AI-driven search might be dominating the marketing playbook but consumers who discover new brands, products and services through word-of-mouth recommendations and reviews are five times more likely to be loyal to those brands than those which are discovered using the technology.
That is according to a new report from the DMA that has revealed a stark disconnect between the customer engagement tactics marketers are adopting and what consumers actually value.
The DMA’s Loyalty in the Age of AI report also highlights a clear generational divide in responses to AI-driven marketing. While younger adults are broadly receptive to AI-led brand recommendations, among over-55s they are more likely to weaken loyalty than strengthen it, recording a net score of -19 percentage points.
In addition, 70% of marketers believe loyalty towards their brand has increased, whereas consumer behaviour tells a different story, with the proportion of consumers who say they stick to familiar brands, shops and sites for everyday purchases falling nine percentage points, from 76% in 2024 to 67% in 2026.
Released annually, the DMA’s 2026 Customer Engagement Report explores how economic uncertainty, the continued rise of AI and the growing importance of consumer data are affecting brand loyalty.
Based on a national survey of over 500 consumers and marketers, conducted earlier this year, the research examines how loyalty is impacted by acquisition strategy, the use of AI, price promotions and discounts, loyalty schemes and data privacy concerns.
The data also reveals a significant gap between marketers’ belief in the power of discounts and the reality of the impact they have on consumers. Almost three-quarters (74%) of B2C marketers believe targeted offers make customers more likely to demonstrate their loyalty, whereas just only half (55%) of consumers agree.
Furthermore, 40% of consumers say existing customers paying more than new customers would make them less loyal, but only a quarter (26%) of B2C marketers recognise this as a loyalty problem.
Consumers are also becoming more deal-sensitive, with over half (54%) saying offers can make them switch brands, while more than a third (39%) would ditch a brand they liked if it stopped offering deals.
The research also looked closely at the relationship between loyalty schemes and how consumers feel about how their data is used.
While 91% of consumers are now members of at least one loyalty scheme – up from 87% in 2023 and 90% in 2024 – the DMA’s research demonstrates that 69% of consumers are concerned about data breaches or fraud, while 42% say data privacy concerns could potentially reduce their loyalty to a brand. This compares with just 30% of B2C marketers who recognise the risk.
DMA chief executive Rachel Aldighieri said: “In many ways, our research reflects the mood of the nation. Cost-of-living pressures, coupled with the unpredictable nature of AI, are forcing brands to adapt their marketing strategies, while consumers appear more concerned with finding the best deal, rather than remaining loyal to a brand they may have aligned themselves with for a period of time.
“Encouragingly, though, human connection, in the form of word-of-mouth recommendations and reviews, still appear to be the most trusted methods to build brand loyalty.
“What this tells us is that while new technologies and promotional tactics will continue to play an important role in the decisions customers and marketers make, brands cannot lose sight of the fundamentals.
“Trust, relevance and a clear understanding of what customers actually value remain at the heart of long-term loyalty.”
Related stories
Loyalty schemes failing to make us feel special, say Brits
Brands urged to act to ensure loyal shoppers feel valued
Brands up loyalty spend as ROI, data and retention soar
Brands crave personalisation but marketers are too busy
Discerning Brits seek value, rewards and personalisation
UK shoppers want retailers to be ‘friends with benefits’
Be the first to comment on "Human league: Word of mouth beats AI for brand loyalty"