Is AI Really Going to Revolutionize Loyalty? How?

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Reading trade press articles convinces one that Artificial intelligence (AI) is going to revolutionize loyalty marketing by enabling highly personalized and dynamic customer experiences. The speed and scale that AI offers represents a quantum leap in our ability to analyze vast amounts of loyalty data to identify patterns and preferences, allowing brands to offer tailored rewards and communications. This will not only enhance customer satisfaction, we're told, but will also foster deeper emotional connections, driving loyalty and brand advocacy. (I'd like to see more talk about driving profitable incremental spend and growth in customer long-term value, but maybe that's just me...)

Seeing a spin on that for the nth time this past week got me thinking... how has this changed over the past few years, especially since Gen AI was introduced? Can AI really do certain things, like predict customer behavior or identify those at risk of disengagement, better than the tools we used, say, five or 10 years ago? Are consumers going to spend more because of loyalty programs that "get" them?

Look at this POV from 2019 from Bill Hanifin from The Wise Marketer , one of the leading thinkers in loyalty marketing: 𝘞𝘩𝘢𝘵 𝘈𝘳𝘵𝘪𝘧𝘪𝘤𝘪𝘢𝘭 𝘐𝘯𝘵𝘦𝘭𝘭𝘪𝘨𝘦𝘯𝘤𝘦 𝘔𝘦𝘢𝘯𝘴 𝘍𝘰𝘳 𝘊𝘶𝘴𝘵𝘰𝘮𝘦𝘳 𝘓𝘰𝘺𝘢𝘭𝘵𝘺 𝘔𝘢𝘳𝘬𝘦𝘵𝘪𝘯𝘨 (https://www.forbes.com/councils/forbesagencycouncil/2019/10/03/what-artificial-intelligence-means-for-customer-loyalty-marketing/). What did he suggest? (keeping in mind that this was before the introduction of Gen AI…)

“...the one-to-one relationship aspect of true loyalty marketing isn't possible to create at scale, nor even sustainable at present levels, without the disciplines and tools that are central to AI and machine learning.”

"Enhancing your analytics engine with AI can make it possible to optimize individual experiences at scale. Next-generation analytics, fueled by AI, can make hypersegmentation possible (i.e., homing in on more precise groups of customers who share specific attributes and behaviors). As a next step, you can optimize dynamic content for delivery across channels in a timely manner, with the result being a delightful customer experience and higher satisfaction levels.” “I believe that the next revolution in customer marketing will be led by AI-enabled personalization via hypersegmentation and delivery of dynamic content.”

So he pretty much nailed where things were going - personalization enabled by AI is definitely the path everyone seems to be following, especially true if you read any of the commentaries coming out of CES a couple of weeks ago.

Let's compare that to a more recent article - have we gotten there yet? From early Jan 2025 is a piece from Kognitiv Corporation : 𝘈𝘳𝘵𝘪𝘧𝘪𝘤𝘪𝘢𝘭 𝘐𝘯𝘵𝘦𝘭𝘭𝘪𝘨𝘦𝘯𝘤𝘦, 𝘙𝘦𝘢𝘭 𝘓𝘰𝘺𝘢𝘭𝘵𝘺: 10 𝘸𝘢𝘺𝘴 𝘵𝘰 𝘶𝘴𝘦 𝘈𝘐 𝘪𝘯 𝘭𝘰𝘺𝘢𝘭𝘵𝘺 𝘱𝘳𝘰𝘨𝘳𝘢𝘮 𝘮𝘢𝘯𝘢𝘨𝘦𝘮𝘦𝘯𝘵 (https://www.kognitiv.com/articles-post/artificial-intelligence-real-loyalty-10-ways-to-use-ai-in-loyalty-program-management).

“Loyalty programs are no longer just about points and rewards; they are about building meaningful, personalized relationships with customers. And artificial intelligence is revolutionizing loyalty program management, enabling brands to deliver highly customized, data-driven experiences that drive engagement, retention, and revenue growth.”

The article then lists “must-use AI use cases for optimizing loyalty programs:”

• Personalized customer experiences

• Churn prediction and prevention

• Dynamic rewards optimization

• Fraud detection

• Predictive analytics for program performance

• Real-time decision making

• Customer lifetime value optimization

• Sentiment analysis for feedback

• Cross-channel attribution

• Omni-channel integration and communication

It just seems like... there is nothing new on this list, certainly since Hanifin's article in 2019, and one could argue, long before. And it still feels reactive, like all this effort is just going towards optimizing interactions once a consumer has set down the purchase path. Weren't we doing a lot of this in the old days, with sophisticated statistical models of various types, and real-time data processing to do things like dynamic web page generation? Besides the improvements in speed and scale that Hanifin suggested were the key benefits of AI for loyalty marketing, there still seems to be work to do, starting with truly bringing to life those use cases listed above so that we do "build meaningful, personalized relationships with consumers" to enhance existing purchase paths But in parallel, we also need to evolve our thinking so we are prepared for what AI will bring down the road, for example, anticipating consumers' needs and reaching them as they set off down the purchase path, not only after they've already started.

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