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The consumer state of AI: Generational breakdowns, top tools, use cases, pain points and more
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When I talk to people in loyalty marketing these days, the discussion inevitably turns to AI. Whether people love it, hate it or are skeptical, most believe AI’s capabilities are infinite and is the very thing that can take their program to the next level.
In theory, it can. AI is precise and highly predictive, giving it the ability to personalize at scale. AI has the potential to be a powerful tool that transforms your loyalty program into meaningful customer experiences that provide value. Personalized loyalty programs are a big part of that—high-performing loyalty programs can lift revenue from points-based customers by 15–25% annually by increasing purchase frequency and basket size.
But the truth is, AI can only act on the input it receives. If your customer information is flawed, or it relies solely on their transactions, your loyalty messages become irrelevant, customers feel your brand doesn’t understand their needs and distrust grows.
So, while the conversation often focuses on what AI promises, equal attention should be given to how it delivers on those promises—leveraging high-quality data and identity resolution. This means having unified and cleansed first-party data is not just helpful for optimal AI performance—it’s essential.
When it comes to building long-lasting loyalty, it all starts with knowing your customer. But when data quality is lacking, the model atrophies and personalization no longer aligns with the customer experience.
Transaction data only shows you what customers have purchased, without telling you why. To create a genuine connection with your customers and appeal to their needs, you have to look beyond their purchase history, frequency of visits and shopping cart-level information.
Loyalty management platforms that layer in contextual data—intent, life context and engagement with your brand—can access these enriched insights to communicate in a way that speaks to the very heart of what matters to their members. Leveraging contextual data is how popular brands understand the person behind the transaction, not just their purchases.
A while back, one of my friends received a notification from one of her loyalty brands urging her to stock up on diapers. The problem wasn’t the marketing. It was the timing. Her kids were now teenagers.
Somewhere in their marketing database, she was still that same person she’d been years earlier—a new parent. The customer database hadn’t noticed that her life—including her habits and interests—had changed.
Many brands still miss the mark. About 61% of consumers say they feel misunderstood or treated impersonally—often the result of personalization built on incomplete or bad data.
If AI only automates transactions, it personalizes to buying patterns and misses important pieces of your customer’s evolving connection to your brand.
Most customers don’t know anything about your data quality—but they notice when it feels off. Seventy-six percent of consumers said they view brands negatively when inaccurate information about them is included in advertising messages they receive.
When this happens, people are increasingly willing to act on it. More than a third of consumers say they would withdraw their loyalty if a brand mishandles other personal data, up from 30% the previous year.
Without a solid data strategy powering your AI, false precision and data volume can create the illusion of personalization—delivering communications that are precise but superficial. When this happens, messages feel automated and offers feel irrelevant—creating friction.
Data quality issues—like duplicate IDs and incomplete profiles—often hold personalization efforts back. Simply improving data hygiene can unlock 10-25% in incremental gains.
Essentially, without advanced data and technology, your loyalty marketing initiatives can’t benefit from the true power of AI, and your campaigns run the risk of:
And when these gaps exist, the impact goes beyond missed insights—AI can end up driving inefficient ad spend, generating low-value outputs and ultimately eroding the very trust that loyalty programs thrive on. When done right, however, AI reveals insights across the entire member journey—enabling more relevant interactions that foster genuine connections and build lasting brand affinity.
Customers expect personalization from their loyalty brands. In fact, 80% of consumers said they liked it when brands personalize their communications based on their interactions and status with their loyalty programs. In fact, 91% of consumers say they prefer brands that offer personalized content—making relevant, data-driven engagement table stakes rather than a differentiator.
However, creating seamless customer experiences that resonate, depends less on AI, and more on the data and identity resolution behind your loyalty marketing.
Even if loyalty programs are designed to capture more data points about their members, there may still be gaps that prevent a holistic customer view. Only 60% of consumers are satisfied with the personalization they receive, revealing a disconnect between expectations and execution, often due to data quality issues.
Advanced solutions fill in those gaps—adding contextual details, like household characteristics, interests and life-stage indicators that enrich the loyalty member's profile, making it complete.
With a clear view of your customer, AI can thrive—recognizing your customers and offering valuable experiences that matter to them. From there, AI can respond in real time—analyzing patterns, predicting behaviors and forecasting offers—creating experiences that actually feel aligned to the customer.
AI promises extraordinary possibilities. Instead of leveraging it as a solution that solves everything, treat it like an accelerator that amplifies the inputs it's built on.
Having a foundation of quality data and identity in place allows AI-powered loyalty programs to deliver true customer value—offering the next-best action or recommendation, anticipating needs and personalizing offers in ways that shape engaging customer experiences and drive real growth for your brand. When powered by clean, complete data, personalized loyalty messaging can increase repeat purchases and boost engagement by 20-40%.
With the right data and technology, brands can turn these insights into action, enriching the member journey across channels. Brands that get subscription programs right show how AI can anticipate needs and guide customers to the next-best offer.
Fueled by data and identity resolution, AI creates seamless continuation of the conversation, subtly shaping behavior, expanding share of wallet, building trust and creating relevant experiences that foster lifelong loyalty and long-term brand advocacy.
If data is the foundation of effective AI, what’s the final piece that turns that foundation into real loyalty impact? For many brands, it’s the right technology partner.
Investing in an advanced loyalty provider gives you much more than software that just runs—it helps you get results and continuously improve. Industry-leading loyalty platforms help you take your loyalty initiatives further, providing practical services that include program design and strategy, advanced analytics and reporting that includes measuring the emotional loyalty of your customers to better optimize engagement. The payoff is clear: customers with a strong emotional connection to a brand have a 306% higher lifetime value than those who are merely satisfied.
Our solutions combine tools with expertise, ensuring strategies are executed effectively and insights are activated, bringing AI-powered loyalty to life. Bridging technology with practical know-how expands AI-readiness and influences customer experiences across channels—moving your brand beyond transactions to relationships.
According to our research, 93% of marketers say they plan to allocate at least 5% of their budget to AI initiatives. But brands that see the biggest ROI will be those that invest just as intentionally in the data foundation that powers AI-driven insights. Currently, 96% of retailers say they struggle with personalization execution—not because of AI capabilities, but due to underlying data, technology and resource challenges.
With advanced loyalty technology, AI can help loyalty program managers better understand their members, truly offer value and achieve better outcomes. It frees time and allows you to create cohesive, innovative experiences—assisting with real-time strategy adoption, dynamic member insights and customer journey orchestrated campaign creation—supercharging your program performance.
The right loyalty platform unifies customer data and enriches it, allowing you to make smarter person-first decisions, create loyalty campaigns that drive deeper engagement and provide memorable customer experiences.
