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AI Could Rescue ‘Frugal’ Consumer Loyalty, Say DMA Members

AI Could Rescue ‘Frugal’ Consumer Loyalty, Say DMA Members

Faced with findings of a drop in consumer trust, the experts suggest that artificial intelligence might hold the key to winning back hearts and minds.

Consumers today are “conflicted”, says the Direct Marketing Association (DMA); they want to be loyal, but don’t know who to trust.

This paradox manifests itself in the regulatory body’s latest batch of research, Customer Engagement 2017, which finds that while consumers are becoming increasingly loyal to brands, they are spending a lot more time researching the right brands and retailers to buy from.

It’s meant that the rate of those that stay loyal for both routine and special purchases has risen from 40%-50% in the last year, while 80% of consumers now show “some form” of brand loyalty.

“Now in its second year, this report on the growing complexity of customer engagement and loyalty highlights that trust can be built in many different ways,” said Scott Logie, chair of the DMA Customer Engagement Committee and MD at REaD Group Insight.

“To a certain extent, it can be bought through rewards and cashback. However, for sustainable loyalty and trust there is a need for brands to be more genuine, have strong values and be seen to live these values.”

This behaviour doesn’t look set to falter any time soon; trust in brands in decreasing among the younger generation, with over half (53%) of 16-24-year-olds finding it difficult to know which marketing messages to trust, against 38% of the over 65 bracket.

Meanwhile, 55% of consumers are using the same brands, shops and sites without looking for alternatives.

Loyalty “bubbles”

For the majority of brands, this represents the difficult and expensive task of penetrating the “bubbles” of consumer loyalty to a finite number of dominating brands, such as Google, Facebook, Instagram, Twitter and Netflix.

“With people spending more of their time in fewer places and increasingly on mobile, brands must focus on fighting for share of mind rather than just share of wallet,” comments Alex Timlin, VP of client services at Emarsys.

While all brands will have to readdress how they approach the issue of trust, says Feefo CMO, Matt West, marketers will have to make use of every bit of marketing tech at their disposal, including “authenticated customer reviews, to more personalised loyalty programmes and the fast-evolving use of artificial intelligence.”

Used correctly this kind of approaches could empower brands to give customers “new reasons to trust them,” West adds.

New technologies

Artificial Intelligence, in particular, represents a “huge opportunity” for businesses to paradoxically appear “more human” to their customer base while scaling, according to Sam Madden, commercial director at Wiraya, but its success in this regard relies on a greater understanding of a brand’s consumers and preferences.

“This will, in turn, enable greater trust and transparency to be communicated in a world where engagement is increasingly digital first,” Madden adds.

The DMA’s managing director, Rachel Aldighieri, shares this view, adding that automated marketing technologies will also give marketers “more room” to focus on building deeper, more emotional loyalty.

However, Aldighieri also warns that new technology should be used with caution; “Brands need to understand where new channels will be the most appropriate and effective in the short term, and which consumers will be best disposed to adopt them.

“The pace of technological change will continue to outstrip the legislation governing it, reinforcing the importance of self-regulation and evolving effective best practice in the data and marketing industry,” says Aldighieri.

Learn how to integrate Artificial Intelligence and Machine Learning from performance marketing experts at PI LIVE this October. 

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Mark  Jones

Mark Jones

Mark manages all aspects of editorial on PerformanceIN as the company's Head of Content, including reporting on the fast-paced world of digital marketing and curating the site’s network of expert industry contributions.

Originally from Plymouth, Mark studied in Reading and London, eventually earning his Master's in Digital Journalism- before making his return to the West Country to join the PI team in Bristol.

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