The Power of AI-Driven Customer Loyalty


The retail industry is undoubtedly among the most heavily impacted by the pandemic, as many physical retailers were forced to close their doors for months to adhere to local mandates. As retailers look to make up for sales and win back customers, it is more important now than ever before to illustrate a true and deep understanding of consumers’ wants and needs to cater to them effectively and ultimately generate revenue and drive customer engagement for the long-term.

Artificial intelligence (AI) enables retailers to achieve this efficiently and accurately to drive higher loyalty and customer lifetime value.

Generating Success through Loyalty

Loyalty programs are boosting customer engagements, frequency, and average order value, driving physical and digital sales for retailers at scale.

As the pandemic continues to force restrictions, influence consumer habits, and heighten competition within the retail industry, companies are realizing the value of brand preference and leaning into loyalty programs and customer engagement as a way to achieve it. A well-designed loyalty platform can increase customer acquisition and retention by building and maintaining strong 1:1 relationships.

With these relationships in place, companies can enhance communications and tailor personalized offers and rewards to optimize the customer experience and strengthen brand loyalty, ultimately driving company-wide revenue.   

A comprehensive loyalty platform considers the complete customer experience — email, SMS, or notification, online or in-store — to create a holistic engagement experience based on comprehensive consumer data. With growing customer bases and a combination of in-store and online engagements, it is vital that companies have immediate access to this data to truly understand individual consumer buying and interactive habits and create the most effective loyalty approach for each individual.

Nowadays, as consumer wants and needs are changing so rapidly, brands must be able to adjust offers and communications in real time to keep pace with the trends and optimize operations on the fly. During this time, it is crucial that retailers leverage the tools available to them to generate revenue and prosper.

Perhaps one of the most valuable is AI, which can be used to drive the smartest loyalty and marketing initiatives and produce real results in terms of customer frequency, average spend, and same-store sales.

Enhanced Loyalty Through AI

AI is the backbone of a successful loyalty program, bolstering engagement, redemption rates, and overall sales through rich data-based insights.

In today’s environment, it is a constant battle for retailers to build effective loyalty campaigns that deliver value for their guests as data is increasingly difficult to access and overwhelming to make sense of in a timely manner.

Further, retailers are operating with leaner marketing teams while juggling competing priorities: What campaigns should be run to drive business objectives?  What guest segments should be targeted, and with what offer? How should those messages be delivered, and through what channels?

With AI-powered technology, retailers can capture and assess specific customer data and make quick, educated business decisions based directly off of these insights, a process that is optimized through intelligent customer segmentation and offer recommendations that deliver Customer Lifetime Value (CLV) and ROI. The way AI delivers ROI to marketing and loyalty programs is through machine learning (ML) algorithms that “learn” from data by spotting customer behavior trends and patterns and adapting in real-time as they’re exposed to more data.

Automated information collects this consumer data through online and offline touchpoints from various POS and other platforms across stores, such as what, when, and where they purchased, and thereby enables brands to deliver smarter, personalized, and more predictive customer experiences at scale. By harnessing the power of AI, retailers can leverage this data to reach the right customers at the appropriate time with the right offers through the appropriate channel, strengthening their loyalty program and optimizing customer relationships for the long-term.

At a time when restrictions and consumer behaviors are evolving alongside each other at a rapid pace, brands need to have automated information at the touch of a button to adapt to these changing preferences and create the most well-rounded loyalty experience. With a comprehensive loyalty solution powered by AI, retailers have the opportunity to increase customer engagement, strengthen relationships, and ultimately drive sales to prosper in such a critical period.

Sastry Penumarthy

Sastry Penumarthy is the co-founder and VP of strategy at Punchh, a provider of dynamic, one-to-one customer engagement through artificial intelligence, mobile-first expertise, and omnichannel communications for restaurants and retailers.

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