September 09, 2025
Rewards Are Becoming a Deciding Factor in Customer Loyalty
Rewards now play a central role in how people choose to pay, where they shop, and which brands they stick with.
New research from PayPal and Reach3 Insights shows that incentives are driving deeper emotional connections and influencing long-term loyalty.
By combining data, video feedback, and AI-powered analysis, the study uncovered a shift in expectations, where people want more than just financial value from rewards. They’re looking for experiences that feel personal and emotionally satisfying.
Cashback over Points
When it comes to types of rewards, cashback stood out as the most preferred option. Its simplicity and instant gratification made it more appealing than points-based systems. Many participants described rewards as a source of satisfaction and even joy, a proof that the emotional impact is just as important as the financial return.
“Rewards drive real behaviors, and when executed well, they can drive loyalty in a meaningful way,” said Sean Campbell, Senior Vice President at Reach3 Insights. “Our research with PayPal shows that there’s a lot of nuance in this space and highlights the need to use modern research techniques to really understand what matters to different customers.”
The findings also show that consumers who engage with rewards programmes often feel more appreciated, and many are more likely to recommend brands that offer them. A well-designed incentive not only drives repeat purchases but also creates moments that build advocacy.
Generational preferences are influencing how brands need to respond. While Boomers and Gen X lean toward practical, everyday benefits, Millennials and Gen Z favour gamified, flexible, and shareable experiences that integrate with digital wallets and social platforms.
