Ready or Not ... The Future of Loyalty Marketing Lies in AI

In today’s highly competitive retail market, customer loyalty is often a pivotal driver of business success. So much so that studies have shown that increasing customer retention rates by just 5 percent can boost profits up to 95 percent.

However, gone are the days of one-size-fits-all loyalty programs that offer the same rewards and incentives for every customer. Today’s consumers expect tailored experiences that align with their individual preferences, behaviors, values and purchasing history.

The rapid development of artificial intelligence-driven tools are giving marketers the opportunity to advance their loyalty programs to make deeper — and more impactful — connections.

So, where to start? Below are a few tips for navigating the world of AI and integrating new tools into your marketing efforts:

1. Use AI tools to improve email delivery, open rates and engagement.

Campaign success depends on message visibility, yet many brands still struggle with their delivery rate due to oversaturation of messages. Sending too many emails can signal spammer potential to email service providers (ESPs) and result in inhibited delivery rates and low engagement. For many marketers, figuring out the ideal cadence takes time, testing and refinement.

To help overcome this issue, Adobe and Salesforce both offer AI-driven tools to manage email send frequency — down to individual recipients.

Salesforce offers a dynamic engagement score for each list recipient as part of its Einstein suite of tools. The score determines the right frequency of delivery to prevent over- and undersaturation of messages.

Adobe has a similar capability with its Sensei engagement-frequency tool. This tool uses AI to create optimized and personalized experiences and communications based on testing algorithms, machine-learning models of customer experiences, and other targeting strategies.

While the timing of email distribution can be tricky, an AI-driven software called send-time optimization (STO) has solved this problem. Instead of using time zones to determine when to send to each audience segment, the STO tool looks at individual message open and view patterns by time of day, no matter the time zone, helping deliver the message to the individual at a time when they're most likely to see and engage with it.

2. Create wow moments with AI personalization.

Along with getting delivery times and open rates in order, driving clicks to increase engagement is imperative. AI-driven tools such as Movable Ink can help. Movable Ink is a prominent content personalization tool that goes beyond dynamic insertion of copy to include layouts and visuals across multiple channels. Adobe has also fully infused this capability into its platform with the launch of Firefly in spring 2023.

Leveraging AI tools to build and run your campaigns will, over time, create an intelligent CRM platform that will automate processes and instinctively make targeting updates based on algorithm data and put you on the path to precision marketing with deeper journey moments and big trigger opportunities for customers.

3. Do your homework, involve consultants and develop guidelines.

There are several key considerations for implementing new AI-driven technology that you need to consider when starting, such as data privacy and security, ethical use of customer data, accuracy and reliability, user acceptance and adoption, integration complexity, regulatory compliance, cost considerations, and intellectual property.

Understand these implications, bring in internal leaders and outside consultants for guidance, and develop guidelines to follow and refer to when issues arise. But don’t let this legwork and the risks outweigh the potential and incredible opportunities available today.

Incorporating new AI technologies into loyalty marketing strategies isn’t just about adopting the latest trends; it’s about acknowledging the evolving demands and preferences of consumers. These new tools provide invaluable insights that can take your marketing programs to the next level.

Todd Hedberg is director, digital strategy, and Claire Cilip is an account supervisor for The Lacek Group, a loyalty, CRM and branding agency.