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Artificial Intelligence on Customer Loyalty Program

Business Process Services

April 21, 2023

As businesses advance, retaining customers has become an essential aspect of success. One of the best ways to achieve this is through AI in loyalty programs. The utilization of AI has become a vital tool for all businesses to retain and build strong relationships with their valuable customers. Such an AI in loyalty program will provide customers with rewards and benefits for their purchases, motivating them to continue doing business with the same company.

Let us see some interesting details and facts on how AI in loyalty programs has positively impacted businesses. According to research on loyalty programs, 22% of customers are delighted with the level of personalization they receive and there is still an opportunity to convert 78% of customers to “delighted.”

There is a constant change in what buyers expect from loyalty programs. Ideally, a great loyalty program offers benefits based on a customer’s interests and 75% of consumers say they are likely to make another purchase only upon receiving an incentive. The challenge companies face is how to use the data they have to enhance customer experience and loyalty benefits.

In today’s fast-paced modern age, considering the cut-throat competition among all businesses, companies are seeking ways to differentiate themselves from their competitors and exploring ways to enhance customer experience by offering special loyalty programs.  However, analyzing this data and developing the best possible solution requires much time and effort, and different channels are needed to reach every customer. Considering the above factors, traditional customer loyalty programs may no longer be effective in the age of technological advancement. Hence, artificial intelligence is a game-changing tool that can transform loyalty programs into more effective and successful ones.

How can AI Improve Customer Loyalty Programs, and what are its benefits?

AI in customer loyalty programs can create a seamless customer experience, making loyalty programs more effective by creating personalized reward plans and benefits. Also, it enables companies to reach out to their customers through different mediums to deliver their tailored program.

Let’s see how this is being done.

  1. Predictive Analysis:
    Artificial intelligence uses a deep learning algorithm that identifies, records, and categorizes specific actions across the customers’ journey in their website or application, starting from their past buying patterns, viewing a product, choice of selection to making a purchase, leaving a review, buying pattern, etc., The deep learning model analyzes this information to assess the customer’s character according to these demographics. After analyzing the data, customer profiling is done based on age, interest, and other factors, as no two customers are the same.
  2. Personalization and Recommendations:Personalization is  crucial for improving customer loyalty because customers are more likely to purchase if you give them what they want instead of what you have. AI can easily create and make your shopping a more personalized journey based on predictive analysis by recommending products based on your interest. Personalization within a loyalty program can create awareness of promotional events, reward status updates, and more. Many big brands use this strategy to improve the customer experience. A recent study says a 6.4x lift in member satisfaction was observed with the loyalty program when companies do personalization well. AI can provide real-time feedback on customer behavior, enabling businesses to quickly respond to customer needs and preferences. This feedback can help companies understand how customers interact with their loyalty programs and identify areas for improvements.
  3. AI BOT for Marketing Activities:
    Data analysis and personalization alone aren’t enough to make your loyalty program successful. It is equally important to focus on marketing and planning how to deliver these recommendations, offers, and rewards to customers at the right time. AI in loyalty programs through bots is the best way to drive and offer customer loyalty advantages and rewards at the right time. Also, chatbots are linked with the customer rewards program and made available across channels which can be used by the customer to view available offers and services on the website. Chatbot also doubles as the perfect virtual assistant which provides 24/7 services that support customers by answering their queries, resolving issues, and alerting customers about special offers. This provides customers with a seamless experience across all channels and improves the brand’s credibility. Along with the above benefits, AI technology can help avoid fraudulent activities, prevent spam emails, enhance cyber security, and more.

In conclusion, the implementation of AI in CX loyalty programs has the potential to revolutionize the way businesses interact with their customers. AI has the potential to provide valuable insights that will enable businesses to modernize customer loyalty programs by giving personalized rewards, predictive analytics, and real-time feedback and thus improve their overall customer experience and enhance customer loyalty. With AI driven CX loyalty programs, businesses can automate various aspects of their loyalty programs and lower their costs by reducing the need for manual work and staffing. This can go towards more rewards and incentives without increasing expenses, thus benefiting the business and the customer by utilizing these on more engaging and effective loyalty programs that keep customers returning and spreading their experience with friends and families, increasing brand value.

American businessman and author Tom Peters once said, “The customer perceives the service as the product.” AI in CX loyalty programs enables businesses to ensure they are delivering the best possible service to their customers. Businesses that embrace AI in their loyalty programs can gain a competitive advantage and achieve long-term success.

About the Author

Sudhakar Rajan

Sudhakar Rajan

Sudhakar comes with an overall experience of 9 years across Operations, Quality & Transitions. He is passionate about upcoming technologies and their applications across businesses. As part of Transitions, he lays the groundwork to implement the people, processes and technology required to deliver the operational services for our clients

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