At Maritz, we are making a commitment to AI. This is not a “here today, gone tomorrow” trend. It’s going to become an invaluable tool which transforms industries. Loyalty is one of those industries. In fact, loyalty presents some unique opportunities, which makes it ripe for AI functionality.
Just this week, we partnered with our client, HSBC, on a press release which talks about an AI model we recently piloted with their customers. We trained an AI to predict reward preferences for each cardholder, and then sent a promotional email to each cardholder based on that preference distribution. The results were incredible. Of the cardholders who made a redemption, 70% redeemed in the category that the AI promoted to them. That result tells me that the customers were delighted by this campaign. They received the perfect message which scratched an itch they weren’t even sure they had yet.
We predict it’s such a big part of this transformation, that we are partnering with the Incentive Research Foundation (IRF) in a study focusing on the impact and potential of artificial intelligence and machine learning on the rewards and recognition industry. IRF president Melissa Van Dyke says, “For over half a decade IRF has been discussing how big data and personalization are the next big frontier for the incentive and recognition industry. We have also repeatedly discovered that many programs owners do not know the power of the data their incentives and loyalty programs offer them. Artificial Intelligence and predictive analytics are the tools industry can now use to take these trends and turn them into actionable information that makes their programs more motivating.”
This is just the tip of the iceberg. There are countless applications for AI in the industry, and we are excited to be on this journey along with our incredible clients. Here are a few reasons why AI is so important to the future of loyalty:
- The width and depth of loyalty data. Customer Loyalty has better data than just about any industry. Each touch point with a customer is a chance for you to collect data – every email, every visit, every purchase, every reward. This creates a data story for each customer, but the book is thousands of columns wide and millions of rows deep. A human simply can’t read it well. Only with our modern machine learning methodologies can we take that incredible scope of data and make use out if.
- The need for personalization. The very fundamental aspect of loyalty programs is that your best customers want their experience with the brand to feel different than the average customer. There are monetary benefits, sure, but the non-monetary benefits can be just as important, if not more. Calling the customer by name, knowing their preferences, knowing their history with the brand are things that make that loyal customer feel that one-to-one connection. With AI, personalization becomes more feasible at scale than ever before.
- Keeping points fraudsters at bay. The prevalence of fraud, to attack the customer’s account and his or her point balance is a threat that is unlikely to go away. AI will be a valuable ally in the prevention of fraud. Many current fraud prevention systems are based on rules – if this specific thing happens, raise a red flag. This is mostly effective, but all rule-based systems are a little bit like a levee. As soon as the fraudster finds the rule, they can break it wide open and exploit the system again and again. AI fraud prevention systems work a little differently. They adapt and learn, so that the holes in the levee are patched and can never be exploited in that way ever again.
- The future interface: chat. One very tangible example of AI’s rise is the voice assistants – Google’s Assistant, Amazon’s Alexa, and Apple’s Siri. Customers are becoming incredibly comfortable chatting with an AI system daily. This trend will be felt in loyalty too. As this technology gains maturity, the interactions with AI chat systems will get better and be able to accomplish more for that customer. I predict that, in the near future, customers will prefer interacting with a brand over chat, even if a human is an option, because that chat bot will be able to service the customer faster and easier.
The IRF study will be released later this year, but even now it’s a safe bet to predict AI will have enormous impact. Melissa believes AI will have 10 times the impact the discussion around millennials has had. “For many years it was easier to craft programs based on generations because it summarized the data in a way that seemed actionable. But our research continuously finds there is an intersectionality that makes a loyalty program’s focus on generations suboptimal. AI offers the incentive and reward space the opportunity to harvest data in ways significantly more impactful on motivation than generational considerations,” according to the head of the IRF.
I’d love to hear how you’re using AI to make a difference and encourage you to share your thoughts in the comments below.