As customer acquisition costs continue to soar across many industries, far exceeding retention costs, loyalty programs are becoming more critical to a brand’s growth and ROI. During a workshop presentation at Loyalty Expo, Ian Young, Head of Loyalty Business at Comarch North America, called loyalty a “strategic anecdote” to the challenge of attracting new customers.
While he sees loyalty programs as a critical growth engine, he notes “a significant difference” between an off-the-shelf loyalty program compared to those programs that perform in the top quartile. And the performance of loyalty programs, especially when it comes to personalization and engagement, is becoming almost impossible to upgrade without integrating artificial intelligence.
Young, who leads strategic growth and partnership initiation for Comarch, pointed to how consumers are increasing using AI to search for brands, which makes it even more important for brands to respond to these changing consumer behaviors by utilizing AI.
“AI is becoming an increasingly important piece, particularly in the agentic area, for you to be able to promote and stay in your business,” Young said. “And loyalty remains a key element of that equation. And so, I think what we're saying here is the AI piece has to become more native in our business and not talked about as an add-on but really integrated across the platforms that you use.”
While some consumers might express concern about brands using AI, Young thinks that the overall sentiment is positive because people are happy to get the more targeted offers they are receiving through AI. If brands make smart investments in AI, it can drive higher consumer lifetime value (CLV) through increased personalization, which can then drive higher ROI and lower the cost of running a loyalty program, according to Young.
Of course, the implementation of AI and automation places even greater importance on brands having a robust data platform in place.
“If you're not collecting data or building that into your strategy, the loyalty program will not be able to operate the way that you expect it to,” Young said.
Brands that treat loyalty as a core growth engine tend to have greater buy-in from across the company, most critically from finance. But turning loyalty into a successful growth engine today is going to require it to be built with AI-native capabilities.
“There are lots of demands on capital in companies these days and so if you don't have the best business case then you don't get the money,” Young said. “Really thinking about how you embed those AI capabilities directly into your programs and directly into your data so you can serve customers in real time and drive automation is where I think the leading brands will win.”
This session is open to Loyalty Expo attendees and Loyalty360 Brand Members. To watch the full video, click here.