Consumers who discover new brands, products and services through word-of-mouth recommendations and reviews are five times more likely to be loyal to those brands than those which are discovered using AI (56% net positive impact on loyalty vs 11%).
That’s according to a new report from the Data and Marketing Association (DMA) that has revealed a stark disconnect between the customer engagement tactics marketers are adopting and what consumers actually value.
The DMA’s Loyalty in the Age of AI report, released today, also highlights a clear generational divide in responses to AI-driven marketing. While younger adults are broadly receptive to AI-led brand recommendations, among over-55s they are more likely to weaken loyalty than strengthen it, recording a net score of -19 percentage points.
In addition, 70 per cent of marketers believe loyalty towards their brand has increased, whereas consumer behaviour tells a different story, with the proportion of consumers who say they stick to familiar brands, shops and sites for everyday purchases falling 9%, from 76% in 2024 to 67% in 2026.
Released annually, the DMA’s 2026 Customer Engagement Report explores how economic uncertainty, the continued rise of AI and the growing importance of consumer data are affecting brand loyalty.
Based on a national survey of over 500 consumers and marketers conducted earlier this year, the research examines how loyalty is impacted by acquisition strategy, the usage of AI, price promotions and discounts, loyalty schemes and data privacy concerns.
The data also reveals a significant gap between marketers’ belief in the power of discounts and the reality of the impact they have on consumers. Almost three-quarters (74%) of B2C marketers believe targeted offers make customers more likely to demonstrate their loyalty, whereas just only half (55%) of consumers agree.
Furthermore, 40% of consumers say existing customers paying more than new customers would make them less loyal, but only a quarter (26%) of B2C marketers recognise this as a loyalty problem.
Consumers are also becoming more deal-sensitive, with over half (54%) saying offers can make them switch brands, while more than a third (39%) would stop buying from a brand they liked if it stopped offering deals.
The research also looked closely at the relationship between how commonplace loyalty schemes now are and how consumers feel about how their data is used by those same schemes.
While 91% of consumers are now members of at least one loyalty scheme – up from 87% in 2023 and 90% in 2024 – the DMA’s research also demonstrates that 69% of consumers are concerned about data breaches or fraud, while 42% say data privacy concerns could potentially reduce their loyalty to a brand. This compares with just 30% of B2C marketers who recognise the risk.
“In many ways, our 2026 DMA Customer Engagement Research reflects the mood of the nation,” says Rachel Aldighieri, CEO of the Data and Marketing Association.
“Cost-of-living pressures, coupled with the unpredictable nature of AI, are forcing brands to adapt their marketing strategies, while consumers appear more concerned with finding the best deal, rather than remaining loyal to a brand they may have aligned themselves with for a period of time.
Aldighieri continues: “Encouragingly, though, human connection, in the form of word-of-mouth recommendations and reviews, still appear to be the most trusted methods to build brand loyalty.
“What this tells us is that while new technologies and promotional tactics will continue to play an important role in the decisions customers and marketers make, brands cannot lose sight of the fundamentals.
“Trust, relevance and a clear understanding of what customers actually value remain at the heart of long-term loyalty.”
Summary
What the research shows is that customer loyalty is becoming increasingly fractured. With cost-of-living pressures dominating the public consciousness, many people are willing to switch brands for a better deal, rather than remaining loyal to a brand they may have previously been loyal to – which is contrary to what marketers appear to assume.
Earned and owned channels continue to build the most consistent loyalty, while social media and AI perform radically differently across different demographics. Across several areas however, the research suggests that marketers are more closely aligned with younger consumers than older audiences; a sign that they could be neglecting a significant portion of their potential market.
Concurrently, loyalty schemes have never been more popular, however growing concerns around data privacy and how that data is handled are raising the risk levels for brands.
