Your loyalty program has thousands of members. Enrollment numbers are climbing. Customers are scanning their cards at checkout, racking up points, and redeeming rewards. By every visible metric, your program looks successful.

But here's the question that matters: Is your loyalty program actually driving new sales, or is it just rewarding purchases that would have happened anyway?

Traditional loyalty programs do increase sales — just not always in the way growth teams need them to. They’re excellent at rewarding your most committed customers, while the majority of shoppers continue choosing based on value, convenience, and timing.

The loyalty paradox facing retailers today

Modern loyalty programs exist in a strange paradox. They work extremely well for a small segment of your customers, while barely moving the needle for everyone else.

Your most committed customers love your program. They visit frequently, spend consistently, and engage with every promotion you send. When you look at member vs. non-member sales data, the numbers are impressive. But here's what that data doesn't tell you: how many of those sales are actually incremental?

The uncomfortable reality of modern shopping behavior:

• Uncommitted customers make up 79% of brick-and-mortar retail customers.
• These customers contribute the majority of total revenue but visit up to 80% less frequently than loyal customers.
• Two-thirds of consumers decide where to shop or dine less than two hours before they go.
• Across all retail categories, 60% of new customers never come back after their first month.
  

Your loyalty program might increase sales among members, but if those members were already your most frequent shoppers, you're not growing your customer base. You're just rewarding behavior you already had. And here's the opportunity: earning just one additional visit per month from uncommitted customers could increase your total revenue by as much as 209%, depending on the category.

What the data reveals about loyalty and sales growth

Research analyzing millions of brick-and-mortar retail transactions reveals important truths about loyalty programs and retention. Loyalty programs do have a positive impact; but even with a program in place, up to 20% of members still churn in a given month, depending on the category.

The bigger challenge? Across all retail categories, 60% of new customers never come back after their first month. That early churn represents lost acquisition dollars and missed opportunities to form lasting shopping habits.

The retention gap highlights where traditional loyalty programs are less effective:

• Loyalty programs work well for customers already inclined to return, but struggle to convert casual shoppers.
• Traditional programs reward behavior after it happens, but don't influence the decision before customers choose where to shop.
• One-size-fits-all discounts often miss the mark because different customers need different motivations.
• Programs are passive. They sit in wallets waiting to be used rather than actively engaging customers between purchases.
  

This is why nearly 40% of retailers report that customer acquisition costs have risen year over year. You're spending more to win customers, and your loyalty program isn't converting them at the rate you need to justify that investment.

Learn more about how effective customer loyalty programs are on the Upside blog.

The incremental profit problem: Paying for sales you already had

A more useful question for growth teams is this: if your loyalty program disappeared tomorrow, how much would sales volume actually change?

The uncomfortable answer is that you'd probably lose fewer sales than you think. Your most loyal customers would likely continue shopping with you out of habit and genuine preference. Your program rewards them, which they appreciate, but it's not the primary reason they chose your business in the first place.

This phenomenon is called cannibalization. Every discount you give to a customer who would have purchased at full price anyway is profit left on the table. When you apply the same loyalty discount to your most frequent shoppers as you do to customers on the fence about returning, you're essentially paying for sales twice.

What true incrementality looks like:

• New customers who chose your business specifically because of your program.
• Infrequent customers who increased their visit frequency due to targeted promotions.
• Occasional customers who expanded their basket size beyond their typical purchase.
• Competitive switchers who redirected spend from your competitors to your business.
  

The retailers who win with loyalty are the ones who solve for incremental sales, not just total sales. They understand which customers need incentives to change their behavior and which ones will return without any extra nudge.

How Upside works alongside your loyalty program

Upside is designed to complement your existing loyalty program, not replace it. While your loyalty program manages relationships with committed customers, Upside focuses on changing behavior among the uncommitted majority: the shoppers who currently split their purchases across multiple retailers.

Upside reaches 35 million consumers through its marketplace app and network of strategic partnerships with brands like Uber, Lyft, Instacart, and DoorDash. These partnerships put your business in front of customers at the exact moment they're deciding where to shop, eat, or refuel, long before they reach your parking lot.

Upside supports incremental sales by:

• Reaching customers at the moment they’re deciding where to shop
• Personalized cash back offers to motivate behavior change
• Protecting profit through individualized, margin-bound promotions
• Proving which transactions are truly incremental

Measuring what matters: Attribution vs. correlation

Most loyalty programs measure success by tracking member vs. non-member sales. It's straightforward and shows impressive-looking numbers. There's just one problem: correlation doesn't equal causation.

