Episode 8

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How is AI Shaping Emotional Brand Loyalty?

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There is some serious growth happening in brand loyalty with some forecasting a value of $18.2 billion dollars by 2026. An increase of almost $10 billion dollars from 2023.  

Within the CPG industry there are a range of brands taking their brand loyalty programs to new heights, today we are considering Starbucks, Mondelez, and PepsiCo.  

International speaker, trainer, and researcher of neuromarketing, Katie Hart, joins marketing expert and Head of Marketing, Shelley Martin to share their insights about AI, brand loyalty, and how everything is evolving. 

Q: Considering Starbucks AI driven loyalty program, how does AI contribute to understanding and enhancing the emotional aspects of consumer behavior and what implications does this have for building a deeper brand loyalty? 

 Katie: It's a great question. I think in fairness, we are probably at the moment only looking at the tip of the iceberg of where this is going to take us. It would be so interesting to have this conversation again in 12 months, 24 months' time, because we are learning as much as the AI is learning too. 

There's obviously a lot of ways that we can utilize AI. Starbucks have been really playing to the processing side of it and enabling the data capture to create a much richer and more detailed picture of the customers and then use that to inform them in terms of the loyalty program that they provide. It’s much more bespoke, it's much more specific. As a result of that, the customers feel much more understood and valued. They're looking at offers that really resonate with them. I feel that connection is really important. 

The Forbes article says how important customer service is. Good customer service makes you feel as though you have a connection with the organization and you're not just a number. The more we look at AI in the way it's being used, the more opportunities we've got to really kind of galvanize that connection and that relationship. 

 As human beings, emotions are a really important part of how we build those relationships. The more we can demonstrate that we understand and we appreciate the emotions, the more we can create content or offers which play to the emotions, the more chance we've got to get some really robust relationships between ourselves and our customer base. 

 Shelley: You touched on the value that customers need to feel, Katie, and I think that's the crucial element. If we think about brands like Starbucks, they've got this celebrity cult-like status and they feel untouchable in terms of, you don't feel important to that brand, you go in, you get your coffee, and you leave. I think these sorts of loyalty programs where actually it makes you feel like the brand is aware of you as a customer and you start to get that valued connection. 

I think at the beginning, they got it a little bit wrong. This can happen sometimes with brands where there's obviously a business need behind some of these loyalty programs. At the beginning, when they first launched their loyalty app, there was a transition from the way that they were working with how many coffees you buy or how many purchases you make, and then they switched it to how many dollars you spend. That had quite a negative impact on the customers. This was back in the day, kind of years ago, and I think it's obviously changed again since then, and it's working really well for them now. 

I think that comes down to the AI element as well, understanding what's important to the customers and the emotional reaction that they may have, just what might seem like a really sensible business decision and just changing the way that the reward structure is. It can have a huge impact on that loyalty. I think there's different ways for brands to look at it, but the emphasis on the emotional importance and the value that customer needs to feel is huge. AI can really help brands to have a better understanding of it. 

 Q: Deloitte found that consumers increasingly expect exclusivity and white glove treatment and the generation that follows Gen Z is very, you know, they want it now and they want a certain level of service, whereas generations before that were not as demanding in their expectations. So how do we think the emotional aspect will ensure that the Gen Zs and the generations that follow get what they expect? 

Shelley: This comes down to the way that we shop. There's a really distinct difference in the way that older generations shop. They like to go to the store whereas, and I think that perhaps the pandemic paid a big part in this as well, the younger generations tend to be much more online. There's a real mix in the way that we shop and that plays very importantly into the way that brands then interact with those different experiences and having this kind of universal experience across all of those different modes of shopping is really important. I think AI can play a big part in that. You know things like when you go to Tesco's getting discounts off the products that you often buy. That's a huge advantage if you're shopping in store but it's also great if you're shopping online and those kinds of experiences and across the different modes is hugely important and I think brands that tap into that will often have the advantage. 

 Katie: The younger generation, they've never known any different. Their expectations are that much higher, which actually means that some of the generations, the more mature generations, whether we're talking B2C or B2B and professional purchasing as well, they don't expect the same level. In terms of emotion, it's easier to give them sort of customer delight because they have that element of surprise when things are incredibly slick or when they've got choice about which platforms, they access their products or services through, or when they've got choice about whether they want delivery within 24 hours. We still have these associations which mean that for some of the older generations, that is an incredible positive. For the younger ones, that's expected. That's the norm.  

If I've got to wait till tomorrow, actually that might feel inconvenient considering that some services are available to us instantly. When we're used to streaming things and when we're used to different providers who get it to us within the same day, actually tomorrow might be disappointing and frustrating. In terms of looking at the emotions, we need to kind of step back and look at actually what builds those emotions. A lot of that is our previous lived experience, for younger people whose experiences have been much more in this digital environment, their emotional experience is going to be completely different from people who have lived through different permutations. 

Q: Mondelēz has utilized AI in blending online and offline consumer experiences. How do you think this integration impacts the emotional connection between consumers and brands like Oreos and what role can AI play in these? 

