Published in Financial Services

Driving Your CX at the Intersection of LX and AI

The Shift Is Upon Us

Customer experience is at an inflection point.

We are in a transformational moment where significant demographic and technological shifts have changed our expectations of brand interactions. Companies like Uber have reduced consumer patience with friction in the brand experience. Companies like Amazon and Warby Parker are scrambling our notions of online versus brick-and-mortar. Trends like big data and conversational commerce are disrupting our notions of the predictability of customer behavior, and the rise of Gen Z is causing everyone to question who owns the medium and who truly generates the most impactful brand messages.

In this time of disruption, it makes sense to look to a north star to guide new strategies and new approaches. We see that guidance coming from four simple letters – LX + AI.

The Interplay of LX and AI

Loyalty Experience (LX) is the total sum of your brand’s interactions with your best customers and your high-potential customers. It’s not points. It’s not a program. LX is about a holistic approach that delivers what loyal customers now expect – an elevated and consistent experience across all touchpoints. But this new approach also requires new tools. Attempting to deliver LX using the same analytical approaches of the past won’t be enough. This is where Artificial Intelligence (AI) enters the picture. Along with machine learning approaches, AI is rapidly becoming a requirement for effective loyalty marketing. It promises a significant leap forward in our ability to predict customer behavior and preferences. It also provides us with the tools to truly execute 1-to-1 marketing strategies through hyper-personalized offers and content.

LX Versus Loyalty Program

The weakest aspect of most traditional loyalty programs is ironically the aspect that once made them compelling – namely, their financial value proposition. Increasingly, we’re seeing that loyalty points-and-rewards constructs are showing a declining ability to drive behavior. Yes, they still work, but at a declining rate. Consumers are experiencing fatigue with these traditional loyalty programs, evidenced by more than 50% of all loyalty program memberships being inactive.

In research just published by Maritz and The Wise Marketer, we found that 44% of consumers who have stopped participating in a loyalty program cited “rewards were too hard to earn” as their primary reasons. We also found that 25% of consumers active in loyalty programs can’t even recall the last reward they redeemed for. This suggests that the loyalty CX needs to shift from an overwhelming focus on Mercenary Loyalty (retention driven by a financial offer) and toward developing deeper relationships through True Loyalty (retention driven by a powerful and differentiated customer experience).

How AI Can Positively Impacts LX

AI provides the ability to process huge volumes of transactional data more efficiently than previously possible through traditional analytics approaches. It is the answer for anyone who was asking themselves a few years ago: “Okay – I get what Big Data is – now, what do I do about it?” AI can see the trends in the data that an analyst will miss, and provide much more effective targeting of messages and offers. Most importantly, as we advance in our application of AI to customer retention challenges, these algorithms will have the ability to get smarter on their own, continually refining their predictions and recommendations based on shifting data points.

Ultimately, the key to retaining today’s consumer – a consumer who looks very different from those of the 1980’s when loyalty marketing was invented – is to engage them with a strategic approach that combines advanced analytics and a focus on the total customer experience. This approach will change the quality of our interactions with loyal customers, making them timelier, more personal and more relevant. In short, it will be an experience that goes way beyond simply the impact on a consumer’s wallet.

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Don’t miss Barry and Jesse’s breakout session at next week’s CXFusion to hear them expand on the two trends that will shift your loyalty strategy in 2018: LX + AI.

Can’t make the conference? You’re in luck! Barry and Jesse will also be hosting a webinar on this topic on April 10th, at 1pm EST. Click here for more information.