In the competitive retail market, customer loyalty is a key factor for businesses to thrive. The EHI, commissioned by Epam, a pioneer in software engineering, has explored how artificial intelligence (AI) can strengthen customer retention. According to Philipp Hübner, a retail expert and author of the study “AI and Customer Loyalty in Retail,” retaining existing customers is easier than acquiring new ones, especially in saturated markets.
The study revealed that about six out of ten respondents find it easier to retain existing customers rather than acquiring new ones. However, the percentage of existing customers varies significantly among retail companies. For example, half of the respondents stated that their existing customer base ranges from 61% to 90%, while 12.5% indicated that it is at most 30%.
Many retailers are turning to loyalty programs to enhance customer loyalty. 65.5% of the surveyed executives already offer a loyalty program, with an additional 14.5% planning to introduce one. To increase the number of users in loyalty programs, attractive pricing, exclusive benefits, and tailored offers are considered crucial by the respondents.
While loyalty programs play a significant role in customer retention, other factors such as product quality, assortment selection, direct customer consultation, and post-purchase support are also important. Excellent service and competent advice are highlighted as key success factors for customer loyalty, along with attractive pricing and exclusive benefits.
The use of AI to boost customer loyalty is seen as beneficial by almost all respondents (92.4%). A considerable percentage (19.8%) already leverage AI for this purpose, while more than half (54.2%) plan to use AI in the future. Projects related to AI implementation for customer loyalty are currently underway for over a third of the respondents, with an additional 40.1% planning such projects in the future.
The study also found that the majority of respondents view increased personalization of direct marketing, more efficient customer behavior analysis and forecasting, and automation of consultation and services as key areas where AI can be utilized to enhance customer loyalty.
Investment in AI applications for customer loyalty is expected to increase significantly in the coming years. Nearly 40% of the respondents believe their retail company is likely to invest in AI applications for customer loyalty today. This percentage could rise to 68.5% in two years and potentially reach 85.7% in five years.
The full results of the study will be presented by Lars Hofacker and Philipp Hübner at the upcoming Retail Congress in Berlin, with a digital session scheduled for December 5th. The whitepaper containing detailed insights is available for free download.
The study was based on an online survey conducted in August/September 2024, with 232 participants from 179 retail companies in the DACH region. Nearly half of the participants (105 individuals) hold positions in top management or at the executive level. These companies collectively generate approximately 111.6 billion euros in net sales in Germany alone.
