How AI will impact customer loyalty programs

It's not news that technology, particularly Generative AI, has disrupted many traditional marketing strategies. But knowing the world has changed isn't the same as knowing how to adapt to that changed world.

We speak with experts from Accor, The Warehouse Group and Eagle Eye to discuss what the future of loyalty looks like in the age of Gen AI. 

As would be expected, our three interviewees had different priorities. But they all agreed that, firstly, the pace of technological change was only likely to accelerate and, secondly, organisations that fail to keep adapting to constantly changing circumstances will be outcompeted by those that do.     

Accor
Chris Mills, Vice President Loyalty & Partnerships (Middle East, Africa, Asia Pacific)

What is a 'must have' when building a successful loyalty program?

Executive support. Too often, there's the ambition for a loyalty program within businesses. However, if the need and opportunity isn't supported by senior executives, it's unlikely to succeed. Loyalty programs require support across an organisation, and without leaders advocating the priority and importance amongst business-as-usual tasks, it will be difficult to seek support from each of the departments that will ultimately determine the success or failure of the program.

What are the top 3 pitfalls to avoid when building a loyalty program?

1. Progress over perfection: It's unlikely when building a program that you'll get it perfect at launch. Instead, determine a clear and easy-to-understand value proposition; you can build further benefits/features from there.
2. Complicated redemption process: If it's difficult to access the value/rewards, members will likely become disengaged or dissatisfied
3. Communication planning: At times it can be easy to focus on the program mechanics and overlook the need for communication planning, but this will determine how customers and employees understand and support a new loyalty program. With the right comms approach, you can turn employees into advocates and quickly establish program awareness and participation amongst existing customers.

How is AI transforming the loyalty landscape?

AI is impacting many areas of the loyalty landscape, but what excites me most is the use of AI for predictive modelling. The ability to anticipate customer needs goes beyond offering incentives and rewards for transactions. It can assist us to personalise communication, understand member preferences, and support team members in frontline service roles to create meaningful moments that keep members returning. This could be as simple as wine-pairing suggestions based on a meal selected through to suggested routing options in real-time should a passenger's flight be cancelled to help them reach their destination.

The Warehouse Group
Cameron Keats, Programme Lead Group Membership & Personalisation (MarketClub)

What is a 'must have' when building a successful loyalty program? 
Option 1: An essential component for crafting a successful loyalty program is establishing a clear and compelling value exchange with customers, fostering an emotional connection that resonates with them. 

Option 2: A crucial aspect of developing a successful loyalty program is to create a delightful loyalty experience that seamlessly integrates into the customer's broader shopping journey.  

What are the top 3 pitfalls to avoid when building a loyalty program? 
Three pitfalls to avoid when building a loyalty program are:  
·       Neglecting the Customer: It's crucial to always prioritise the customer's needs and preferences throughout a loyalty program's development. Putting the customer at the heart of all decisions is essential for success. 
·       Operating in Isolation: Building a loyalty program without involving various departments across the organisation can hinder its effectiveness. Loyalty initiatives impact multiple aspects of the customer journey, requiring strong internal engagement for success. Store team members should be the biggest advocates of a loyalty program. 
·       Overcomplicating the Program: Loyalty programs should feature straightforward earning and redemption mechanics that are intuitive for customers. Complexity can deter engagement, so simplicity is key for optimal participation. 

How is AI transforming the loyalty landscape? 
AI is revolutionising the loyalty landscape by empowering retailers to efficiently extract actionable insights from their customers at scale. This capability enables retailers to engage with customers in a more personalised and relevant manner, thereby fostering enduring loyalty.

Eagle Eye 
Jonathan Reeve, Vice President APAC, Eagle Eye 

What is a 'must have' when building a successful loyalty program? 
Companywide buy-in. There are several "must haves" I could list, but the fundamental one is that everybody from the C-suite down is committed to making the loyalty program an ongoing success. If it's treated as something only certain individuals or departments in an organisation have to worry about, it's likely to struggle.     

What are the top three pitfalls to avoid when building a loyalty program? 
Three pitfalls to avoid when building a loyalty program are:  

• Not understanding the customer: Especially if they are no longer young themselves, corporate decision-makers can underestimate just how different younger consumers are from their parents and grandparents. They are both much more online and much more concerned with authenticity, including brand authenticity. That's something those targeting younger Australians must keep front of mind.  
• Failing to K.I.S.S (Keep it Simple): Everything will go smoother if both your staff and customers can easily get their heads around how your organisation's loyalty program operates. So, default to keeping things straightforward wherever feasible.    
• Slipping into complacency: Given how fast technological change is moving, you can't assume that what worked last year, month or week will yield similarly pleasing results today. If you want to remain competitive, you have to be constantly innovating and investing.  

How is AI transforming the loyalty landscape? 
The available evidence suggests AI will have a transformative impact on many areas, including loyalty programs. Eagle Eye's most forward-thinking clients are already embracing AI for everything from harvesting actionable insights to segmentation to predictive modelling. And I predict it will start to be widely used for generating hyper-personalised offers "in the moment", which we think will be the next big transformation in retail marketing.