Boosting Customer Loyalty With Artificial Intelligence

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Boosting Customer Loyalty With Artificial Intelligence

By Terri Gaughan - 12/17/2018

In April, Amazon customers were mysteriously locked out of their accounts with no explanation, leading to a lot of speculation and even more angry customers. The algorithms in place to automate account reviews and shut down ‘bad actors’ went rogue, shutting down legitimate accounts. The debacle quickly created a loyalty nightmare for the brand, whose program boasts more than 100 million members.

This wasn’t a great look for Amazon, especially as sentiment around AI remains on shaky ground. Nearly four out of ten customers (39%) worry about the overall impact of AI, while 49% believe AI will lead to diminished privacy.

Additionally, customers are often unclear about what AI even is. While 72% of customers across six countries say they understand AI, only 41knew products like Google Home and Amazon Alexa rely on the technology.

AI has improved loyalty programs by leaps and bounds, enabling brands to create engaging, memorable and personal experiences for their most loyal shoppers. But it’s important to be cautious when implementing AI so that catastrophes (like Amazon’s) or perceived privacy infringements don’t occur.

Perfect AI tactics with machine learning and human oversight

Amazon’s gaffe may have been prevented by better and smarter algorithms. Instead, the brand’s loyal customers, who weren’t abusing the return system or otherwise behaving poorly, were targeted by the faulty algorithm. Brands with AI strategies need to use machine learning technology to constantly improve algorithms so that mistakes like this can’t happen. Relying on human oversight to make smarter judgments can help catch potential mishaps AI technology might otherwise miss.

For example, the algorithm could have detected potentially fraudulent activity, but flagged loyal Prime members, so that real employees could do further investigations before immediately shutting people out of their accounts. Any time AI is involved, the human touch is still critical for success.

Personalize, but don’t take away choice

When is too much personalization a bad thing? When it takes away choices from your shoppers. Accurate product recommendations, promotional discounts based on past behavior and individualized rewards are always a good thing. However, brands that go too far in trying to craft personalized experiences for customers risk getting it all wrong.

Instagram learned this the hard way after it changed its algorithms so that social posts no longer displayed chronologically. Users perceived this move as a controlling one from the platform, and felt they were missing the content they wanted to see. The brand has since responded by tweaking its algorithms to return to a more chronological approach.

Understand that your loyal customers love your brand for what it is. While you should tailor your program to individuals, don’t go overboard or you’ll risk restricting how customers engage with your brand. 

Remember: AI is a tactic that allows you to craft better experiences for your customers, but it can’t take center stage. Personalize experiences to the best of your ability, while still allowing your customers to experience your brand organically and on their own terms.

-Terri Gaughan, Senior Loyalty Consultant, Kobie Marketing