Artificial Intelligence has another string to its bow as it aims to make a lasting mark on customer loyalty by creating personalised customer experiences. But just how much of a role does AI play in customer loyalty? And what are its benefits to your brand?
How Artificial Intelligence Works Within Customer Loyalty
AI-powered customer loyalty comes in a few different variations. Fundamentally however, AI software combines vast amounts of data using algorithms to learn from analysed patterns and features. With this data, it’s able to self-improve performance and deepen its expertise.
Customer loyalty AI is actually a blanket term for a whole range of strategies designed ultimately to improve customer loyalty. Some of these include:
- Analysis of large data sets to predict consumer spending habits and trends
- Enhancing the customer experience every step of the customer journey through personalisation
- Taking pressure of customer service teams to resolve queries without the need for human intervention
Up to now, AI seems to be used predominantly in a supportive role. But that capacity will change as technology improves and demonstrates even better ROI. As we’re about to uncover, even in a fairly limited role, AI has made huge waves in the customer loyalty sphere and improved customer experiences across the board.
Application of Customer Loyalty AI
AI spending in marketing is set to increase to $107.5B in 2028 from $15.84B back in 2021. Whilst we won’t know how much of that will be invested in customer loyalty, the way AI is used in its infancy today, implies a significant portion will be directed towards enhancing personalisation.
For example, look at how it functions, how it may function, and what this means for CX in the following:
1) AI powered customer loyalty programmes
AI-based tools run loyalty programmes more efficiently. The amount of data collected in your programme is huge, complex and constantly growing.
Yet, even with CRMs, some loyalty programmes require lots of manual hours from support. For example, customers may need fixes for glitches when trying to redeem reward codes. Or candidates in the right place of their customer journey, might slip through gaps and miss an ideal reward. Thereby dulling the effectiveness of your loyalty programme.
Chances of these playing out are reduced significantly once AI is brought into the fold. That’s because customer loyalty AI is capable of extracting and analysing big data that traditional software might struggle handling. Similarly, AI is able to predict customer behaviour within your loyalty programme. Meaning it could automatically offer segmentations and reports, advising you on which rewards should be offered to which customers at the right time.
The future of AI-based loyalty platforms is looking bright particularly when we consider what loyalty programmes are designed to do. Marketers spend a lot of time researching and fine tuning loyalty programmes to boost customer retention.
As this study shows (pp. 5 – 6), customer loyalty is reliant on mechanisms and theories. All of which depend on some form of customer behaviour analysis, consumption patterns, and weighting functions.
To us humans, this sounds like hard work. Yet, for AI, it’s a walk in the park! And as the old adage says, ‘better to work smarter than harder.’
2) Predictive marketing analytics
AI will do the heavy lifting in marketing analytics in the foreseeable. Advances make it capable of learning without the need for human assistance! Take machine learning (ML) for example. A subfield of AI that, again, reviews vast amounts of data using artificial neural networks, known as deep learning.
Customer loyalty AI is able to use deep learning in a number of ways. It informs marketers about the best strategic choices in their loyalty programmes. Flexible functions and capabilities also allows it to directly interact with consumers. Predictive marketing analytics is perfect when it comes to personalised recommendations for customers.
It’s also a validated system that’s demonstrated huge ROI for major players like Starbucks, Amazon Prime and Apple. So much so that Apple is looking to employ AI officers! Proving again, AI will play an increasingly prominent role in all areas of business, including marketing products and services.
3) Chatbots and virtual agents
What’s more, ML techniques have improved to a point where AI is able to hold its own in conversations with customers. It’s typical these days for consumers to engage with brands first by interacting with chatbots and virtual agents.
And who can blame them?
AI powered chatbots from a user end perspective are great! Guiding website navigation, quickly resolving queries, and encouraging self customer service at a time when it’s highly popular…and no wonder! As it cuts out waiting on the phone or a business rep emailing you back.
A learning technique called natural language processing helps AI understand text or the spoken word on a human level. Advances in NLP already show promising potential. The North Face used a virtual assistant that helps customers find products ideal for them. Apparently this was a big hit as it boosted conversions by 75%!
Whilst still a savvy tool, the VA looks nowhere near as impressive as some of the innovations coming out today. The future of virtual assistants and chatbots is looking even more beyond what was thought possible a few decades ago.
Soon, NLP might even help AI predict what customers might say next. Even a chatbot market has emerged in recent years and by some estimations will be worth $10B just three years from now.
4) AI-driven innovations
AI has also been strutting its stuff in the world of fashion. Designer brands like Tommy Hilfiger are partnering up with tech companies to deliver what they called ReImagine Retail. The AI collects data in real time, to see what types of clothes are purchased together, their colours and styles, materials, patterns and so forth.
