AI for Customer Loyalty

How To Leverage AI for Customer Loyalty

Artificial intelligence seems like it’s everywhere these days. 

That’s for a good reason: artificial intelligence gives everyone access to a flexible set of tools that can be used in just about every setting—everyone who has picked up the basic understanding and skills to put AI to use. 

It’s become more apparent that those who know how to leverage AI have a serious competitive advantage. 

As any good business owner knows, customer loyalty is, in essence, the likelihood that a customer will continue to choose your business over your competitors based on positive experiences in the past. 

The ‘AI revolution’ is coming to customer loyalty—it will upend how we think about and measure customer loyalty and how we try to retain customers.

The Importance of Customer Loyalty & Customer Retention

AI for Customer Loyalty
One of the most challenging yet essential tasks for any company is finding customers to provide a product or service that fulfills a need. However, it’s equally important to keep the customers you already have.  Profits soar when a single customer you’ve found through marketing or advertising becomes a repeat customer. Not only are loyal customers good for your bottom line, but they also help to spread the word to their network of family and friends. Good word of mouth marketing is the best advertising because it’s coming from someone independent and objective about a product or service.  There are many ways to go about keeping your customers happy. Indeed, people have been working very hard on a problem for a long time—way before people were using AI for anything.  The traditional ways of maintaining a positive image in the eyes of one’s customers, like great customer service, paying attention to each stage of the ‘customer journey,’ and rewarding loyal customers, still work.  But these tried and true strategies can become even more effective when paired with the latest technology.

Artificial Intelligence, Machine Learning, and Customer Loyalty

Machine learning Vs Deep Learning

The key to understanding artificial intelligence is to think about how a human being responds to situations. It’s always in a way that is flexible to the problem and what’s going on in it. 

An artificial intelligence system is just a machine that’s meant to do just the same thing: respond to an ‘input’ by producing an ‘output’ that’s the same or similar to what a human would do. 

For example:

  • A human might look at a spreadsheet of a customer’s recent purchases and make a good guess about what their next purchase will be. 
  • An AI system would be able to do the same thing if it’s correct, at least as often as the person can. 

However, we’ve seen many AI systems that are better than humans at specific tasks. 

One way that AI can outperform humans in specific tasks is through inculcating machine learning-based algorithms.

Essentially, machine learning produces systems that can intelligently respond to inputs by analyzing thousands, hundreds of thousands, or millions of examples. 

By picking up on different features of these examples, the machine learning algorithm can learn to make predictions with tremendous accuracy. 

To go back to our example above, you could train a machine-learning algorithm to guess whether or not a customer will make a new purchase in the next six weeks. 

After comparing the actions of hundreds of thousands of customers, the AI might well outperform the human. This use of AI, often called predictive analytics, is becoming more and more popular in the business world. 

AI and machine learning have already been applied to:

  • Customer relations
  • Customer loyalty
  • Customer retention

In particular, the data collection that’s now easier than ever to do can be used to train machine learning systems to provide personalized experiences to your customers, showing them only the products they find interesting.

Use AI to Improve Customer Experiences

Customer Experience
These days, it’s become trendy to refer to customer experience as CX—but this is just a new name for the old process of ensuring all the interactions your customers have with your business create positive experiences rather than negative ones.  When you leave your customers with positive impressions, they’ll form positive memories and make purchase decisions in the future on that basis.  Here are a few of the ways that executives have been using AI to improve CX. 


In general, the personalization of websites using AI revolves around delivering unique, AI-powered content to each consumer based on their preferences and prior activity.  AI can be helpful for this purpose because it’s able to keep track of what someone has been doing on your website and automatically create a unique webpage for them.  Another way to use AI for personalization is for crafting custom email content shaped by which links the person tended to click on in the past. 

Engagement and Communication (Chatbots)

Chatbots started poorly, getting a reputation in the early days of the internet for wooden, repetitive answers that didn’t respond to questions.  However, that was years ago, and people are starting to realize that technological advancement in AI has brought us chatbots that can chat. The Acquire chatbot has been getting a lot of hype lately for its human-like output. Often, text-based chatbots are a more effortless way of getting information from your company, especially in comparison to picking up the phone and calling your customer service division. The instantaneous answers leave your customers feeling like they haven’t wasted any time resolving their problems. 

Effortless User Experience

Web designers have a term for a user experience they try to avoid at all costs: friction. The harder it is for customers to do what they want to do on your website, the less likely they’ll continue using it.  It is a situation where bad design can lead to lost customers.  Including AI in the loop for design is becoming more and more common. Although humans aren’t replaced in this process, AI can try thousands of times to solve experience problems and generate innovative designs But the AI doesn’t know if an idea is innovative or simply odd. That’s for humans to decide still. AI isn’t inherently creative. It only amplifies humans’ creativity. If humans are kept in the loop, it can be a tool to help navigate a variety of issues to improve the user experience.  A crucial part of user experience is how responsive a company is to problems. Not only can you use an AI chatbot to respond to questions, but you can also use it to direct customers to a human employee that specializes in their problem.  A company called five9 has developed several applications that help improve the efficiency of your customer service while keeping everyone happy. 

