AI in Loyalty Series: Reshaping Loyalty Program Management with AI-Powered Customer Segmentation - Part 2

AI is transforming a lot these days. Let’s add loyalty program management to the list. We are starting to see AI enabling businesses to better understand and engage their customers through advanced customer segmentation. By analyzing vast amounts of data, AI can identify distinct customer segments based on behavior, demographics, and psychographics, uncovering insights that would be impossible to detect manually. This allows businesses to create more targeted and effective loyalty campaigns, ensuring each customer receives rewards and offers that resonate with their unique preferences and needs. Especially as more than 70 percent of consumers expect personalization and 76 will seek out different companies if they receive un-personalized communications.¹

With the power of AI, it can analyze purchasing patterns to identify a segment of customers who frequently buy premium products and tailor exclusive perks, such as early access to luxury items or invitations to VIP events. Similarly, it can detect budget-conscious customers and design campaigns focused on discounts or bonus point opportunities. Psychographic segmentation takes this even further. By identifying shared attitudes, interests, or values among customers, it allows businesses to connect on a deeper level by creating marketing campaigns that are meaningful to the customer. Psychographic segmentation can also create a campaign that appeals to the customers competitive side through gamification offers. This precision not only enhances engagement but also maximizes the ROI of loyalty programs by allocating resources where they will have the most impact. Loyalty increases 1.5x when brands use personalization to meet customer needs, but 50% of consumers feel that personalization is often off-target.²Marketers need to constantly tweak and analyze data to include the correct personalization; AI takes a lot of this off the marketers plate.

One example of a loyalty platform that has AI customer segmentation built into it is GRAVTY AI-Recommend from our friends at Loyalty Juggernaut, which segments out customers based on many customer attributes. GRAVTY AI-Recommend is an industry specific tool, which also allows businesses to add their own customer model into the platform to make it even more specific. GRAVTY AI-Recommend gets even more specific with GRAVTY AI-Individualize, which offers customers personalized offer values for each member in the segment, so 3 customers shopping the same store will not receive the same offer based on their psychographic data.

By leveraging AI for segmentation, businesses can move beyond one-size-fits-all approaches and create loyalty programs that feel personal and relevant. The result is a stronger emotional connection with customers, increased participation in loyalty initiatives, and a competitive edge in retaining and growing the customer base.

And as AI continues to change the loyalty landscape, Ascendant Loyalty, as a leading loyalty consulting firm, will continue to keep you informed and up to date on all these changes and new technologies.