 Shelley: I think that seamless interaction between the online shopping versus in-store, any brands that can take advantage of that and create that kind of personalized experience. Like the Boots card, the same with the club card that Tesco's do, all of these brands are cottoning onto this now. It's really great because I can shop online and I get points and then I can go into the store and I'm more likely to pick-up other products. 

If brands can tap into that and create a way of engaging with the customer at all of these different points, it really does create that kind of loyalty. I'm far more likely to buy products from Boots when it comes to beauty products because of the points and the experience that I have, as opposed to shopping in say Superdrug, even though possibly in Superdrug it's cheaper.  

They've kind of got me through that brand loyalty scheme that they've created and using AI to track the products that I buy and things that I like it has created a personalized experience for me and it's working. I'm into it. Any brand that can do that and can cut across those different shopping experiences is always going to hold that emotional connection and that value. 

 Katie: We can look at how we are now reaching out into their lives. When we look at some of these campaigns and it builds so much of the sort of personality now behind these brands. And the way that we can utilize this through social media means that actually we're no longer waiting until people need to make a purchase to either come onto the Boots platform or go into a Boots store. It really enables us to leverage that connection. When we talk about brands having personality, we're naturally leaning on that emotional need that we have and that sort of fundamental aspects, which build on the connections so that we, we engage with that brand in a much more meaningful and hopefully profitable way. 

Q: Looking at PepsiCo's implementation of AI in the Joy Customer Loyalty app, how do you see AI transforming the traditional notions of customer loyalty into more emotionally resonant and personalized experiences? 

 Katie: It feels from this example as though actually it has completely transformed the process behind data capture. So instead of it being one or two weeks, this is now down to a matter of seconds. This is going to really revolutionize the way that we can connect with our loyal customers. It's going to enable us to be able to explore those emotions on a completely different level.  

Instead of it being quite so transactional, it can become much more conversational and we can have backwards and forwards. I just think that is going to completely change the way organizations and their customer base interact. 

Shelley: There's a big element that the AI is helping with and I think that's accuracy. Being able to have really accurate right now information is so critical to that experience feeling seamless and the seamlessness is so important to the customer.  

Our attention span is so limited these days and we're bombarded by information from brands all over the place in all experiences that we have throughout our day. That seamless, accurate interaction is hugely important and AI is massively helping with that.  

I had an experience recently which kind of really brought this to light for me a little bit on the personalization front. I made a purchase of a nail kit online and they had this really great series of emails that they sent me. They were very personalized. They were all addressed to me, with my name all the way through the email. There were videos, there was all of these different things and it was great. It was a really wonderful experience until it got to the point where they asked me to review the product. I received an email that said, we'd love to hear what you think ‘test’. And it completely threw me because I hadn't really realized how engaged I was with these personalized emails, until they weren't. It happens to us all as a marketer, there's been numerous times where these sorts of things, it's so simple to do and so easy a mistake to make. The impact that it had on my experience with that brand was huge and I wasn't even aware of it until it went wrong. 

Katie: If we'd looked at what was going on in your brain, that would have been a hugely positive thing. You'd have had dopamine and anticipation and everything is firing off in a lovely way. And then it was just destroyed. To have got so far and to have done so much to create those positive associations, it's devastating to hear of that complete 180-degree pivot where suddenly you're not valued anymore. 

You're on your own, you're one of many, and that must have felt literally as an emotion, you must have felt quite rejected by that and quite hurt by that. That's where AI can really come into the emotional connection is this idea of trust and building and demonstrating and establishing that kind of credibility and ensuring that our processes are optimized so that everything. 

Q: Do our brains respond in the same way to that personalization, even though we know it's AI driven? Is there a difference between a human-to-human connection as opposed to an AI to human connection? And how do we navigate that as AI takes on more and more? 

Katie: Definitely, categorically human to human connection is something that is built into us. Even the desire to feel connected is built into us and a lot of the success of these platforms ironically are built on the fact we are connecting humans to humans. It is going to be very interesting to see how the brain responds because our brain is not designed, it's not fit for purpose, it's not coping with us; it doesn't cope with virtual reality. It's very easily fooled by a lot of the kind of cues which have served it very well through most of our evolutionary past. And now within the last decades, we've created ways to fool it. 

Our brain is old technology. When we look at what's happening with AI, there is no way that our brain is going to be able to keep up with it. 

Shelley: This is a very controversial topic, isn't it? The blur between the use of AI in a positive way, and then the more negative things. The fact that we live our lives so online these days, it takes away a lot of the of our brains ability to read people properly. 

I guess the other angle of this is does it matter? If we're reading content that's written by AI or by a person, I think the personal element always has to have a person behind it. I think the content that we engage with the most is going to be that has had that personal touch and that kind of human element.  

You've only got to use some of the pop-up chat bots to realize that we're away off that yet, because they're just terrible.  

To hear more of the discussion about the AI/human collaboration for emotional brand loyalty you can listen to the episode on Spotify here. 

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