Self Service

The idea behind self-service in the CX space is avoiding human intervention in customer support altogether. It can lead to a much quicker resolution of problems than getting a human agent involved in problem-solving.  The name of the game here is creating a customer journey through the support system where every step is clear, quick and gets them closer to solving their problem. In addition to chatbots, you can add systems like sentiment analysis and, especially, predictive analytics.  If you can train a machine-learning algorithm to guess what problem a customer has based on their behavior, you can deliver solutions exceptionally quickly.  One of the companies making waves in this sector is TechSee, an ‘AI-Powered Cognitive Visual Assistance Platform.’ The company is an excellent fit for businesses that see most of their traffic come in via smartphones. 

Handling Large Volumes of People

One of the best aspects of AI customer experience systems is the way that they scale. Once you have a high-quality and responsive AI system in place, it will work whether twelve people are looking for assistance or twelve thousand.  This AI implementation is a big difference from traditional, human-led customer service, which only has so much capacity. Once that’s exceeded, you’ll have customers spending extended periods on hold.  That’s never a good thing for customer loyalty.

Use AI for Customer Loyalty Programs

Loyalty Program

In a certain sense, customer loyalty programs are about rewarding your best customers for their continuing engagement with their business. However, the other reason is that they are all about giving your customers incentives to stay through discounts and other perks. 

Like anything else in business, a customer loyalty program is an investment that should yield more in revenue than you spent on it. 

Identify Customers Likely to Leave 

Your business can use AI to improve the outcomes of your customer loyalty program through data processing and predictive analytics. 

It’s possible to identify which customers are likely to leave soon and target them with incentives to keep them in the fold.

Dynamic Segmentation

Since an AI system can keep running and updating its predictions, you can split customers into different categories that update ‘dynamically’ depending on how their behavior has changed. 

Monitoring Fraudulent Behavior

Some loyalty programs open themselves up to exploitation by malicious actors looking to take advantage of the deals or perks on offer.  The IBS Loyalty fraud-management system can monitor customers’ behavior to ensure they aren’t getting more benefits than they deserve.

Use AI to Predict Customer Behavior and Needs

Customer Behavior
As we’ve gone over already, one of the greatest strengths of AI is its ability to make predictions quickly and accurately. There are many benefits to using AI to follow how customers interact with your business and use it to predict what they will need and do next. 

Predicting Buying Trends

One of the most popular ways to use AI is to predict future demand for products and services. This knowledge can help your business in many ways, from managing inventory to marketing specific products to certain demographics. 

Sentiment Analysis

The way that people interact with businesses isn’t just driven by reason and logic. Emotions play a significant role as well.  A growing number of AI systems track how your customers are feeling, like Lexalytics Salience and MeaningCloud

Customer Churn Prediction

Customer churn refers to the number of recently stopped customers using a company’s products or services. Knowing how many customers are likely to leave in the future can help with planning and preparing initiatives to find new ones.

Use AI to Optimize Products

Optimize Products
AI and machine learning can speed up and improve new product development and product discovery, leading to reduced costs and better products, leading to greater customer loyalty.  AI systems that allow for companies to test out their products virtually give business leaders a chance to see how their products will perform in the real world before it gets there. 

Testing Many Different Versions

AI can let you try out far more options than the usual human-led A/B testing paradigm.  Instead, you can try out hundreds of slightly different products and have an AI system keep track of how well they’re being received. 

Predicting Recalls and Problems at Launch

One tool that researchers are developing is AI systems that can find and fix problems before they occur. For example, researchers have been able to predict which foods and brands are most likely to face recalls in the future using only Amazon reviews. 

Understand Your Competitors

One way to fine-tune your products to make sure they succeed in the market is by looking carefully at your competitors’ products, analyzing how they appeal to customers and how they fail.  Outperforming competitors in terms of the quality of your products or services is undoubtedly a way to keep customers in your camp.

Use AI & Machine Learning for Insights

Machine Learning
In customer loyalty, insights are the value that can be extracted from data using analytic tools.  Creating and using a machine learning model can help you identify new segments of the market to which products can be tailored and identify the parts of your customer loyalty program working well. 

Understand Consumer Perceptions

Through programs that collect data about customer actions and sentiments, the development of customer loyalty programs provides the correct level of incentives to get the most out of your investment. 

Evaluating and Tailoring Your Marketing

Machine learning can evaluate the individual responses of thousands of competitors to your marketing materials, giving you a deeper and more exhaustive understanding of what messaging is the most successful. 

Evaluating the Health of Your Customer Service

AI isn’t only good for improving your customer service. It can also generate insights into where customers get frustrated and point to ways to avoid that outcome. O360 is an AI-powered insights platform that offers many products that help achieve all three of the goals in this section.


If you had some skepticism that AI can make a difference in the up close and personal world of customer relations, we hope this article will have convinced you otherwise. 

Customer loyalty, maintaining an ongoing and positive relationship between a business and its customers, is a vital part of running any business. There are lots of ways that AI can make improvements to both results and efficiency. 

If you want to learn more about the various uses for AI in customer relations, take a look at longer posts on how it interacts with:

  • Customer loyalty
  • Product development
  • Customer service

Good luck integrating AI into your business!

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