Will AI define the loyalty programmes of the future?

Artificial intelligence (AI) has long been a source of discussion and debate, but with the advent of the digital age and technological advancements, it is finally becoming a reality.

For instance, ChatGPT and Stable Diffusion, two AI models developed by OpenAI, made headlines recently for their potential impact on daily life. While ChatGPT is a conversational AI chatbot that helps users develop detailed and articulate responses, Stable Diffusion can generate photo-realistic visuals from any text input. However, the general population may not fully understand the potential implications of these AI platforms.

As digital transformation accelerates across all sectors, AI solidifies its role in every business’s operation, including loyalty. Now that the world is accelerating forward, loyalty programmes are changing shape to keep up with evolving consumer expectations. Brands that want to retain or win back customer loyalty must deliver meaningful offers and experiences at the right time and place. This raises the most intriguing question at the moment: what does the future hold for AI?

AI unlocks the age of true personalisation

The value that loyalty programmes bring to a brand is unquestionable. Companies that build sophisticated schemes, with timely and tailor-made approaches powered by technological advances, will have the competitive edge. For loyalty leaders, though, designing a programme that is truly relevant to a diverse group of customers can be challenging. This is precisely where AI comes into play.

While the sheer volume of generated data may seem daunting, AI can streamline analysis, extract valuable insights, and suggest smart next steps. When it comes to personalisation, AI is actually a necessity. Companies can utilise AI to dig through massive amounts of customer data to customise offers and other rewards to each individual’s tastes and spending habits.

In addition, AI-based behavioural analysis may help uncover patterns and trends to enhance the programme’s strategy, and predictive AI models can forecast consumer behaviour and highlight opportunities to increase loyalty and engagement. When companies try to make these predictions, they always do so based on continued patterns. AI can provide this insight without any brand bias. Unintentional bias is removed by AI functionality, and predictions are based on pure data-driven facts.

AI can also support recommendation systems by making the products or services suggested to each customer more suited to their specific preferences, leading to higher revenue. Furthermore, the adoption of AI-powered chatbots and virtual assistants can provide personalised customer service and support, elevating the brand experience.

Does AI pose a threat to loyalty programmes?

Contrary to popular belief, AI is not a deux ex machina. Instead, it can only deliver positive outcomes when given the correct data and implemented properly. And we must never forget that without a customer-centric mindset, no amount of money spent on technology will strengthen customer loyalty.

However, AI has the potential to impact human jobs. Consider how a customer service platform entirely based on AI could result in the removal of the human element from the equation. This will almost certainly lead to complications in intricate customer inquiries. As a result, the people of the company and the human touch should always be at the forefront of customer operations. However, it is critical that AI models are not biased in favour of the most loyal customers, as this could have negative consequences.

Furthermore, no matter how advanced a system is, it cannot replace the human touch, providing that caring, understanding voice. Knowing the mental impact that poor service can have is critical to providing a comprehensive customer experience, and an AI system cannot replicate this in the present.

MENA countries bet big on AI

The potential impact of AI on the Middle East and North Africa (MENA) economic development is enormous. According to a recent report, the region is predicted to generate $320bn in value added by AI by 2030. The UAE, Saudi Arabia, Qatar, Kuwait, and Egypt have demonstrated a remarkable commitment to developing and deploying AI technologies, with AI strategies that emphasise cultivating AI talent and building an AI-friendly corporate environment. However, they still lack appropriate data governance, data privacy and protection, bias, transparency, ethical use, and technology abuse regulatory frameworks.

With the right policies in place, the regional AI startup ecosystem could eventually create unique and innovative solutions which will revolutionise the loyalty sector like never before and become a powerful growth driver. The future of brand loyalty will centre on seamless, personalised, and omnichannel experiences strongly tied to brand values, and AI will play a vital role in this transformation. In terms of technology integration, the future is unknown, and businesses are only now beginning to understand the power that AI-driven solutions hold; with the proper level of regulations in place, these can develop for the betterment of the loyalty sector as a whole.

Priyanka Lakhani is the senior vice-president – Commercial EMEA at Collinson

Read: How loyalty programmes can safeguard against sophisticated cyberattacks