Enhancing customer loyalty is an excellent way to accelerate business growth. However, building client loyalty is a challenge. Because your industry has fierce competition for attention, you’re competing with top brands for the same customers.
The reality is that you won’t have a business without a loyal client list. That’s because devoted buyers are the reason for your business’ existence. Given this, you need to devise a well-thought-out, seamless marketing strategy to enhance customer loyalty.
That is where artificial intelligence (AI) comes to play. However, note that customer loyalty is not client retention. So please, don’t confuse the two as they’re very different.
How does artificial intelligence improve the customer experience and boost loyalty?
Read this Trends blog for answers!
Customer Loyalty and Customer Retention: How They Vary
Client loyalty and retention have striking similarities, which is why some marketers use the terms interchangeably when depicting a customer. But, they have clear distinctions.
Loyal consumers are those who buy from you, make repeat purchases, and recommend your product or service to others. They become brand advocates and help grow your business with word-of-mouth (WOM) and referral marketing.
In other words, customers loyal to your brand transcend monetary commitments. A dedicated client will stand by you through thick and thin and willingly vouch for your products or services. Such advocacy is free brand promotion triggered by excellent customer experience (CX).
According to research:
- Over 70% of consumers say customer experience influences their purchasing decisions
- 86% of respondents confirm they are willing to spend 17% extra for excellent client experiences.
- Businesses that focus on improving customer experience increase their earnings by 80%.
- Companies that prioritize customer needs are 60% more profitable than those that do not.
On the other hand, customer retention is fighting decline; it’s a continuous marketing process to help keep customers coming back to your business. Retained clients may or may not buy from you again. They may choose to purchase from your competitor—meaning that their loyalty to your business is not guaranteed.
Why is Customer Loyalty So Important?
“Loyal customers, they don’t just come back, they don’t simply recommend you, they insist that their friends do business with you.” — Chip Bell.
Customer loyalty is vital because it contributes significantly to business sustainability and growth. Chip Bell’s quote implies that consumers don’t just come back or recommend your brand with loyalty marketing, but they insist on it.
To back this claim, a report by Invesp reveals that increasing client loyalty by 5% can generate 25 to 100% ROI.
Hence, the value of a loyal customer is 10x more profitable than a first-time buyer. They account for about 80% of your earnings because they spend more than new buyers. Moreover, you have a 60 to 70% chance to sell to an existing buyer.
When you compare those numbers to selling to new customers, you only have a 5 to 20% chance. These findings make customer loyalty a critical asset for your business.
Given this knowledge, a well-defined loyalty program for customers will stimulate continuous business relationships and extend customer lifetime value (CLV). That’s not all; let’s consider a few more advantages of having loyal customers.
Benefits of Customer Loyalty
Why should you enhance customer loyalty for your business? In addition to the values explained above, I will discuss only a few benefits.
- Loyal customers use persuasive word-of-mouth and referral marketing to promote your business for free. They spread the word about your products or services to their friends and followers. Remember, over 90% of buyers trust recommendations from friends.
- Loyal customers are repeat buyers and will gladly share positive reviews or feedback about your brand.
- With a loyalty rewards program, loyal consumers will spend more on your brand than they need.
- Building client loyalty is essential because loyal consumers serve as a reference or control group. They provide answers to surveys and respond to users’ comments—providing insights based on their experiences with your business.
Now that we’ve addressed the differences between customer loyalty and client retention, the importance, and the benefits of client loyalty, let us look at the values of AI for business growth.
Why is AI Essential for Your Business Growth?
Understanding the business values of AI: The advantages of incorporating AI technology solutions into your business undertakings are beyond imagination. For example, artificial intelligence gives you a competitive advantage over your competitors.
These may involve digging into other areas of AI, such as machine learning and natural language processing. Please, read this article to learn about the unique advantages of artificial intelligence to enhance your growth proportion.
Nevertheless, here are three exceptional values of AI technology in your marketing mix that I’d like to point out:
- Fraud prevention: There’s a prevalence of fraud in all industries. Thus, your business can use AI technology and automation to file paperwork, discover and avoid fraudulent activities. Also, AI can detect and prevent spam emails, improve cyber security, and more.
- Determine consumer requirements and behavior for better targeting: Al uses customer data to help improve marketing efforts by analyzing users’ behavior on your site or landing page. This information helps you determine customers’ needs and requirements to serve them better and increase ROIs.
- Discover and manage data: AI enables you to discover and manage industry data for machine learning applications faster and more efficiently. This aspect gives you an edge over the competition.
How to Boost Client Loyalty with AI Technology
According to data from SEMrush, 75% of brands fear they may run out of business within five years. Why? They’re not using AI in their marketing mix. The report also indicates an estimated $190 billion growth in the artificial intelligence market worldwide.
Interestingly, the most planned area and use case for AI technology for marketers and brands is customer experience. Improving CX is an excellent way to increase client engagement and loyalty marketing.
It enables you to create hyper-personalized content and a solid marketing strategy that addresses all buyer journey stages. For this, you will enhance client loyalty significantly. So, here’s how to use AI to influence consumers and increase customer loyalty and business growth positively:
1. Use Chatbots to Boost Customer Engagement
Earlier above, we learned that brands that take the lead in client experience outperform those that don’t by almost 80%. Furthermore, companies that work to optimize CX increase revenue by 84%.
Further insights into customer experience statistics reveal more exciting results:
- 73% of organizations with an above-average level of CX surpassed their competitors in revenue earnings.
