What Artificial Intelligence Means For Customer Loyalty Marketing

WM Circle Logo

By: Wise Marketer Staff |

Posted on October 8, 2019

It seems like everyone is trying to identify how artificial intelligence (AI) can benefit their business. In my circles, executives are asking how AI will impact customer marketing, more specifically data-driven customer marketing.

One study found that in 2017, 80% of enterprises had "some form of AI (machine learning, deep learning) in production" and 30% were "planning on expanding their AI investments." The same study found that improving customer experiences motivated 62% of enterprises to invest in AI.

Data-driven customer marketing (you might know it as loyalty marketing) is designed to change customer behavior in a positive way for both the brand and the customer. The short-term goal is to hit financial objectives like increased sales, visits, etc., while the long-term goal is to establish valuable, long-lasting, mutually beneficial relationships that insulate the brand from competitive offers.

This marketing discipline is arguably the most important of the modern era. Why? Because loyalty marketing, the way I believe it should be executed, is highly measurable and financially accountable. Campaign tactics and offer development are each inspired by what we can learn through analyzing customer data. We plan, execute and then measure results to make sure we're hitting targets and are able to clearly report to our stakeholders.

Analyzing data and developing insights from aggregated data sources is a foundational step in the strategic planning methodology my company has employed over the past decade to create customer strategies for brands. While it was once acceptable to process datasets in batch format, every brand we work with today is seeking to increase its speed and efficiency in processing customer data. This demand is the source of my interest in AI as we sought to deliver the data insights our clients wanted at the speed they demanded.

Making A Connection Between Loyalty And AI

You likely know that people generate digital footprints through visits, purchases, searches, posts, reviews and other daily activities. Brands have excelled at collecting this data and have tacked on external metadata to add rich context to a simple purchase or transaction with the goal of predicting a customer's next move.

In our experience, the one-to-one relationship aspect of true loyalty marketing isn't possible to create at scale, nor even sustainable at present levels, without the disciplines and tools that are central to AI and machine learning. For any brand seeking to develop more durable customer relationships, we've found that applying machine power to an ever-expanding view of the customer is becoming an absolute requirement to process offers in real-time at the point of purchase and truly personalize those offers the way Don Peppers and Martha Rogers theorized in the 90s when they wrote The One to One Future.

How Does AI Transcend Traditional Data Analytics To Advance Customer Loyalty?

Segmentation is a technique that has been part of the customer marketing toolset since the onset of loyalty marketing over 20 years ago. Methods of segmentation have become increasingly sophisticated and are indispensable stepping stones on the journey toward one-to-one marketing. Even though segmentation has been effective in the past, it's time to recognize the inherent limitations of the process. I believe marketers must accept that the resulting segments are overgeneralizations, or worse, they deliver a static view of the customer.

At its most basic level, AI can automate simple, repeatable tasks and accelerate pattern recognition. This opens the door to marketing efficiency and hastens the fulfillment of the promise to provide “the right offer to the right person at the right time, in the right channel.” It also delivers personalization, meaning practical ways that a brand can demonstrate that it's listening to its customers, learning more about what they want and formulating offers for products they actually want instead of what the brand wants to sell. This is the essence of how data-driven marketing can build trust with customers and long-term loyalty.

Enhancing your analytics engine with AI can make it possible to optimize individual experiences at scale. Next-generation analytics, fueled by AI, can make hypersegmentation possible (i.e., homing in on more precise groups of customers who share specific attributes and behaviors). As a next step, you can optimize dynamic content for delivery across channels in a timely manner, with the result being a delightful customer experience and higher satisfaction levels.

Customers are becoming more aware of the value of their data every day, and what it represents to the brands they patronize. Delivering a highly personalized experience communicates clearly to the customer that their favorite brand "gets it," meaning they might just wonder how the brand managed to connect with them in a natural, organic way that encouraged them to visit, purchase, recommend it, etc.

What Does All This Mean?

Loyalty marketing is focused on creating long-term, mutually beneficial relationships that transcend the era of segmentation-driven campaign management. Creating profitability from a true one-to-one relationship with a customer is the pinnacle of execution; however, in our experience, doing so isn't possible, much less sustainable, at scale without AI.

The next time a discussion of AI breaks out in a meeting, don’t avoid the topic due to the unknowns, but embrace it through a belief that it could spark the ultimate revolution in marketing analytics at a time when we seem to need it most.

I believe that the next revolution in customer marketing will be led by AI-enabled personalization via hypersegmentation and delivery of dynamic content. With a current global population of more than 7.7 billion, marketers may need this enhanced analytical power to deliver highly personal, yet natural, one-to-one marketing experiences that lead to customer loyalty.

Originally published on Forbes.