While the battle for customer loyalty has well and truly entered the digital age, many organisations are still managing like it’s 1985.
The rise of the AI-augmented customer
This is a pivotal shift. Consumers are becoming AI-augmented. More prepared, and increasingly more confident, they are calling out service grievances and flawed systems, publicly and persuasively. It’s no longer just about reviews or ratings.
Meanwhile, many businesses still rely on blanket rules and rigid policies that were written for a different era. The reality in many organisations is they hire smart people but force them to operate inside “dumb” systems.
A REAL-LIFE EXAMPLE: WHEN POLICY KILLS LOYALTY
This column’s writer was recently presented with a perfect case in point. What level of service should a loyalty program customer with a major pet supply retailer and a regular monthly spend of $100–$150 expect? More than what was delivered — and the chatbot agrees.
It’s a familiar tale. The spouse who doesn’t usually shop does the shopping and purchases a different brand of cat food. Unimpressed, Cat refused to eat it.
Back at the store, the situation was explained to the store assistant with a request to exchange the unopened packets for the usual brand.
A dutiful employee, she followed company policy, searching the customer’s account for the purchase. It wasn’t there as the loyalty program wasn’t used during the transaction. “Sorry,” says the employee. “I can’t give refunds without a receipt.” No, not a refund — an exchange. “Still need proof of purchase.”
The customer is out of pocket by $8.40. But more significantly, she’s also annoyed. Her loyalty, reviewed in detail by the staff, clearly meant little.
Dumb policies in a smart era
Refund policies, like many standardised processes, are designed to protect against fraud and inconsistencies. But in practice they dumb down decision making.
Responsibility is pushed away from people and the burden is on the customers to ‘prove’ themselves.
The ChatGPT analysis of the situation concluded that staff did the right thing for the business (checking the loyalty account, following the refund policy to prevent abuse), but the smart thing was not done. Its verdict: The store’s narrow approach likely cost them a loyal customer.
Today, the biggest threat isn’t fraud — it’s rigidity.
In the age of AI, policies need a rethink. This doesn’t mean abandoning rules — it means applying them intelligently. It means training, such as in business acumen and decision making to enable intelligent support of the business’s goals. “We can’t make exceptions” does not work in a smart era.
AI alone will not help: deploying it with outdated policies just scales bad processes. AI’s role is to enhance, not replace, human capabilities. Customers are doing it and expect the same level of considered response from your people.
With AI, companies can go well beyond simple automation. Using it to test policies, simulate outcomes, and redesign customer workflows, they can implement system change quickly and at low cost.
Now that your customers are using AI, your business can’t afford not to. That’s not just good service. It’s smart business.
This article is written by Isabel Wu from Meta Management and covers all things digital. Meta Management is a consultancy specialising in helping its clients with the organisational assets that drive effective digital transformation and create value in a hyper-connected, constantly changing world.
About Meta Management
Meta Management is a consultancy specialising in helping its clients with the organisational assets that drive effective digital transformation and create value in a hyper-connected, constantly changing world.
This article originally appeared in Edition 17 of The Toy Universe Magazine
