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What AI Means to Customer Loyalty Marketing?

Martech Outlook | Tuesday, July 14, 2020

With so many loyalty programs and memberships out there, how can marketers make their program stand out and surprise customers? The answer is in the hands of AI.  

FREMONT, CA: Customer retention is top of mind for businesses. Loyal customers make it possible for the business to make sales and stay profitable perpetually. In a competitive market where customers can make snap decisions to switch their service providers, customer retention programs can make all the difference. And loyalty programs have been given recognition in recent years as an idea for customer retention, but having a traditional loyalty program cannot serve the purpose. To increase loyalty program ROI and consumer retention, companies are incorporating Artificial Intelligence (AI) in their attempt to provide their customers with a more personalized experience. By creating a robust loyalty program with the help of AI that facilitates for modern marketing techniques, marketers can turn their customers into advocates of their brands.

Customers’ expectations of personalization are increasing as the customer-centric culture is spread among big brands. Data-fed AI systems have made a big step in analyzing and understanding customers’ needs. Marketers are now able to collect necessary information and track customers’ purchasing history, shopping behaviors, and preferences. Based on these data, AI learns and makes a decision to timely offer buyers personal touch, tailor-made products, and customized services. By deploying AI in the loyalty program, customers really get that attention which they crave today.

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Usually, loyalty program data is used as a guide, delivering insights on what a program member has done in the past, with which marketers can make an informed guess as to what they might do in the future. For loyalty marketing objectives, including, identifying customers’ position in the purchasing cycle or tracking habits and preferences, this data is sufficient. For streamlining processes like behavioral targeting, influencing the next buying decision, and predicting future customer actions, AI and machine learning are indispensable. Many brands are already using AI and machine learning for a variety of applications as they are most promising in managing and interpreting customer data captured by loyalty activities and customer interactions. With this, brands can understand their customers faster and react to changes in the market more effectively.

Another exciting application of AI is its ability to more accurately predict customer behavior and the potential to more effectively influence that behavior within the shortest time possible. Loyalty program data can provide an entry point for the sales funnel and customer life cycle and sound cross-system integration, which can facilitate a single view of the customer. AI can take this customer identity, combine it with real-time analysis of customer activity, and forecast what the next customer action might be. The outcome is a dynamic delivery of messaging, offers, or incentives to influence that activity. In short, AI transforms a data-driven loyalty marketing approach to a predictive one. AI can optimize the guesswork that often comes with identifying and shaping customer encounters. Used effectively, AI is an incredibly valuable tool for optimizing loyalty marketing strategies.

Loyalty program members shop around a lot. They might be looking for better deals, different brands, prices, locations, schedules, or even trying to get the point bonus. If the loyalty program is doing its job right, it should understand the customer and their intent. By identifying intent, marketers can decide the most effective amalgam of promotions that will engage customers. Knowing what triggers a customer’s buying intent is not easy, but with advanced AI modeling, marketers can start to predict not only the best offer but also address other parameters that will engage and satisfy customers.

Modern consumers are influenced by millennial characteristics, including acting at the moment, using values to guide purchasing decisions, having a demand for authenticity and experiences, and ensuring offers. Technologies providing the ability, digital natives expect all these characteristics. Brands have tried adapting to these demands, with many adopting location-oriented marketing. This way, marketers are offering real-time engagement with relevant and personalized offers to reach their customers and compete with other loyalty programs in their sector. AI-powered personalization on a one-to-one basis engages customers with offers, perks, and amenities that are surprising, relevant, and interesting for customers.

AI also offers a robust set of algorithms for marketers, including natural language processing, image analysis, and semantic reasoning, with which marketers can have an adaptive and evolving understanding of customer engagement. Today, loyalty means more than enrolling in a program and passively collecting rewards or cashing in for a benefit. Customers wish to be treated uniquely, and when the customer experience meets the expectation, brands benefit. With AI, marketers have an exciting future in how they transform the loyalty experience to engage and retain valuable customers; ensuring loyalty programs are profitable for the brands.

Loyalty marketing is focused on creating a long-term, mutually beneficial relationship between customers and brands. For marketers who aim to jump-start the results of their loyalty and marketing programs, being early to embrace the AI revolution will help brands do a lot more with the data they are collecting.

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