Why Building Loyalty is the Biggest Challenge – and Opportunity – for Brands in 2025

By Joanna Milliken, CEO, SAP Emarsys

E-commerce is undergoing some major changes—with advances in technology like artificial intelligence (AI) leading the charge. AI is reshaping how e-commerce brands and retailers engage with consumers, forcing them to rethink strategies for building lasting customer relationships. Not just a buzzword—AI is changing the game by driving a real shift in customer loyalty. In 2025, we see building loyalty as both the biggest challenge and the best opportunity for brands in e-commerce.

To compete, brands must adapt, embracing personalization, smarter data-driven insights, and innovative loyalty programs.

AI is playing a pivotal role in transforming customer loyalty. It enables hyper-personalized customer experiences, while giving us access to an ever-expanding array of new brands and products across multiple touchpoints, reducing barriers to switching. As consumers we expect a lot from brands and it's easy for a competitor to turn our heads if we’re not happy. Our latest Customer Loyalty Index (CLI) research shows that while 69% of U.S. consumers say they are loyal to a brand— that loyalty can be fleeting with more than 60% of Americans willing to switch brands due to cost considerations and 53% because of a bad experience.

Personalization sits at the heart of building lasting loyalty. More than one in four US shoppers (26%) say they feel more loyal to brands that tailor their marketing to their individual preferences and deliver personalized experiences. Yet, doing this on the right channel, at the right time and at scale is a near impossible task. This is where AI can bridge the gap between creative development, consumer insights, and execution, ensuring that experiences and offers are personalized in real-time and resonate deeply with individuals.

I love the work our customer, the legendary guitar manufacturer Gibson is doing here. Customers buying expensive guitars online want to ensure they’re making the right choice. Gibson Brands are using the SAP Emarsys AI Product Finder to recommend the perfect product based on customer preferences, whether it’s a guitar for beginners or experts. Additionally, the brand uses AI and insight derived from its app to offer tailored experiences dependent on a customer’s purchase history or skill level, such as a guitar lessons or tips on guitar maintenance for beginners. For businesses operating in competitive e-commerce spaces, leveraging AI for personalization in this way will be a critical differentiator in maintaining loyalty. It helps brands predict what customers need before they even know it themselves, leading to stronger engagement and loyalty.

Businesses—here in the U.S. and across the globe—are facing tighter budgets, making it essential to maximize ROI from every marketing dollar spent. The secret to driving value from customer experience and loyalty investments lies in prioritizing platforms that deliver measurable, data-driven results and can build on digital and offline channels to create great brand experiences. We’ve seen brands achieve significant ROI by combining AI-driven insights with omnichannel execution and in-person events.

For example, Ferrara’s super-fun sweet brand Trolli aligned digital campaigns with offline initiatives such as gaming events, which led to an uptick in both short-term sales and long-term loyalty. By centralizing data and focusing on personalized experiences, businesses can stretch their marketing budgets, while delivering engagements that boost customer engagement and brand loyalty.

While loyalty programs have traditionally focused on points and discounts, consumers are now expecting more from them. Over a third of shoppers (36%) say they show their loyalty to a brand by signing up to a loyalty card or scheme. When asked what would most positively impact their brand loyalty 20% mentioned memorable experiences such as events and unique customer engagement.

Loyalty programs that offer personalized, VIP-style experiences and exclusive rewards—such as early product access or invitations to exclusive events—will increasingly become the norm. Brands need to go beyond simple transactional incentives to create more meaningful engagement with their customers.

Take a look at haircare brand John Frieda who used SAP Emarsys’ platform to deliver highly tailored offers to its loyalty subscribers as part of the launch of its UltraFiller+ product direct to consumers. Nurturing these customers with early insights and insider product updates resulted in a fourfold increase in conversion rates. You wouldn’t usually associate personalized programs like this with consumer products brands, but John Frieda has demonstrated how they create a tangible value exchange, fostering deeper connections and helping build lifelong loyalty.

In the future, customer loyalty will increasingly be shaped by AI. By investing in AI-driven personalization, and evolving loyalty programs to provide greater value, brands can build engagement that lasts beyond a one-off purchase. Success depends on shifting from transactional loyalty and taking the opportunity to build a deeper connection with their customers.