The realm of customer loyalty has evolved tremendously over the years, with brands and marketeers continuously seeking innovative ways to stand out and create deeper, more meaningful relationships with their customers. And now, as we stand on the precipice of a new age in technology, artificial intelligence (AI) is poised to take centre stage and redefine the loyalty landscape in ways we could have never imagined. For marketers and Loyalty Programme Managers, AI refers to systems that can perform tasks like a human such as learning, problem-solving, pattern recognition, decision making, and language understanding.

What Marketers Need to Know.

First things first, we know that AI might in the first instance seem a little intimidating. It’s not just the complexity of the technology itself that can be daunting, but there’s also the human hesitation towards ‘the unknown’. How will AI impact jobs? Will it be difficult to control? Could it make decisions that clash with your brand’s values? These fears stem from a mix of myth, misunderstanding and a dash of good old scepticism about handing over parts of a marketing strategy to a machine, no matter how smart it is.

The reality is that marketeers are creative, strategic thinkers used to controlling the narrative and engaging personally with their audience. The idea of an artificial entity taking part in this process can feel like stepping into an unknown territory and risking that personal touch that the best brands strive for.

But the reality is, AI is not the future…

It’s the present, especially when it comes to Loyalty Programmes. AI is your new superpower when it comes to understanding your customers and creating relevant and meaningful interactions.

So, rather than fearing AI, marketing leaders could in time, view it as an invaluable tool of the trade. Allowing you and your team to work smarter and more efficiently while gaining a competitive edge. The future of marketing will be AI-powered, and those who incorporate it into their strategies and workflows will be best positioned for success. With AI as an ally, the possibilities for innovative and impactful customer-centric thinking are endless.

Just imagine each and every time you go into your favourite coffee shop, you know that every visit earns you a point, and once you get enough points, that’s a free coffee right? This isn’t simply good luck, it’s a well-thought-out Loyalty Programme which aims to keep you, coming back time and time again.

Now what if, through leveraging AI, this interaction was more dynamic and personalised? By integrating AI into your Loyalty Programme, what if you could offer your customer their favourite pastry on the day that you know they are most likely going to purchase it? WOW – now that is an incredibly powerful and personalised brand interaction.

AI infuses Loyalty Programmes with the capability to learn from customer interactions, making every touchpoint an opportunity for personalisation and engagement. It’s about creating a 1:1 relationship with your customer, at scale, something that was previously unimaginable.

How will AI shape the future of Loyalty Programmes?

Now we’ll explore some of the ways that AI can truly revolutionise your strategic approach to customer loyalty. From predictive analysis to hyper-personalisation, here’s how this emerging technology is transforming modern marketing though…

  1. Personalisation – Getting to know your customers
  2. Hyper Personalisation
  3. Predictive Analysis
  4. Customer Experience – Chatbots

Personalisation – Getting to know your customers

Personalisation is key to enhancing your customer experience and driving higher levels of loyalty. By leveraging customer data and AI, brands can gain deep insights into customers’ preferences and behaviours – tailoring their rewards, communications and incentives by segment or cohort. Tom Peace, from The Loyalty People believes that

“By leveraging AI algorithms, businesses can now react much more quickly to the insight, providing real time and highly relevant communication. This creates an entirely new level of customer engagement.”

Hyper Personalisation

The magic of AI in Loyalty Programmes lies in its ability to offer unprecedented levels of personalisation – HYPER PERSONALISATION. Imagine a Loyalty Programme that knows you so well it can predict what you want before even you do. This is the power of AI. By analysing data from various customer interactions, AI can customise rewards, offers and communications to match each and every customer’s specific preference and buying habits. For example, if your AI system notices that a customer frequently purchases organic products, it might offer them exclusive discounts on new organic offerings/ Or, it could recognise a customer’s love for chocolate and send them a personalised offer of their favourite bar. This level of personalisation builds a strong emotional connection between the customer & the brand, increasing loyalty and retention.

