Opinions expressed by business partners are their own.
Key takeaways
- What started as a customer perk has quietly become one of the most powerful assets in modern commerce.
- Founders who misunderstand this shift risk developing strategies on the wrong side of confidence.
For decades, retailers have trained us to believe that loyalty cards are a favor. Swipe here, save a dollar. Enter your phone number, earn points. Buy ten, get one free.
But that story is incomplete — and, for founders, dangerously vulnerable to misunderstanding.
What retailers originally built was one of the most powerful data engines in modern commerce, and many consumers and entrepreneurs still fail to understand its implications.
As someone who has spent years inside the data economy—designing systems, advising businesses and now warning of their excesses—I can say this bluntly: Loyalty programs are no longer about loyalty. They are about leverage.
And for entrepreneurs, leverage is never neutral.
From coupons to corporate assets
Loyalty programs started innocently enough. In the 1980s and 1990s, they helped retailers understand the fundamentals of buying behavior: what sells, when it sells, and to whom.
Fast forward to today, and those same programs have turned into billion-dollar balance sheet assets.
Airlines figured this out quickly. When American Airlines used its loyalty program as collateral for a government-backed loan, the valuation was driven by data — not by aircraft, door or service quality. A similar shift is now quietly underway in retail.
Modern retailers don’t just sell groceries, clothing or home goods. They sell insight.
Each swipe of a loyalty card contributes to a growing behavioral profile that includes household composition, income bands, health indicators and life stage transitions. Even pregnancy predictions and political leanings can be predicted with startling accuracy.
This is not speculation. Data today is mathematically derived and increasingly accurate.
In many cases, retailers know what you’ll buy next before you do.
Why traders should pay attention
If you’re building a business today, you’re operating in an economy where data is currency — and loyalty programs are one of the cleanest ways to grow it.
Retailers have moved beyond merchants. They now work for media companies, analytics firms and in some cases as de facto data brokers.
Retail media networks run by companies such as Walmart, Amazon, Kroger and Target generate a lot of revenue by selling access to consumer insights. In many organizations, data margins now rival – or exceed – physical product margins.
For founders, this creates a strategic confluence.
You can follow the existing model and quietly extract more data. Or you can deliberately redesign the trust and create something fundamentally different.
This choice becomes more important as trust decreases.
Personalization has a price.
Entrepreneurs are taught that personalization is the holy grail. Know your customer. Meet them where they are. Provide consistency at scale.
But personalization is not neutral. It is a two-way mirror.
Consumers get convenience. Behind the scenes, they surrender to behavioral fatigue — often without realizing how far it travels or how long it persists.
This is where many businesses cross an invisible line.
It’s one thing to monitor behavior in a store to prevent theft. It’s quite another to digitally follow someone home in their private life.
Smart TVs, apps, voice assistants, fitness trackers and loyalty cards work in concert. They are stitched together by identity graphs and clean rooms that reconstruct a remarkably complete portrait of an individual.
At that point, consent becomes performance.
Clicking “I agree” should not invalidate the control. This is compliance.
The illusion of consent is crumbling.
Even silently, public sentiments are changing.
Across all industries, I hear three recurring responses:
- This is how the world works now.
- I have nothing to hide.
- It is already too late.
All three are wrong.
Saying you don’t care about privacy because you have nothing to hide is like saying you don’t care about free speech because you have nothing to say.
Privacy and confidentiality are not the same thing. Privacy is about autonomy – and autonomy is the foundation of innovation.
If founders want consumers to trust new platforms, AI systems, and data-driven services, control must shift back to the individual.
The next competitive advantage
The next generation of winning companies will understand something that incumbents often miss.
While it’s tempting—and easy—to simply extract data, it can and should be negotiated.
Imagine a model where customers can see how their data is used, choose when and how they participate, and benefit financially or proactively from that participation.
It is not anti-business. This is pro market.
Markets work best when participants are informed, empowered, and free to make choices. The same principle applies to data.
Resentment accumulates when users are treated as silent workers of data. When they are treated as partners, trust compounds.
Trust, unlike data, cannot be reverse-engineered once it is destroyed.
The question founders must ask now.
Before launching yet another loyalty program, personalization layer, or data partnership, founders should stop and ask a few tough questions:
Will users knowingly consent to this use of their data? Can it be explained in plain language without legal cover?
If the roles were reversed, would it feel respectful — or draining?
Answers are important.
Because the companies that thrive in the next decade won’t just be the ones with the most data.
They will be the most permissive.
In an insight-based economy, permission can be the rarest asset of all.
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Key takeaways
- What started as a customer perk has quietly become one of the most powerful assets in modern commerce.
- Founders who misunderstand this shift risk developing strategies on the wrong side of confidence.
For decades, retailers have trained us to believe that loyalty cards are a favor. Swipe here, save a dollar. Enter your phone number, earn points. Buy ten, get one free.
But that story is incomplete — and, for founders, dangerously vulnerable to misunderstanding.
