AI trends in loyalty
27 March 2023
Amy Gavagnin
Artificial intelligence. Information concept. 3D render

Artificial intelligence (AI) is the hot topic of 2023 and is increasingly becoming a more popular tool for loyalty program operators to enhance their program experience. As AI technology continues to advance, there are several upcoming AI trends that loyalty program operators are starting to employ to enhance their customer experience and drive engagement.

1. Hyper-Personalisation / Predictive Analytics

One of the biggest upcoming AI trends in loyalty programs is hyper-personalisation.

Unlike existing personalisation techniques used more commonly by marketers today (e.g., segmentation), Hyper-personalisation is an AI-powered approach to customer engagement that creates a customised experience for each individual customer. By analysing customer data, such as purchase history, browsing behaviour, and social media activity, AI-powered algorithms can identify patterns and preferences to create unique individual offers, recommendations, and rewards in real time.

One example of a loyalty program that has successfully implemented this is Starbucks. The coffee giant’s rewards program uses AI to analyse customer data and provide personalised offers and rewards based on their preferences. For example, if a customer frequently orders a particular type of beverage, the AI-powered system will offer promotions or rewards related to that beverage. This personalised approach has helped Starbucks increase customer engagement and retention. If a customer has not visited a Starbucks location in a while, the app may offer a reward or discount to encourage them to return.

2. Voice-Activated Loyalty Programs

Voice-activated loyalty programs are another upcoming AI trend in loyalty programs. Voice-activated loyalty programs allow customers to access their loyalty program account and redeem rewards using voice commands, making the customer experience more convenient and streamlined.

One example of a company that has implemented a voice-activated loyalty program is Domino’s Pizza. The pizza chain’s loyalty program allows customers to place orders using voice commands through Amazon Alexa, making it easier for customers to earn rewards and redeem offers.

3. Emotional AI

Emotional AI is an emerging technology that uses AI-powered algorithms to detect and respond to human emotions. For loyalty program operators, emotional AI can be used to personalise customer interactions based on emotional responses. For example, AI can detect if a customer is frustrated or upset and respond with targeted promotions or offers to improve their experience.

One example of a loyalty program that uses emotional AI to enhance its program experience is Hilton Honours. Their chatbot, “Connie”, is designed to recognise and respond to human emotions in a natural and intuitive way. It uses natural language processing and sentiment analysis to understand the tone and meaning behind customer messages and can respond with empathy and understanding.

For example, if a member is unhappy with their hotel room, Connie can empathise with their frustration and offer a range of solutions to resolve the issue. Connie can also remember previous interactions with the member and use that information to provide more personalised recommendations and offers.

4. Facial Recognition

Facial recognition is an AI-powered technology that is becoming increasingly popular in loyalty programs. One example of how facial recognition is being used in loyalty programs is by KFC in China.

KFC has implemented a facial recognition system in their “Smile to Pay” program, which allows customers to pay for their food using their faces. Customers simply register their faces through a mobile app, and then can use facial recognition technology to pay for their meals without the need for cash or a credit card. The system uses AI-powered algorithms to verify the customer’s identity and process the payment.

The “Smile to Pay” program not only offers a more convenient payment method, but also provides an opportunity for KFC to collect valuable customer data. By analysing customer facial features and behaviours, KFC can better understand their customers and create more personalised offers and promotions.

AI technology is transforming the way loyalty programs operate, providing opportunities for personalisation, optimisation, and customer engagement. As AI technology continues to evolve, we can expect to see even more innovative ways in which loyalty program operators use AI to enhance their customer experience and drive engagement.

<a href="" target="_self">Amy Gavagnin</a>

Amy Gavagnin

Amy is a Senior Strategy Consultant at Loyalty & Reward Co, the leading loyalty consulting firm. Loyalty & Reward Co design, implement and operate the world’s best loyalty programs for the world’s best brands. She has worked in various areas of marketing, previously supporting departments at Westfield Scentre Group and Harvey Norman Commercial Division. Amy applies her skills across all aspects of the business, including promotional campaign management as well as loyalty program design, strategy development, and market research.​

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