New research by global digital transformation firm Apply Digital highlights a significant shift in how large enterprises approach customer engagement.
Traditional strategies like loyalty and rewards programmes are being deprioritised due to perceived poor returns on investment, with 71% of surveyed senior managers citing artificial intelligence (AI) as offering the best ROI compared to just 15% for loyalty programmes.
The Future of Customer Engagement study surveyed 500 senior managers from large North American enterprises. It revealed that over a third (38%) of organisations plan to allocate zero to moderate spending on loyalty programmes over the next two years. This trend is attributed to a growing confidence in AI-driven tools, which are increasingly favoured for their efficiency in personalisation and conversion optimisation.
Lauren Milne, Chief Strategy Officer at Apply Digital, explained, “As companies reassess their strategies, many are turning to AI tools to enhance customer engagement. This does make a lot of sense, there’s little doubt that AI-driven personalisation tactics play a huge part in driving efficiencies and conversions. However, that doesn’t mean that there isn’t still a place for more traditional CX strategies such as loyalty. The trick is reimagining and reinvigorating them through the lens of AI.”
Despite the reduced focus, loyalty programmes remain somewhat relevant, with 47% of respondents viewing them as effective tools for driving repeat business. However, opinions are divided; 43% of senior leaders believe customers are losing interest in loyalty programmes, while an equal percentage disagrees.
Data Silos and Organisational Misalignment
The research also highlights key challenges hindering enterprises from optimising customer engagement strategies. Disparate data systems and organisational misalignment are identified as primary obstacles to success. Many large enterprises struggle to unify customer data, which limits their ability to deliver cohesive and personalised customer experiences.
Lauren Milne noted: “AI is seen by many as a solution to the relative decline in the effectiveness of loyalty. However, businesses are unlikely to meet their targets until they have addressed the underlying structural challenges that hold them back from moving to a data-first model.”
Milne added that the integration of AI tools, such as chatbots and personalisation engines, can significantly enhance customer engagement efforts. However, these tools need to be seamlessly aligned with existing systems and supported by robust data integration across teams and platforms. Without such foundational investments, enterprises risk falling short of their engagement objectives.
The Role of AI in Reimagining Customer Loyalty
The report underscores AI’s potential to transform customer engagement strategies, particularly by complementing and enhancing traditional approaches. Tools powered by AI can provide deeper insights into customer behaviour, automate personalisation, and streamline operations, creating a more dynamic and responsive customer experience.
Nevertheless, the research suggests that AI alone is not a panacea. While its role in driving efficiency and conversions is widely acknowledged, the structural issues of siloed data and misaligned teams remain critical barriers to achieving long-term success.
As businesses continue to adapt, the findings emphasise the importance of a balanced approach. Leveraging AI alongside reinvigorated loyalty programmes and other customer experience strategies may provide the best path forward for enterprises seeking sustainable growth in customer engagement.
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