The Evolution of Brand Loyalty and AI

Brand loyalty has always been a critical driver of business success. Over the years, companies have experimented with various strategies, from traditional punch-card reward systems to sophisticated digital loyalty programs. However, with the introduction of AI agents, the entire concept of brand loyalty is undergoing a major transformation.

Before running Cheeze when at Brndstr.com, we were early pioneers in AI-powered engagement. From 2013 to 2018, we built advanced chatbots for brands such as McDonald's, Nissan, Twitter, British Airways, and IBM, leveraging conversational AI to automate customer interactions. In 2017, we were among the first to integrate IBM Watson into our solutions, bringing AI-driven customer service to leading brands. Back then, managing these interactions required maintaining massive Excel sheets filled with pre-approved responses. AI has now completely fast-tracked this process by allowing brands to pull relevant responses from vast datasets in real time.

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Now, with Cheeze, we're taking AI-driven loyalty to the next level by introducing AI-powered loyalty agents that can dynamically manage, trade, and optimise loyalty points for brands and consumers alike.

How AI Agents Enhance Brand Loyalty

The introduction of AI agents in brand loyalty programs is revolutionising how consumers earn, trade, and redeem rewards. Here are some key ways AI is reshaping loyalty:

1. AI Agents as Market Makers for Loyalty Points

Traditionally, loyalty points have been locked within individual brand ecosystems, limiting their usability. With AI agents, we can create a dynamic marketplace where loyalty points function like currencies on a forex exchange. Here’s how it works:

• AI agents track the value of loyalty points across multiple brands.

• Users can buy, sell, or trade loyalty points in real time, similar to trading forex pairs.

• AI optimises transactions to ensure users get the best value for their points.

For example, if a customer has Sainsbury’s loyalty points but wants to use them at Lime Tree Cafe, an AI agent can facilitate the conversion at an optimal exchange rate, ensuring maximum value for the customer and engagement for both brands.

2. Predictive Personalisation for Consumer Rewards

AI-powered loyalty agents leverage machine learning to predict consumer behaviour and offer tailored rewards. Instead of a generic discount, AI can:

• Analyse purchasing patterns to suggest personalised offers.

• Determine when a user is likely to disengage and send a targeted incentive.

• Use location-based insights to offer contextual rewards (e.g., a free coffee if you're near a partner store).

3. Automated Token Expiry and Smart Utilisation

Loyalty points often expire unused, leading to frustration and disengagement. AI agents can:

• Warn users when points are about to expire.

• Automatically trade soon-to-expire points for usable ones.

• Convert points to crypto or other digital assets before they lose value.

4. AI-Powered Negotiation Between Brands

One of the most exciting advancements is enabling AI agents to negotiate deals between brands for cross-promotional opportunities. For example:

• A customer at Sainsbury’s earns points that can be automatically redeemed at Uber Eats.

• AI agents communicate between brands to offer real-time deals, optimising both inventory and engagement.

The Shift from Pre-Programmed Chatbots to AI-Driven Agents

During my time at Brndstr, chatbots required meticulous pre-programming. Brands would provide us with extensive Excel sheets of pre-approved responses, and our bots would match user queries with the closest answer. This approach worked but was slow, rigid, and required constant manual updates.

AI agents, on the other hand, are fundamentally different. Instead of relying on static response trees, modern AI agents:

• Have access to a vast knowledge base in real time.

• Use natural language understanding (NLU) to derive intent without needing pre-programmed responses.

• Continuously learn from customer interactions, refining responses and recommendations dynamically.

This shift means brands can deploy loyalty programs with real-time intelligence, adapting to customer needs instantly.

The Competitive Advantage of AI in Loyalty Programs

Brands that integrate AI-driven loyalty programs will gain a significant edge in customer retention. Benefits include:

• Increased Engagement: AI offers rewards and incentives that are relevant to individual consumers.

• Frictionless Transactions: No more manual redemption—AI agents handle all conversions and trades seamlessly.

• Real-Time Value Optimisation: AI ensures that both brands and consumers get the best deal on loyalty points.

• New Revenue Streams: Brands can monetise loyalty programs by allowing customers to exchange points across networks.

By incorporating AI agents into brand loyalty, we’re not just modernising rewards programs—we’re creating a decentralised loyalty ecosystem, where consumers have true ownership of their rewards.

Final Thoughts

From my early days at Brndstr building chatbots for global brands to today’s AI-powered loyalty ecosystems at Cheeze, the evolution has been nothing short of extraordinary. AI agents are the natural next step, offering brands and consumers unparalleled flexibility, efficiency, and value.

With AI, we’re not just digitising loyalty—we’re transforming it into a living, breathing, intelligent economy that continuously adapts to the needs of the market. Brands that embrace this shift will not only improve engagement but will also future-proof their loyalty programs for the AI-driven world ahead.

The question is no longer if AI will shape the future of brand loyalty—but rather, how soon will your brand embrace it?

————

Simon Hudson
CEO

/Follow me @hudson