New research by Apply Digital reveals that traditional strategies like personalization and loyalty programs are losing traction due to poor ROI. Instead, AI is capturing customer engagement budgets, with 71% of surveyed senior managers citing it as the best-performing tactic. Confidence in loyalty programs is so low that 38% of organizations plan minimal investment in them over the next two years.
Lauren Milne, Chief Strategy Officer at Apply Digital, says: “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 personalization 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 reduced investment, 47% of respondents still view loyalty and rewards programs as effective tools for driving repeat business. However, closer analysis reveals a notable split in opinions; while 43% of senior leaders believe customers are losing interest in loyalty programmes, an equal percentage disagrees.
The research also highlights that organizational misalignment and siloed data are the primary barriers to achieving better results from customer engagement strategies. Many large enterprises struggle to unify their customer data, making it difficult to deliver the types of cohesive, personalized experiences that drive revenue.
Lauren Milne comments: “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.
“AI tools such as chatbots and personalization engines can be highly effective if they are integrated with existing systems and tools to support engagement efforts. However, this will only work if sufficient investment has already been put into data integration and alignment across teams and platforms.”