- The choice of loyalty to a brand, products, or services for 96% of consumers is customer service
- Companies that offer superior customer service experience (CSX) generate 5.7x more proceeds than the competition
- For more than 70% of buyers, good CX influences their loyalty to a business.
- 50% of global consumers say they will stop doing business with a company after one bad experience
- 59% of US shoppers say they will stop buying from a brand after multiple bad experiences
What do these results mean for your business? It means that one of the best ways to increase customer loyalty is to improve customer experience.
The best way to enhance user experience and drive loyalty is by using chatbots. Chatbot technology provides 24/7 customer service. They answer consumer queries, resolve issues, and alert customers about special offers and new products round the clock.
The reality is that chatbots are your perfect online virtual assistants. They conduct initial conversations with customers on your site before handing them over to customer service personnel.
See a typical example of a chatbot in action in the screenshot above. These experiences help increase client satisfaction, boost customer engagement, and ultimately improve loyalty.
2. Produce Data-Based Loyalty Programs
What else can do these robot-controlled machines or AI do when potential customers and existing buyers visit your site? Besides initiating a conversation, they record all visitors’ behaviors of any actions.
For instance, online shoppers may pay for your services or buy your product. They might view the list of products you have or the services you offer and leave comments. Additionally, some may scroll down and click a few more pages.
All these activities are recorded by deep learning algorithms, which supplies you with information that allows you to manage decisions. How? You can use the data to develop audience personas for your business based on interests and other elements for your business.
From there, you can segment your target audience according to their values and create data-based loyalty programs for each group. This business strategy is effective since it lets you develop customized loyalty or reward programs that connect with each audience group.
Remember, your audiences are at various stages of their buyer journey and require different offers to meet their needs. Providing the appropriate content and loyalty program will improve consumer engagement and build customer loyalty.
However, to boost your marketing effectiveness, link the customer rewards programs to your chatbot and make them available across channels. That way, consumers can access your chatbots from different platforms and view other available offers and services on your website.
3. Apply Conversational AI in Virtual Agents
Conversation artificial intelligence in virtual agents drives optimal results. Why? Because virtual agents use AI to increase consumer engagement and satisfaction. A virtual agent is a chatbot or virtual rep software app.
This technology employs natural language processing and preset answers to respond to consumers from your customer support knowledge base. For instance, when clients make requests, the bot uses natural language processing to determine the terms used in the queries.
Then, it searches through its scripted feedback and provides the most related answer to the customer’s request. However, these technologies use conversational AI to go beyond identifying customers’ keywords.
They utilize this technique to pull out the search context and implement it across conversations or inquiries. Thus, conversational AI in your virtual agent enables these chatbots to understand and remember the context.
It guarantees that your bot offers quick resolutions from a customer support knowledge base. Consequently, you can delight buyers with valuable pieces of information that will boost engagement, improve customer satisfaction, and increase loyalty. However, you may need to map out specific workflows for your virtual agent to maximize efficiency.
4. Use AI to Make Customized Recommendations
One of the primary applications of AI in business is customized product or service recommendations for online shoppers. It helps you outsmart your competitors and increase sales.
For example, eCommerce brands, such as WooCommerce or Shopify storeowners, can use AI technology to personalize consumers’ online shopping experience. Artificial intelligence applies knowledge discovery techniques to make customized product recommendations.
With this technique, AI can recommend related products personalized to customer segments following past online activities. Moreover, you can use these robots to demonstrate your products or services’ value proposition and marketing campaigns to potential customers.
It helps you boost sales and enhance consumer relationships. A report by BCG shows that personalization improves marketing strategy and efficiency. AI for marketing personalization can increase your growth proportion by 6-10%. Further, a survey by Statista reveals more exciting results.
As you can see, personalization increased customer experience and conversion rates by 64% & 63%, respectively.
Please, consider the following personalization statistics that back up this claim:
● 75% of online shoppers say they’re interested in doing business with brands that provide personalized digital experiences
● 97% of brands increased revenue with customized marketing campaigns
● 70% of companies that focus on marketing personalization generated 200% ROI
Therefore, with big data, AI for personalized product recommendations influences consumer preferences, improves sales, and increases loyalty.
5. Leverage Predictive Marketing Analytics
Implementing predictive marketing analytics is a fantastic way of using AI to enhance consumer loyalty. That’s because predictive analytics use big data to process information and forecast future business results.
Thus, predictive analytics combine diverse data capabilities from different areas, including:
- Artificial intelligence
- Machine learning
- Data mining
It uses information from these avenues to examine various pieces of data and process them to create marketing predictions. For example, the machine learning algorithm studies consumers’ purchasing histories and predicts their next move.
Hence, you will receive valuable insights into consumers’ buying footprints with predictive marketing analytics. The insights enable you to understand your target buyers and foretell their following actions. It helps know how to address their pain and retain them as loyal customers to your brand.
Are You Ready to Use AI to Boost Customer Loyalty?
AI can change how you operate your business and provides several opportunities for business growth. However, the significant advantage of AI for business growth is that it enables marketers to understand data in real-time.
As a result, companies can create positive customer experiences, impact client behavior, and improve loyalty marketing. Thus, if you want to gain an advantage over the competition and build brand loyalty, incorporate AI into your marketing strategy.
About the author: Moss Clement is an expert business writer for B2B SaaS brands and individual digital marketers. He is also a content strategist at Moss Media and blogger at Writers Per Hour. He helps B2B marketers, small & medium-size businesses, brands like Omnisend build their online presence and brand reputation.