Fix the Loyalty Leak: Why Smarter CRM Reduces Margin Loss

Discounts may drive short-term sales, but smarter CRM targets loyalty behaviours that protect margin and build long-term value. Strategic incentives change the game and the outcome.

Laura Wall, 

2 July 2025


This article is part of our ongoing series built around Plinc’s Strategic CRM Playbook: From Execution to Influence. The Playbook is designed to help CRM teams earn influence, protect value, and deliver smarter commercial performance.

In Chapter 6: Fix the Loyalty Leak, we look at the real cost of well-meaning promotions, and why loyalty strategy needs to shift from blanket incentives to value-building behaviours.

Download the full Playbook now or follow this series to explore all 10 chapters.

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A Familiar Trade-Off

CRM teams are often asked to drive short-term results – fast. The simplest lever? A discount.

So they pull a list, add an offer, and the numbers come in strong: redemptions, click rates, incremental sales (hopefully).

It looks like a win. But behind the uplift, questions remain:

  • Who needed that incentive to buy?
  • Did we grow loyalty, or just pay for it?
  • What was the impact on long-term value?

It’s rarely clear. And when promotions become habitual, CRM’s role quietly shifts from customer value building to margin giveaway.

The Risk Beneath the Results

In many brands, promotional activity is embedded into the rhythm of trading. It’s fast. It’s measurable. And it drives conversion.

But over time, it creates hidden erosion:

  • Customers trained to wait for the next discount
  • Reduced effectiveness of full-price messaging
  • Mid- and high-value customers treated the same as price-sensitive ones
  • Loyalty confused with frequency. Even when value is low.

CRM teams see the pattern but often don’t have the framework or data to push back. Read on for ways to reframe.

The Reframe: Target What Builds Value, Not Just Sales

Smarter CRM loyalty strategies don’t eliminate promotions. They target them based on behavioural triggers and predicted value. Ensuring incentives drive meaningful customer progression and encourage valuable behaviour. Not just giving discounts for purchases customers would have made anyway.

Here’s what that looks like:

  • Model the impact of past promotions on long-term value
    → Don’t just look at redemptions. Track whether those customers repurchased, moved up in value, or churned soon after.
  • Segment promo responders by contribution
    → Identify which incentives create future value — and which cannibalise margin.
  • Introduce trigger-based loyalty journeys
    → Nudge key behaviours like second purchase, new category adoption, or channel expansion. All of which correlate more closely with retention than discount redemption alone.

What It Looks Like in Practice

We’ve worked with brands that moved from offer-led calendars to value-led CRM strategies by doing three things:

1. Audit the margin impact of historical offers

Ideally, use a 13-month view to track how promo customers performed over time, not just in the campaign window. Depending on how the business approaches measurement, shorter views might be the default but they risk missing the full picture.

2. Build predictive models to guide when to incentivise

Instead of sending to everyone, identify:

  • Who’s likely to buy anyway
  • Who needs a small nudge
  • Who won’t convert even with an offer

3. Develop loyalty nudges that don’t rely on discount

Use personalisation, exclusivity, or experiential benefits (e.g. early access, tailored content) to reinforce value and encourage desired behaviours.

Quick Wins vs Long Plays

Quick win: Map redemptions from your last three major CRM promotions against 6-month future customer value. Highlight which groups created value and where margin was lost.

Longer play: Identify the actions that drive long-term value. Map out where customers drop off or hesitate and understand what’s getting in the way. Then design a journey that links meaningful rewards to progress. Not just transactions.

Why This Protects Performance

Discounting is easy to track. Loyalty is harder. But when CRM teams treat promotions as a strategic lever rather than a default, they reclaim control of customer value, protect margin, and shift the conversation from short-term uplift to sustainable performance.

This article is part of From Execution to Influence, Plinc’s Strategic CRM Playbook. Download the full Playbook here to explore all 10 chapters.

Next Up:

Chapter 7 – Be the Monday Hero

→ How automation and smarter reporting can give CRM back its time and its voice at the table.

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