AI in Loyalty Series: How AI is Revolutionizing Loyalty Programs for a More Engaging Customer Experience

Loyalty programs equal points, right? Well, not if you are hoping to create meaningful connections with customers. If you are looking for ways to stand out and foster lasting relationships, look at how AI is rapidly transforming loyalty programs by making them more personalized, efficient and engaging by creating a more tailored and meaningful experience for each customer. The power of AI lies in its ability to analyze vast amounts of customer data, providing insights that help businesses understand individual preferences, behaviors, and needs.

For example, AI enhances loyalty programs through personalization. By leveraging machine learning (ML) algorithms, businesses can offer customized rewards that are directly aligned with each customer’s psychographic data (interests, attitudes and values) with demographic data (age, race, gender, income, etc.). AI can predict what rewards a customer will find most appealing, whether it’s a free product, exclusive access to an event, or even early access on new merchandise that is a precise match to their size, color and style preferences based on historical or predicted insight. This level of personalization can lift customer satisfaction and increase the likelihood of continued engagement, referral and so much more.

AI also takes personalization a step further by enabling dynamic offers. ML models can analyze a customer’s behavior in real-time, adjusting offers and incentives based on their immediate preferences and past actions. Whether it’s suggesting a product they are likely to purchase next or offering a limited-time discount tailored to their needs, these timely and relevant offers drive more meaningful interaction. While discounts still matter, 71% of consumers expect personalized interactions — a sense that brands really understand them — and most feel frustrated when personalization misses the mark.¹

For example, Amazon’s early adoption of AI and automation has given them a competitive edge. They use AI to improve efficiency and enhance customer experience. Implementing AI in eCommerce enables businesses to offer personalized experiences, streamline operations, enhance customer support, mitigate risks, and drive customer loyalty. This AI revolution will reshape loyalty programs and transform customer engagement and retention.²

The AI adoption is a “team sport” that requires cooperation to avoid redundant work and conflicting initiatives, and build data sets, tools and models for multiple applications. “It takes engineering, architecture, strategy, change management, data and loyalty teams all coming together to make AI programs in loyalty successful,” Brendan Boerbaitz, senior manager at Deloitte Consulting said.³

As a leading loyalty consulting firm, Ascendant Loyalty works with many companies that build capabilities using AI. Loyalty Juggernaut, for example, offers GRAVTY® AI-Recommend, a tool within the platform that allows businesses to segment out customers based on many attributes. GRAVTY AI-Recommend is an industry-specific tool, so you can leverage best practices for your industry to create customer segments that work for your business. Additionally, GRAVTY AI-Recommend allows businesses to add their own customer model to the platform to make it even more specific. Taking personalization even deeper, GRAVTY AI-Recommend can layer on GRAVTY AI-Individualize, which offers customers personalized offer values for each member in the segment, so three customers shopping the same store will not receive the same offer based on their psychographic and demographic data—an example of fully dynamic offers based on data and AI.

AI-driven loyalty programs are about creating seamless and memorable experiences that keep customers coming back. By harnessing the power of AI, businesses can build loyalty programs that are not only smarter but also truly customer-centric, setting the foundation for long-term success.