This data is then passed on to designers to both inspire and inform them about the best-selling trends and styles! By doing this, AI cuts down research time for designers who otherwise are constantly on the lookout for inspiration on sites such as Pinterest and Instagram.
Consider also the impact product innovation has for deepening the customer experience. Tommy Hilfiger basically creates products to fit the customer in an industry that traditionally told customers what fashion was “in”. Taking a customer-centric approach to a whole other level. This practically guarantees better engagement with their audience as they’ll be offering exactly what the customers want at any given time. Imagine what that does for customers’ loyalty…
Customer loyalty AI is just getting started
As to whether now is the perfect time to implement AI-based marketing into your loyalty programme?
We’d say yes...definitely!
In fact, going back to Statista, marketers shared the top applications they’d trust AI to oversee....might be worth checking out.
The Benefits of Customer Loyalty AI
By now you should be seeing the benefits of AI-led personalisation and what that means for CX. Whatever benefits your customers also benefits your business. But it’s also worth pointing out benefits to businesses in terms of retention, productivity, lead generation and competition.
That’s why below, we’ve curated a list of statistics that highlight customers’ desire for better personalisation, their attitudes towards AI, what it means for your KPIs, and validation of customer loyalty AI.
Customer’s attitudes towards AI & personalisation
62% of customers are willing to engage with AI for an enhanced personalised experience.
80% of online shoppers prefer brands that offer personalised digital experiences.
71% of customers expect companies to respond and engage with them in real time. Of course, this is made possible with AI tools such as chatbots and VAs.
43% of consumers believe businesses who use AI are more careful when handling their personal information.
Customer loyalty AI and lead generation & nurturing
Evidence shows that AI algorithms generate up to 50% more leads
When currently 21% of B2B sales reps spend more than half their time prospecting leads and researching.
AI assistants hand over 25% more qualified leads to sales.
40% of sales teams agree that AI helps them succeed due to unrivalled data mining.
84% of customers agree that better product innovation is very important to them when more organisations are now using AI to spot opportunities to improve product innovation – resulting in increased customer loyalty.
Enhanced customer experience & retention
Marketers are using 50% more customer data sources, hindering their efforts in other areas, but AI can leverage data collection for better personalised experiences.
Better service improvements enabled by AI have shown to increase customer retention by 51%.
AI automates much of the work associated with sales and marketing, thereby improving productivity by 40%.
44% of businesses who’ve integrated AI report increased cost savings.
How to Leverage Customer Loyalty AI in Your Programmes
Customer loyalty AI walks hand in hand with customer loyalty programmes. Firstly, the data collected in your customer loyalty platform is a treasure trove for AI. As you already know, the whole purpose of customer loyalty programmes is to enhance overall CX and give people incentives to keep coming back. Digitising the process onto software makes the objective a lot more manageable.
Streamline the process of customer nurturing further by adding AI into the mix. Not only does it extract useful data, it also engages customers via chatbots the moment they visit your website. You could also set up a virtual assistant to help website visitors make purchases. The effectiveness of which can be monitored in KPIs set up in your chosen loyalty platform.
Worth noting that AI also works well with all types of customer loyalty programmes. Whether that be a points based system or a tiered loyalty programme. Once a customer starts climbing the loyalty ladder, your AI assistant could send invites and dynamic offers, calculated to yield the best outcome for both parties.
Reward programmes that use machine learning auto generate hyper-focused incentives and offers, based on customers’ behaviours and profiles, in order to enhance the customer experience.
It also monitors customer churn and attrition rates, freeing up your marketing team to focus on other crucial areas, such as content ideation for win-back campaigns. Using past data, the AI predicts more accurately which customers are more likely to leave.
Does AI Have a Role With You?
As always, we’ve looked at a lot in this blog. So, before you go, let’s summarise everything covered into a list of key takeaways that you can take with you.
- Customer loyalty AI is a solution for increasing customer engagement and customer experience.
- Its unrivalled method of analysing patterns in huge amounts of data makes it the perfect candidate for tech stacks that include CRMs and customer loyalty programmes.
- Capabilities of conducting simple tasks positions customer loyalty AI as an ideal assistant for busy marketers who are constantly personalising and enhancing CX.
- Accurate predictions means AI correctly informs designers, salespeople and marketers about product innovation, customer qualification, and CX improvement opportunities.
- The future of AI looks promising as it’s already demonstrated a real use case, featuring in loyalty programmes, as a predictive marketing analyser, customer service assistant, and innovator driver.
- Finally, the benefits of AI-led solutions perfectly align with the key objectives of customer loyalty programmes and even improves cohesion between different programmes due to centralised data.
For more customer loyalty trends read our blog Customer Loyalty Trends: 10 Game-Changers to Prepare for in 2023