In the fast-changing world of commerce, there’s been much talk about the end of customer loyalty programs in the age of AI-driven shopping assistants. Some have argued that AI represents a death sentence for brand loyalty, particularly with the rise of AI-powered search engines and shopping assistants. However, this view misses the mark.
Far from killing loyalty programs, AI represents the biggest opportunity for brands to strengthen customer relationships, create unbreakable bonds, and achieve true competitive differentiation.
The Reality of Loyalty in 2025
Despite predictions of their decline, the global loyalty program market continues to grow, demonstrating remarkable strength and resilience. In fact, the market is projected to reach $214.7 billion by 2028, fueled by steady, double-digit growth rates. This robust growth is a testament to the enduring power of loyalty programs, which continue to generate significant value for businesses and customers alike.
While AI presents a transformative force in commerce, it is not a threat to loyalty programs—it’s an ally. As Google and other tech giants shape the customer journey through AI, brands still control the most critical part of the equation: the loyalty ecosystem.
AI and Loyalty
The Unlikely Duo
Many argue that AI will disrupt traditional customer loyalty systems. However, this perspective overlooks one key factor: brands still own the loyalty ecosystem. While AI-powered shopping assistants are growing, they cannot replicate the exclusive benefits, emotional connections, and accumulated perks offered through brand-controlled loyalty programs. When customers engage with a brand’s loyalty program, earning points, achieving status levels, or unlocking special perks, they create switching costs that AI systems cannot overcome.
For instance, Google’s AI might suggest alternatives based on price or features, but it cannot replicate the personalized rewards, brand alignment, or experiential value that loyalty members enjoy. This emotional connection and exclusive experience remain a powerful moat that strengthens in the AI-driven world.
The Power of Brand-Controlled AI
Creating Competitive Moats
Rather than being a threat, AI is an incredible opportunity for brands to take their loyalty programs to the next level. Modern AI platforms enable brands to create custom AI agents that reflect their unique values, understand their products intimately, and engage customers without bias. These AI-powered agents can provide:
- Unbiased product recommendations based on customer needs.
- Deep product knowledge that external AI systems cannot match.
- Exclusive loyalty rewards seamlessly integrated into customer journeys.
By creating their own AI agents, brands can offer personalized experiences that competitors like Google or Amazon cannot provide, ensuring deeper customer loyalty and stronger relationships.
AI and Loyalty
A Synergistic Relationship
The evolution of loyalty programs mirrors the growth of e-commerce and brick-and-mortar retail. Just as physical retail has thrived alongside e-commerce by adopting omnichannel strategies, AI and loyalty programs can work together to enhance the customer experience.
Successful brands are integrating AI capabilities into their loyalty ecosystems, creating “phygital” experiences that combine the best of both worlds. AI shopping assistants may help customers discover products, but they cannot replace the brand relationship that loyalty programs foster. Research shows that 85% of consumers still prefer physical retail experiences, signaling that AI-driven discovery can serve as a tool to enhance—not replace—the deep relationships forged through loyalty programs.
AI-Enhanced, Not AI-Replaced Loyalty
As the loyalty industry continues to grow, the role of AI will be crucial in shaping the future of customer engagement. The key lies in building AI-powered loyalty ecosystems that integrate real-time personalization, gamification, and exclusive experiences. AI-enhanced loyalty systems are capable of providing more sophisticated and personalized experiences than ever before, ensuring that loyalty programs continue to thrive, evolve, and grow stronger.
Key Takeaways
- AI isn’t killing loyalty programs; it’s enhancing them.
- Loyalty programs are growing rapidly, with projections to reach $214.7 billion by 2028.
- AI agents can provide personalized, unbiased, and brand-aligned experiences that external platforms cannot replicate.
- Brand-controlled ecosystems offer exclusive rewards and experiences that drive loyalty and create switching costs for customers.
- AI-enhanced gamification can boost customer retention and engagement.
- Loyalty programs are not just transactional; they create emotional connections that AI-powered assistants cannot replicate.
Loyalty Isn’t Dead; It’s Just Getting Started
The narrative of loyalty’s demise at the hands of AI is fundamentally flawed. AI presents the greatest opportunity yet for companies to deepen their customer relationships, create unassailable competitive advantages, and build loyalty ecosystems that transcend simple transactions. Brands that use AI to enhance, not replace, their loyalty programs will thrive in an increasingly digital world. Loyalty isn’t dead; it’s just getting started.
