In an era where customer loyalty is as fleeting as the latest trend, artificial intelligence (AI) is emerging as a potential game-changer, empowering businesses to redefine engagement strategies and forge deeper, more enduring connections with their clientele.
Wendy’s Company has unveiled an AI-based loyalty platform that analyzes customer data, including purchase history and preferences, to create tailored offers and rewards. By understanding each individual’s unique tastes and habits, AI systems can provide targeted incentives that are more likely to resonate with the customer, ultimately driving increased sales and brand loyalty.
“Customer loyalty programs must leverage AI to stay competitive. But the key to realizing the full benefits of AI in improving the customer journey lies in finding the right balance of personalization and automation,” Kelli Hobbs, a loyalty and rewards expert at Valuedynamx, told PYMNTS.” One-size-fits-all marketing doesn’t cut it, so it’s important to leverage data and AI to better understand your customers as individuals — using those insights to drive positive brand engagement on a regular basis.”
A recent study from PYMNTS Intelligence confirms personalized offers from merchants can have a big impact on how consumers shop, but failing to fully understand a customer’s needs can result in offers that fall flat. The survey found that nearly 83% of all consumers are interested in customized discounts and promotion offers, but only 44% said the offers they receive are relevant to their needs.
Gaming for Loyalty
A fundamental aspect of Wendy’s AI loyalty program involves gamification, where the AI system rewards customers for encouraging and recognizing their loyalty. Lindsay Sanchez, chief marketing officer of digital engagement software provider Khoros, highlighted in an interview with PYMNTS the effectiveness of gamified customer loyalty programs in bolstering online brand-owned communities.
“This technology can also self-optimize the program by garnering advanced customer insights based on community and member behavior,” she added. “For these gamified ranking systems to be aligned with the brand’s mission and community members’ needs, the rankings must give greater weight to the activities that are most important to the audience, and that starts with analyzing their interactions.”
Making things more personal for customers is key to keeping them loyal, especially when you’re dealing with people of all ages, Hobb said.
“Gen Z and Millennials, for example, are looking for the most value from their loyalty programs and may benefit more from gamified rewards offering as compared to other generations,” she added.
Hobbs explained that AI helps companies understand what their customers like and how they behave in real-time, making it easier to offer a tailored and flexible experience.
“This personalized approach communicates to consumers that they are valued beyond mere transactions,” she added. “Through consistent, personalized interactions, businesses foster deeper connections, ultimately enhancing customer lifetime value.”
While AI-powered loyalty programs offer numerous benefits, experts caution that businesses must balance personalization and privacy.
“To properly train these AI-powered digital assistants, [one must] equip the technology with an intimate understanding of a brand’s audience, needs, and pain points,” Sanchez said. “This means that IT people shouldn’t develop this AI alone. “Contact center experts know how to talk to their customers and maintain brand voice, so they are a critical component of the IT teams’ cultivation of this service into a seamless extension of the brand experience, not a frustrating roadblock.”
Recipes for AI Success
Companies are already using AI to keep customers. Finance company Intuit partnered with Khoros to evolve its online community with a gamified system of badges and rankings to reward user participation and give special attention to top contributors. After one year, this loyalty program increased customer satisfaction scores by 17% and engagement by 35% within the community, Sanchez said.
Sanchez also pointed out that Samsung’s AI digital assistant successfully handles over a quarter of customer inquiries. This initiative has increased the brand’s customer experience scores.
“By effectively training on customer interactions, knowledge bases, and the brand website, this customer service tool exploded customer loyalty, offering more insightful, personalized, and streamlined customer experiences,” she said.
Jean-Matthieu Schertzer, the Eagle Eye Group‘s first chief AI officer, told PYMNTS that predictive AI and customer loyalty programs are ideal matches in many ways. “Consumers understand that loyalty programs reward them for desired behavior, which creates an expectation of personalization,” he added.
Schertzer pointed to McKinsey research, which indicates that 71% of consumers expect personalized interactions, and 76% are frustrated when they don’t get them. He added, “By leveraging data to customize every interaction to the individual customer, predictive AI can deliver the advanced personalization consumers expect.”
The French supermarket chain Carrefour uses AI to increase engagement with its loyalty program through gamification. Carrefour’s Challenges initiative, built and run by Untie Nots (part of the Eagle Eye group), creates custom thresholds and goals for its MyClub loyalty program members based on various factors, including shoppers’ purchase history and supplier offers.
“AI allows the Challenges program to dynamically tailor each of these triggers to the individual loyalty member,” Schertzer said.
While many retailers are leaping into AI, Schertzer recommends a thoughtful approach to ensure a lasting impact on customer loyalty and ROI.
“Prioritize integrating AI into existing retail operations, like a retailer’s current loyalty program, at first,” he said. “Focus on rethinking current workflows and processes, acquiring stakeholder buy-in, and training teams to harness AI’s power. And perhaps most importantly, work with partners that understand industry-specific nuances, can streamline the adoption process, and help you establish a sustainable competitive advantage. AI is the future of customer loyalty but needs expert guidance to reach its full potential.”
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