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01 NOVEMBER 2024
Building customer loyalty with a little help from AI

It’s been a hard few years for consumer loyalty. Firms’ ability to personalise their offers will be key to building it back.

Brand loyalty is critical to growth and building business sustainability, and retaining an existing customer is much more profitable than attracting a new one. In addition, loyal customers tend to recommend the brand and are less sensitive to price fluctuations. Loyalty, therefore, contributes to the financial stability of companies, with a recurring customer base ensuring the stable revenues that are essential to long-term planning.

But with Gen Z making up the least loyal generation of consumers, the challenges to overcome are significant. IESE Prof. José Luis Nueno, holder of the Intent HQ Chair on Changing Consumer Behaviour, co-authored a study with Alfonso Urien, looking at 473 million transactions in Spain in 2023 and giving special analysis to how AI is revolutionising consumer loyalty in different sectors.

The role of artificial intelligence in bringing customers back

The main contribution of AI to fostering loyalty is through its ability to personalise the experience. It revolutionises how companies can interact with their customers, and it can reduce barriers in the buying process. To achieve this transformation, organisations must consider the following aspects:
  • Human nature: Consumer loyalty is based on habits and feelings. An emotional connection increases profitability, as engaged customers spend more and are more loyal. How can your AI tools help create a warm, fuzzy feeling in customers?
  • The personalisation of communication: Generative AI allows you to tailor messages and create dialogues in real time, making interactions more relevant and meaningful.
  • Behavioural models: AI helps predict consumer behaviour and reduce friction, improving the customer experience and fostering loyalty.
  • Observation, privacy and trust: The use of personalised data poses privacy challenges, but technologies such as perimeter computing and digital twins enable personalized experiences while respecting privacy.
Useful resources:

IESE Insight
INSIGHT is the knowledge portal of IESE, one of the world's leading international graduate business schools. Visit our InfoCentre or website.

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