An AI Handshake for Sustained Customer Loyalty
A recent survey revealed compelling insights on what business leaders expect from artificial intelligence (AI) in customer engagement. Sixty-seven percent looked to AI for faster information, 62 percent to reduce wait times, 53 percent for improved data accuracy, 42 percent to create consistent experiences, and 41 percent for personalized responses.
They say all roads lead to Rome. In this case, they lead to customer loyalty.
Customer loyalty is a make-or-break imperative in today’s extremely competitive global retail marketplace. Today’s well-informed consumer can effortlessly compare deals and switch brands, diminishing brand loyalty. Recent research showed that more than 50 percent of customers would switch brands after just one negative experience. Therefore, customer retention becomes increasingly difficult and profit margins continue to tighten.
This is where AI steps in as a game-changing enabler.
By tapping into the vast data footprint generated by retail businesses, AI empowers retailers to deliver personalized product recommendations, plan for stockouts, enable dynamic pricing, and more. And with the rise of generative AI (Gen AI) and agentic AI, customer loyalty management is poised to become even more innovative and impactful.
Personalization Like Never Before
Push campaigns remain a central strategy for driving sales. However, with a broad consumer base, the challenge is crafting offers and messages that truly resonate with individual customers. Gen AI goes beyond simply identifying preferences at scale — it can create distinct, personalized content tailored to specific consumers. Our experience shows that retailers can quadruple the impact of their marketing efforts through Gen AI-powered personalization.
With store interactions, every customer touchpoint is an opportunity to deliver personalized experiences. Macy’s AI-driven dynamic pricing model, introduced in 2024, adjusts prices in real time based on demand and competitor analysis to power a significant revenue boost.
Loyalty for the Long Term
The most successful loyalty strategies take a longer-term view, focusing on total customer lifecycle value. AI-led customer loyalty management programs provide 360-degree data visibility across multiple channels in real time to power customers to hyperpersonalize their products. For example, Sephora’s Beauty Insider program uses AI to curate personalized product bundles, helping the company achieve an 80 percent retention rate — and, according to its 2024 Annual Report, a 14 percent increase in member retention. Similarly, Walmart’s Q2 2024 earnings report declares that its AI-driven subscription, which provides tailored delivery options and rewards, has increased customer retention by 16 percent.
Restoring the Confidence of Product Discovery
Abandoned search efforts are, more often than not, the result of confusing and endless choices. Gen AI takes personalization to a whole new level through intuitive conversational product discovery tailored to individual preferences. It can deliver highly accurate and relevant product recommendations at scale to create tremendous consumer confidence. Carrefour’s intelligent assistant Hopla enhances the shopping experience through personalized support on products, services, and store information.
With Great Power Comes Greater Responsibility
As AI investments accelerate, retailers must commit to building responsible AI systems that are ethical, transparent and accountable. The access to large volumes of first-party data is both a competitive edge and an overwhelming responsibility. It’s critical to safeguard customers’ personally identifiable information (PII), eliminate bias during model training, and ensure transparency in AI-driven decision-making. These are not theoretical concerns. In 2023, a leading European apparel retailer was fined for deploying a personalization algorithm using customer data without explicit consent.
The cost of failing in customer engagement has never been dearer. Now is the time to execute with precision, to harness the full power of AI and elevate customer loyalty to unprecedented heights.
Manish Vora is the business unit head of manufacturing, retail and consumer products at WNS, a global business process management company.
Manish Vora is the business unit head of manufacturing, retail and consumer products at WNS. He is responsible for the strategy, growth initiatives and financial performance of these businesses. Previously, he served as Executive Vice President and Head of Sales (Horizontal Offerings) at WNS. With a background in finance, Manish has decades of experience in outsourcing, consulting, risk management, investment banking and audit.