Predictive Analysis

Predictive analysis is another area where AI shines in Loyalty Programmes. By Leveraging vast amounts of data, AI can forecast future buying behaviours and trends, allowing businesses to stay one step ahead. This predictive power enables brands to tailor their Loyalty Programmes in ways that continuously meet and exceed customer expectations. Furthermore, it can identify potential issues before they become problems, whether it’s a dip in engagement or a shift in consumer preferences. By predicting these trends, businesses can adjust their strategies in real time, ensuring their Loyalty Programmes remain relevant and engaging. This proactive approach not only keeps customers satisfied but also drives sustained business growth.

Customer Experience

One of the ground-breaking ways that AI is revolutionising Loyalty Programmes is by elevating the customer experience. It does so by making interactions seamless and more intuitive. For instance, chatbots powered by AI can handle customer inquiries, 24/7, providing instant responses to questions about your Loyalty Programmes, their point balance, and rewards. These AI assistants can also guide customers through the redemption process, making it a breeze to maximise their loyalty benefits. Moreover, AI can track customer preferences and behaviours to offer tailored recommendations, making each customer feel ‘seen’, understood, and valued. This not only enriches the customer’s experience but also fosters a deeper relationship with the brand.

AI Loyalty Programme Case Study – Starbucks

Did you know that global coffee giant Starbucks has been using AI within its Loyalty Programme, Starbucks Rewards for quite some time? The company harnesses the power of AI to enhance its members’ experience – by analysing customer data and providing personalised offers and recommendations.

How? The Starbucks AI algorithm can analyse each individual members purchase history and suggested new food or drinks which should appeal to them, based on their personal preferences. For example, if a member frequently purchased iced coffee in the morning, Starbucks Rewards might send them a personalised offer for a free iced coffee during a hot summer’s day. Or, if a customer hasn’t visited their local Starbucks location in a while, they may receive a promotion for a free beverage to entice them back to the store.

Speaking about how AI has truly supercharged Starbucks Rewards’ participation rate, CEO Lazman Narasimhan said:

“Starbucks Rewards members develop a routinized long-term relationship with our brand, we recently activated new predictive analysis within our AI tool to identify and incentivise specific members cohorts – this action saw our 90-day active member base in the US, increase to 34.3 million, up 13%!”

Now that is a world class example of effectively harnessing the power of AI to boost not only member satisfaction, engagement and participation but real business growth!

AI Loyalty Programme Case Study – Connie the Chatbot, Hilton Hotels

Emotional AI is an emerging technology that uses AI-powered algorithms to detect and respond to human emotions and deliver an exceptional customer experience. For Loyalty Programme Managers, emotional AI can be used to personalise customer interactions based on emotional responses. For example, AI can detect if a customer is frustrated or upset and respond with a bespoke replies to improve the situation.

One brand utalising emotional AI to enhance its Loyalty Programme, is the Hilton Hotel Group. Their robot concierge and customer service agent, ‘Connie’, named after the hotel chain’s founder, Conrad Hilton, is designed to recognise and respond to human emotions in a natural and intuitive way. It uses natural language processing and sentiment analysis to understand the tone and meaning behind member messages and can respond with empathy and understanding.

For example, if a member is unhappy with their hotel room, Connie can empathise with their frustration and offer a range of solutions to resolve the issue. Connie can also remember previous interactions with the individual member and use that information to provide an even more personalised recommendation.

Speaking about Connie’s impact on overall customer experience, Jim Holthouser, executive vice president for global brands at Hilton says

“We’re always looking for ways to surprise and delight our guests. How do you better serve customers? How to do you make the lives of our team members easier? I think with AI – you’re looking at the future.”

Final Thoughts.

You may have been sceptical at first about how AI could improve Loyalty Programmes, but after reading this article, we hope that you see the enormous potential. By leveraging AI to gain deeper customer insights and provide personalised recommendations and offers, brands have a real opportunity to revolutionise Loyalty unlock its power.

Rather than viewing AI as a threat, think of it as not just a tool, but a team member that’s always on, always learning, and always working to make sure your members feel valued and understood.

In the race to win customer loyalty, AI is the ace up your sleeve—empowering your business to build stronger, more meaningful, and longer-lasting relationships with your customers. So, the question isn’t whether AI can help your brands Loyalty Programme— it’s how you can integrate AI to start reaping the benefits?

P.s, we’ll let you in on a little secret – AI helped us with this article. A blog post about AI, written with AI and the ever-important human touch – hopefully this leaves you inspired to try some AI tools for yourself.