AI Makes Loyalty Programs Smarter

Artificial intelligence is transforming ecommerce customer loyalty programs.

A May 2025 analysis found a “strong positive correlation” between AI use and customer loyalty, suggesting that AI can significantly enhance customer retention, engagement, and satisfaction.

The analysis, “Artificial intelligence’s effect on customer loyalty in the context of electronic commerce,” comes from Hasan Beyari of Umm Al-Qura University, Makkah, Saudi Arabia. It reviewed and consolidated findings from several studies, academic papers, and articles.

3 Ps

Beyari’s report focused on three AI capabilities that could change how ecommerce loyalty programs and customer retention marketing operate:

• Personalization. AI enables relevance.
• Prediction. AI enables anticipation.
• Performance. AI enables reliability and service quality.

Personalization

AI-driven personalization has several advantages over other technologies or manual recommendation systems. These advantages stem from AI’s ability to process massive amounts of data in real time and adapt dynamically to individual shopper behavior.

Beyari’s analysis identified a “strong” relationship between ecommerce merchants employing AI recommendations and repeat purchases.

When a recommendation feels useful and relevant rather than somewhat random, shoppers interpret that utility as care rather than mere promotion.

AI personalization is already affecting product detail pages. It can change layouts,  descriptions, and even images.

AI can even learn from conversion rates, getting progressively better as it adapts and personalizes.

The good news for ecommerce merchants is that just about every software provider is trying to add AI.

Prediction

AI enables merchants to move from reactive to proactive loyalty.

AI can monitor declining open rates, cart activity, and average order value. Predictive AI can re-engage a customer at the most opportune time, such as when she’s at risk of churning or ready to reorder.

AI anticipates needs. If a subscription customer typically orders protein powder every 30 days, an AI engine can predict the next purchase window and send a reminder or loyalty bonus at day 27. That small gesture confirms expectations of convenience and care.

The key here, according to Beyari’s analysis, is identifying micro patterns of engagement or disengagement and acting on them.

Performance

Performance in the context of ecommerce loyalty describes the program’s speed, accuracy, and trustworthiness. Here, the report finds that AI enhances each of these.

AI chatbots and virtual assistants can instantly resolve routine inquiries “How do I redeem a loyalty coupon?” or “Where is my order?”  without involving customer service representatives.

Beyari’s review cited studies showing that AI-powered customer service improved satisfaction and perceived efficiency; both are strong predictors of loyalty.

AI adds integrity, too. Fraudulent redemptions and fake accounts can erode trust in loyalty programs, especially points-based ones.

Machine-learning models can flag unusual behavior such as bulk redemptions or location mismatches before damage occurs. AI also forecasts redemption rates, helping merchants manage liabilities and inventory.

Ecommerce Loyalty

Loyalty programs are often a later-stage marketing tactic. An online shop typically evolves from paid acquisition and search engine optimization to lifecycle marketing, and then to loyalty and retention marketing.

Artificial intelligence is not replacing loyalty programs. It is refining them.

The evidence shows that AI creates a feedback loop between behavior and reward, turning every purchase into a learning event. It is an active and dynamic system that personalizes in real time, predicts what customers need, and performs well behind the scenes.

The result is what Beyari describes as a “moderate to strong positive association” between AI use and loyalty. It’s an academic way of saying the technology works.