Role of AI in enhancing customer engagement, loyalty and loyalty programme performance

Abstract

Despite the widespread use of loyalty programs (LPs), they are often not as effective as they should be. Given the growing role of artificial intelligence (AI; e.g., robotics) in interpreting and shaping consumer behavior, this study investigates the role of AI in boosting customer engagement (CE) in the LP context. Specifically, we develop a conceptual model that explains the role of AI in affecting CE, customer loyalty, and LP effectiveness. We propose that mechanical AI, thinking AI, and feeling AI typically yield enhanced CE and customer loyalty, in turn generating improved LP performance. Overall, our findings suggest that AI plays a key role in improving LP effectiveness. By addressing the theoretical interface of AI and LPs, our analyses add to the emerging LP-, AI-, and CE literature. We also illuminate managerial implications of AI-based LPs, which are able to cultivate more personal client relationships (e.g., through customized rewards), in turn contributing to CE, customer loyalty, and LP effectiveness.