Retailers today are driven by data, using personalization to unlock a wealth of opportunities and build deeper, more meaningful relationships with their customers. This is especially important when it comes to getting tailored product recommendations and loyalty program rewards. Almost three-quarters of consumers said they’re more likely to buy from brands that deliver personalized experiences – and go on to spend 37% more with them when they do.
While consumers may not always be consciously aware of which interactions are personalized, they do notice when a brand enhances their experience by making it smoother, quicker, more affordable, and more relevant to their needs. To keep pace, retailers are tapping into the power of advanced artificial intelligence (AI).
How are retailers using AI to enhance customer experiences?
Take Amazon’s AI-powered recommendation engine, which suggests products based on customers’ browsing history, past purchases, and preferences, helping them find what they need more easily. Then there’s Netflix. While not a traditional retailer, it continues to lead the way in AI-driven personalization, recommending movies and shows based on a user’s viewing history, ratings and preferences to boost engagement and retention.
Thanks to AI and augmented reality, beauty retailer Sephora gives its customers a virtual makeover. A mobile app scans their face and lets them virtually try on hundreds of makeup products along with step-by-step tutorials to help them find their perfect look. They can even engage with AI chatbots for personalized product recommendations based on their skin type, beauty routine and preferences. Meanwhile, outdoor apparel retailer The North Face launched an AI-driven campaign to help customers find the perfect jacket. Based on their input to a series of questions about their location, planned activities, weather and so on, AI suggested the best product.
“Applied in the proper ways, AI can help develop new, trusted personalized experiences that make every customer feel like they are the most important,” Frank Keller, Executive Vice President and General Manager of PayPal’s large enterprise and merchant platform group, told Harvard Business Review.
Here are five steps retailers can take to implement advanced AI and use it to deliver personalized experiences that impress customers and bring tangible value to their business:
1. Create comprehensive customer profiles
Through natural language processing capabilities and machine learning algorithms (both key branches of AI), retailers can now collect more information about their customers and aggregate this data into a unified customer view. Customer feedback, product reviews and social media posts can be converted into structured insights. And qualitative data, such as sentiment analysis and market trends, can be combined with customer profiles to build a rounded view of their preferences and behaviors. Some ways to do this with AI include:
- Aggregate structured and unstructured data from multiple sources (including CRM, web traffic, sales, social media).
- Segment customers based on their preferences, behaviors and past purchases.
- Create dynamic segments that update in real time as new customer data becomes available.
2. Personalize marketing and customer interactions
Consumers are gravitating toward brands that recognize and treat them as unique individuals. Almost two-thirds said they would stay loyal if companies offered a more personalized experience. To start personalizing customer interactions using AI, you can:
- Launch AI-driven marketing campaigns tailored to individual customers
- Generate personalized emails, SMS and push notifications based on customer behaviors like abandoned carts, product searches or frequent purchases.
- Send timely and relevant promotions and content to engage customers more effectively and improve retention.
- Deliver personalized recommendations, answer customer queries, and guide shoppers with AI-powered chatbots and virtual assistants.
3. Dynamic pricing and targeted recommendations
Among consumers, 78% want personalization that helps them save money. An even greater proportion (84%) said special discount offers or bundles influenced their purchase decisions. With the help of AI to segment your customer base into highly specific groups, you can:
- Use predictive analytics to anticipate future customer needs, such as what they are likely to buy next or when they might want to repurchase certain items.
- Dynamically adjust prices and promotions based on customer behavior, demand patterns, and competition.
4. Continuously enhance the customer experience
Research has found that nearly two-thirds of customers expect to check out online in four minutes or less. To help, AI can predict and automatically populate shipping and payment details for returning users, including those checking out as guests, to streamline and accelerate the checkout experience.
Taking advantage of AI, you can:
- Customize website landing pages, search, and navigation to deliver curated product listings and convenient, tailored shopping journeys.
- Enhance in-store experiences by recognizing returning customers via loyalty programs or mobile apps and offering personalized product recommendations, deals and discounts.
- Offer augmented and virtual reality tools like smart mirrors and interactive displays to deliver unique, exciting, and immersive experiences.
5. Continually test and measure performance
By using AI-powered tools to test and measure performance, tracking key metrics like conversion rates and customer engagement, retailers can continuously refine their strategies and make data-driven decisions. With the help of AI, you can:
- Analyze and understand personalization performance.
- Refine messaging and campaigns based on data to boost the effectiveness of marketing strategies.
- Constantly tweak offerings, product assortments, product placement, pricing, and customer service.
By utilizing AI across different touchpoints of the customer journey, retailers can deliver convenient and engaging shopping experiences tailored to each individual consumer. Want to know how you can improve your operations with the help of AI? Contact our team of experts for more information.