The fact that loyalty members spend more than non-members doesn't prove your program caused that increased spending. It might just mean that your best customers are more likely to join programs in the first place.

The difference between correlation and attribution:

• Correlation shows that two things happen together (membership and higher spending).
• Attribution proves that one thing caused the other (the program drove the spending increase).
• Most loyalty platforms measure correlation and call it success.
• True incrementality measurement requires comparing actual behavior to what would have happened without the program.
  

Upside's measurement methodology is built on test vs. control analysis. When a customer claims an Upside offer, the platform uses your transaction data to build a user profile. Then it finds non-Upside users with similar purchasing histories. This control group's average spend represents what you'd expect the Upside user to spend without Upside. By comparing spend between the user and control group, Upside identifies what's truly incremental — and you can see exactly what changed.

The profit-share model: Aligning incentives around incremental growth

Here's a fundamental problem with most loyalty and marketing programs: they get paid regardless of whether they drive incremental sales. They charge based on impressions, clicks, enrollments, or total transactions.

Why traditional pricing models fail retailers:

• CPM models charge for impressions, not results.
• Cost-per-click models charge for engagement, not sales.
• Transaction-fee models charge for all sales, even ones you would have gotten without the program.
• None of these models prioritize or prove incrementality.
  

Upside uses a profit-share model exclusively. Retailers get all the benefits of reaching 35 million consumers through Upside's marketplace and partnerships with zero upfront cost, no subscription fees, and no charges for impressions or clicks. You only pay when Upside delivers proven incremental profit that you can see and verify in your personalized dashboard.

This no-risk approach to customer acquisition means you can win and retain new customers with a return on investment tied directly to incremental profit. Nearly 30% of fuel and convenience retailers nationwide, along with thousands of grocery stores and tens of thousands of restaurants, use Upside specifically because the economics align with growth rather than just activity.

Building a next-generation growth strategy

Your loyalty program has value. It provides a framework for recognizing and rewarding your best customers. It gives you data about purchasing patterns. It creates a sense of belonging that matters to customer relationships.

But if you're asking whether loyalty programs increase sales, you need to be honest about what "increase" means. Are you growing total sales by rewarding existing customers, or are you driving incremental sales by changing customer behavior?

The path to sustainable sales growth combines:

• Traditional loyalty for relationship management and retention of committed customers.
• Personalized promotions that engage uncommitted customers before they decide where to shop.
• Proactive outreach that brings customers back for crucial second and third visits.
• Rigorous measurement that proves incrementality rather than just correlation.
• Profit-share economics that align program costs with actual business growth.
  

Retailers who layer these strategies see measurably better results than those who rely on loyalty alone. They convert first-time visitors into regular customers. They increase visit frequency among occasional shoppers. They drive larger basket sizes by presenting the right offer at the right time.

Loyalty programs still matter. But in a world where most shoppers are uncommitted and deciding where to go at the last minute, growth depends on influencing behavior, not just rewarding it.

Ready to drive incremental sales beyond what your loyalty program delivers? Upside works alongside your existing programs to profitably win new customers and increase visit frequency. Request a demo to see how retailers like you are growing revenue without increasing costs.

Frequently asked questions

What percentage of loyalty program members actually drive incremental sales?

A smaller percentage than most retailers realize. Your most committed loyalty program members often would have shopped with you regardless of rewards. The 79% of customers who are uncommitted but still join programs are where real growth opportunity exists, as they need the right incentive at the right time to choose you over competitors.

How do rewards programs impact customer loyalty in brick-and-mortar retail?

Rewards programs positively impact customer loyalty, but even strong programs see up to 20% of members churn monthly depending on the category. True customer loyalty requires engaging uncommitted customers before they decide where to shop, not just rewarding them after they've already chosen your business.

Can you improve customer retention without discounting all loyalty program members?

Yes, and you should. Personalized promotions improve customer retention more effectively than one-size-fits-all discounts. Upside's margin-bound offers ensure you're providing the minimum incentive needed to change each customer's behavior, protecting profit while driving retention that's up to 92% better when combined with your existing loyalty program.

Do rewards programs work for customer retention or customer acquisition?

Rewards programs excel at customer retention among your most committed shoppers but struggle with acquisition and early-stage retention. Since 60% of new customers never return after their first month, pairing your rewards program with personalized cash back offers that engage customers between visits addresses both retention and acquisition more effectively.