As a consumer, you are overloaded from all sides with different offers. The one even less suited for your situation than the other. For example, I recently received an offer full of carbohydrate-rich products, while I have been following a keto diet for months and only order low-carbohydrate products from that store. The retailer could just know this based on my customer data; and should know for the optimal “customer experience”.
Many retailers have pretty standard engagement and loyalty programs, in which every individual has the same advantages and offers. In case you really want to activate and motivate your customers, you need to make sure that the customer receives a relevant offer and the right moment. Artificial intelligence (AI) is one of the essential and future proof technologies to enable this. Within this blog I explain how you can apply AI, in form of machine learning, to come up with a unique, effective and data driven loyalty program.
”The practical use cases for data and loyalty on customer engagement are still often overlooked.”
AI knows different interpretations and applications. In order to really understand the possibilities of AI and see the added value to loyalty, it is important to first get to know the definition of AI and machine learning.
Machine learning, the technique that enables AI, is software with the power to learn from large amounts of data. In the perspective of loyalty you can better segment with the help of machine learning.
AI supports you in collecting and processing large amount of data, to make sure you can communicate realtime relevant offers with you customers. This enables a personalized and engaging customer experience: the more important ingredient for customer engagement.
Data driven loyalty programs and the effect on customer engagement
Many brands and organizations already use AI to improve the experience of their customers. Still, the practical use cases for data and loyalty – and how they can be improved with AI – are often overlooked. In our opinion, they are at least two applications of AI that influence the complete customer engagement process. These are:
1. Personalized and proactive communication with customers.
With AI you can learn more about the consumer and predict behavior. That enables automated, personalized communication, through which you can offer promotions and products that fit the customer journey and private environment of an individual.
In addition, due to these predictions, you are able to proactively and at the right moment communicate offers. Has a customer bought two new jeans from a specific brand every quarter, then you can use this information to serve this customer by offering fitting products proactively. This ensures you to become more relevant as a brand and you are stimulating loyal behavior. In this approach, sales and service are being combined and activated from a marketing perspective. We call this a multi-department approach.
“Generic benefits and incentives disappear with the rise of AI in loyalty.”
2. Personalization of loyalty programs and incentives.
Every individual has its own preferences and behavior. The context in which someone makes decision also differs per individual. AI ensures that you are able to segment your customers and make specific detailed profiles. Based on this information you can apply customer centricity and personalize incentives. So, Generic benefits and incentives disappear with the rise of AI in loyalty. Plus, with a wider offer of rewards you can the individual a sense of control on what he or she is saving for and you can better engage your customer.
Benefits of AI on segmentation
Segmentation has already been part of loyalty programs for a long time, but with the help of AI technology this can become even more effective. As soon as you enrich your customer segmentation and profiles with automated data from AI, you can indirectly start validating behavioral data of the individual. In this way it is possible to connect geographical, demographical and psychographic characteristics to behavior.
By using these characteristics as a starting point, you can research which customer groups are most likely going to interact with your brand at the most optimal moment, while considering factors as sentiment and price sensitivity.
So, as soon as a loyalty program is able to dynamical manage the customer segments by the automatic processing and analyzing of customer data, you can serve customers within a loyalty program with personalized content and offers, that seamlessly fit their needs.
“With AI it becomes possible that every individual has its own personalized loyalty programs.”
Future of loyalty programs within retail
Because more and more companies are starting partnerships (collaborative marketing) in combination with AI, we will see more extreme forms of personalized engagement programs in the near future.
Vision yourself that every individual has his or her own personalize loyalty program. Customized and proactive communication makes sure that this customer also feels even more unique, seen, appreciated, supported and valued. An experience that is strengthened through a wider and more personal offer of rewards and incentives from which a customer can choose.
With next level loyalty you make sure that a customer is really an appreciated individual. It is possible to achieve this by making use of AI technology (machine learning) within your complete customer engagement process. It makes sure you can further personalize, proactively communicate with the consumers, surprise them in a positive way and have them safe for incentives that are fitting their personal environment. AI and machine learning offer several use cases for marketing and customer engagement, and is therefore one of the driving forces behind next level loyalty.
Within this process, Customer segmentation is an effective method to identify groups of customers and to serve relevant content, that fits their specific behavior and preferences. This makes it possible to generate a much higher response, improve loyalty programs and increase customer lifetime value.
Want to know more about customer loyalty and the development of AI within this process? Contact us now for an inspirational cup of coffee!