Dennis Yu

Why loyalty programs are failing and how to fix yours

An article in MediaPost today highlights why few companies are delivering upon their loyalty programs. In a nutshell, consumers want personalized rewards, whether it be through their grocery store cards, airline frequent flyer program, or other points-based systems.  But marketing departments are not able to personalize because they are unable to collect the data needed to personalize offers and internal organizational hurdles prevent companies from unifying their data across multiple silos.

I was fortunate to spend a few years at American Airlines to perform analysis on the AAdvantage program– to learn firsthand how the granddaddy of loyalty programs operated. Some challenges and how we overcame them:

Incomplete customer data
The website, reservations deck, and gate agents all had separate customer databases. If you were a smart customer, you could complain at all three locations and earn triple the points. So if a bag supposedly fell on your head from opening the overhead bin, you could get miles for the inconvenience, and the agents at the airport, on the phone, and from the website wouldn’t know that you were already compensated. 

The solution– create a unified customer database. This is quite expensive, and has political issues to solve, but is well worth the effort.  When you can create a single view of the customer’s activity, you can measure their overall profitability and create programs to incent the right kind of behavior.

Mass blasting (spamming) customers

Email marketing is so easy and inexpensive that SVPs of Marketing are tempted to spam customers.  After all, if sales increased by changing the newsletter frequency from monthly to twice a month, why not weekly? We’ve seen this approach taken at a number of large brands.  Not only is this a customer turn-off, but goes against the whole point of offering personalized offers that are most appealing to where a customer is in your lifecycle and their stated preferences.   Part of status is being remembered for your particular likes (mints on your pillow and extra towels if you’re a hotel customer), not to get the same message delivered to everybody.

The data crypt

What used to be called a data warehouse, then later called a datamart, then called business intelligence, then enterprise analytics is really just the same thing with a new name each time. Even if you can embark on a $20 million project to consolidate customer data into one spot, the bigger issue is actually getting it out.  Most marketing managers believe they have to speak a special prayer to the high priests of IT to be granted access to the database. The inability to easily access the data– no matter what expensive analytics tool you might have bought– prevents the marketing manager from being able to do the analysis necessary to create a tailored menu of rules. Without a menu of actions and corresponding points, and then being able to adjust payouts based on what’s working, a loyalty program bleeds.  And the more data you have in your scoring model, the more complex it is to calculate status, as you’re dealing with an increasing number of empty fields for variables and bad data.  So perhaps you were able to get a data append from a third party– let’s say Acxiom– and now you have gender, income, and the type of car they drive.  How is that affecting the ways to earn and burn points in your loyalty program?

IT doing Marketing and Marketing doing IT

Managing a loyalty program is really an exercise in user psychology, but it requires some technical execution.  You’re really looking at video game design and trying to influence their behavior.  An average IT administrator is not going to understand this, nor is a traditional brand marketer that has done media buys for 20 years. If you have a loyalty program in-house, ask yourself who is running it.  

The answer is finding folks who are well-versed in data analysis (crunching SQL statements in the database) and also understand user psychology.  Writing SQL is for engineers, you say?  Look at Amazon, where they require marketing managers to know how to query a database.  It’s not that hard.  How are you going to structure and adjust rules for earning and burning points by customer segments if you’re not able to go in there and hands-on be able to run reports? 

Summary– the weakest link

Well there you have it– all it takes is one break in the chain and your loyalty program has a problem.  If you aren’t able to collect user data– transactions and preferences, you can’t create personalized offers. If your marketing people can’t properly access the data, that expensive database just sits there. If you have the wrong people trying to solve the problem, it’s a guy with a hammer who thinks everything looks like a nail.

I’d say that brands would be well-served to hire folks from Nintendo, Blizzard, and other companies in the gaming industry to help revamp their loyalty programs. This is nothing more than a video game.


Dennis Yu

Dennis Yu is co-author of the #1 best selling book on Amazon in social media, The Definitive Guide to TikTok Ads. He has spent a billion dollars on Facebook ads across his agencies and agencies he advises. Mr. Yu is the "million jobs" guy-- on a mission to create one million jobs via hands-on social media training, partnering with universities and professional organizations. You can find him quoted in major publications and on television such as CNN, the Wall Street Journal, Washington Post, NPR, and LA Times. Clients have included Nike, Red Bull, the Golden State Warriors, Ashley Furniture, Quiznos-- down to local service businesses like real estate agents and dentists. He's spoken at over 750 conferences in 20 countries, having flown over 6 million miles in the last 30 years to train up young adults and business owners. He speaks for free as long as the organization believes in the job-creation mission and covers business class travel. You can find him hiking tall mountains, eating chicken wings, and taking Kaqun oxygen baths-- likely in a city near you.
I'm a member of Blitzmetrics Academy and a friend of Dennis to boot. Not only is Dennis highly intelligent and full of great and creative ideas, he's also incredibly generous with both his knowledge and his time. Success couldn't come to a better guy. Thank you for all that you do for the world, Dennis! 🙏

Michael Pacheco


Thanks 🙏 for being shining light in this industry. Love what your building for works overseas too network for jobs so innovative. Dennis helped me navigate having bad experiences with marketing agencies and doing dollar a day marketing which has helped my personal brand tremendously. Highly recommend.

Eric Skeldon

Founder at Kingdom Broker

Working with Dennis has been a delightful experience. After meeting him in 2015 I got to collaborate with him on countless occasions. His understanding for state-of-the-art marketing, his implementation, and his leadership put him into the top 0.01% of marketers and mentors.

Jan Koch

Ihr kompetenter Partner für innovative KI-Strategien.

I had the pleasure of interviewing Dennis for my podcast in 2021 and since then we have maintained a friendship that grows with each interaction. I have seen Dennis' devotion to his friends and clients firsthand, and our conversations often result in us talking about how we can provide more value to the people around us. He is someone whom I can ask questions on a technical level, and look to on a personal level. If you have any hesitancy about hiring him, get over yourself and do it!

Isaac Mashman

Help scaling personal brands.

Geez, where do I start recommending Dennis? First, he is an absolutely brilliant marketer who understands where marketing is today and where it's going tomorrow. He also has an incredible passion for the International Worker community. The lessons he has taught me from his almost 20 years of experience hiring International Workers have been immense. Most importantly though. Dennis Yu is someone who wants the absolute best for you and is willing to tell you the truth. Dennis sat with me at a point in my business where I was floundering but did not want to admit it. He asked some very straight forward questions to get me to admit my issues, highlighted the issues, and then helped me create a roadmap to success.

Atiba de Souza

International Keynote Speaker | Video Content Superman | Superconnector |

Dennis, which I had the pleasure of working with is one of the most giving, honest and tell you as it is person I ever know. The knowledge this man has is remarkable and he just gives it out freely. He is not pretentious and always entertain anyone big or small in the industry always willing to help. If you ever get a golden opportunity to work with him or mentored by him say YES!. You will notr regret Dennis, which I had the pleasure of working with is one of the most giving, honest and tell you as it is person I ever know. The knowledge this man has is remarkable and he just gives it out freely. He is not pretentious and always entertain anyone big or small in the industry always willing to help. If you ever get a golden opportunity to work with him or mentored by him say YES!. You will not regret

Nixon Lee

The PR Whisperer

Ready To Take Your Marketing Game To The Next Level?

Register today for the Dollar-A-Day Coaching Program and accelerate your growth journey!

Scroll to Top