The New Loyalty: Emotions, Experiences and Engagement
Modern consumer loyalty is driven by emotions and experiences offered by a brand in the moment, not by the promise of future discounts. This trend is most pronounced among Generation Z, for whom traditional points and a discount card in the wallet feel boring.
According to NielsenIQ, by 2030, Gen Z’s purchasing power will reach $12 trillion, with their spending growing twice as fast as previous generations. For retailers, this means a new audience ready to spend money — but also are demanding customers. To attract and retain them, retailers must turn ordinary shopping into an engaging experience with instant rewards.
That’s why gamified loyalty programs are no longer just a temporary innovation; they are a strategic tool critical for a retailer’s future competitiveness. These programs seamlessly combine emotions, actions and a sense of progress missing from traditional point-based systems. They leverage familiar gaming mechanics: collecting, completing missions, unlocking new reward levels and competition that encourages interaction among participants.
Which Technologies are Transforming the Customer Experience
When gamified loyalty programs are combined with a phygital approach, customer engagement reaches a new level — the brand gains a form of physical presence while simultaneously enhancing the digital experience. Two technologies particularly amplify this effect: augmented reality (AR) and blockchain.
AR provides customers with a compelling reason to open the retailer’s app. For instance, a customer receives a collectible card with a QR code at checkout, scans it, and brings a character to life in the app. Previously, they might have opened the app only for practical needs — placing an order or checking promotions. Now, they do it out of curiosity.
For retailers, this strengthens the emotional bond with the brand. Collectibles encourage repeat visits to acquire new items. In my experience, launching an AR-based program lifted a retailer’s app from 55th place on the Ukrainian App Store to the top 5 — fueled by the thrill of collecting.
AR provides two key advantages for retailers: attracting audiences who previously didn’t engage with digital services, and increasing digital activity among existing customers.
Blockchain enables retailers to safely run large-scale loyalty programs with partners from entirely different sectors, creating surprising and memorable experiences for consumers. Blockchain-based programs store all transactions in a transparent, tamper-proof ledger. The technology also opens the door to Web3 — an ecosystem of unique digital assets owned by users.
In one project using blockchain, we connected a grocery retailer, a crypto exchange and the national football team. Customers collected physical cards featuring players, scanned them and built a digital collection in the retailer’s app. A competitive mechanic was implemented: users had to complete actions in the app to increase points on their digital cards. Top performers could win a prize of 1,000 USDT. This setup allowed the retailer to attract new audiences, including crypto enthusiasts and football fans.
The next step in Web3 for retail is NFTs — unique digital items awarded for specific actions. Unlike regular points, NFTs have inherent value: they can be stored, traded or used in games. For retailers, this extends the customer lifecycle because NFTs persist beyond a single promotion — they remain in the user’s Web3 wallet, allowing ongoing interaction.
How to Launch a Gamified Loyalty Program
Neither AR nor blockchain alone guarantees results. Here’s what to consider before investing in a gamified loyalty program:
- Define your goal. Do you want to increase the average order value? Grow your app audience? Encourage social engagement around the brand? Your answer will determine everything — mechanics, budget and success criteria. Without a clear objective, you risk creating a flashy tech toy that delivers no business value.
- Choose the right technology for the task. AR creates a wow factor and virality — ideal for boosting foot traffic or generating organic social content. Blockchain works well for partner programs or when targeting crypto-savvy audiences. Don’t chase hype — solve a business problem.
- Review your metrics. NPS and total program participants may look good in presentations but say little about real effectiveness. For gamified programs, more meaningful metrics include active app users, time spent in the game, growth in average spend compared to a control group and the number of organic social mentions.
- Act before mainstream adoption. Don’t wait for AR or blockchain to become standard in your market. The generation that will define tomorrow’s market already lives in a digital culture. This isn’t a bold experiment — it’s the future, and it’s already here.
Konstantin Melnikov is the founder of NTI Loyalty, an award-winning company developing innovative, gamified loyalty solutions for retail. He has 15+ years in retail and 20+ years in marketing. Notably, he spent 10 years as Chief Marketing Officer at ATB, Ukraine’s largest discounter (1,000+ supermarkets). NTI Loyalty’s programs help retailers increase turnover by 2.5% and generate up to $500 extra profit per customer. The company’s projects span Europe and Central Asia and have earned recognition at the International Loyalty Awards 2025. Partners include UNICEF, Mastercard, Rossman, and Binance.
