Businesses that aren’t combining artificial intelligence (AI) technology, with a solid customer loyalty and retention strategy could be at risk of losing out on ongoing revenue streams, experts say.
Artificial intelligence (AI) has evolved a lot over the past few years, with experts now claiming the way online retailers approach AI can impact customer loyalty.
According to behavioral economics and customer loyalty agency, Customology, AI can be used for more than just logistics and managing data; it can also be useful for retaining customers and driving business growth.
For Customology’s General Manager, Michael Barnard the Australian e-commerce industry needs to understand that AI isn’t a “plug-and-play piece of software that will drive immediate results”, rather it needs to be trained and allowed to adapt just like any staff member would.
“Australian retailers are at the crossroads of a very exciting time for their business, which can see them successfully harness the power of AI to secure their future place in the market,” Barnard says.
To achieve this, he recommends retailers roll out AI as part of an overarching business strategy.
“Too often, businesses expect a quick win when the reality is that AI will significantly assist companies with the speed of decision making, allowing more complex customer focused pathways for communications,” he says.
Barnard believes AI can be used both in-store and for online channels to assist with product recommendations and the effectiveness of targeted marketing, but that it shouldn’t replace the vital connection between ‘real’ people, which is vital for building customer loyalty.
Customology claims that one of the most beneficial uses of AI in an e-commerce or traditional shopping market is that it can free up time for staff to focus on building meaningful customer relationships, which in turn, allows them to drive customer loyalty.
Japanese apparel retailer, Uniqlo illustrated the level of success multichannel retailers can experience when it adopted AI to assist with distribution and customer retention. When paired with a personalised in-store service, the brand was able to reinvent itself and experience a 16.6 percent increase in revenue in the six months ending in February 2018.
AI is also being adopted by pureplay businesses to help increase customer retention by predicting customer behaviours and movements.
The role AI will play in the future of the e-commerce industry was touched on by eBay’s President and Chief, Devin Wenig at the company’s Brand Summit event late last year.
“The future of shopping is going to be personal, data-driven and immersive,” Wenig said. “The availability of large datasets and the extraordinary processing power to be able to rip through those datasets and extract patterns and meaning is really getting interesting,” he continued.
Determining the intent of a consumer in terms of what they want, and how they can be persuaded to choose a particular brand is the ultimate goal for a lot of retailers, and it’s one that online retailer, Showpo has already realised.
In a re-development of the brand’s website in 2017, creating a personalised communication channel that could increase overall customer satisfaction and engagement was a big priority. Through the use of AI, Showpo was able to boost revenue while also unlocking new customer loyalty insights.
While AI is still relatively new, brands, both multichannel and pureplay, are beginning to reap the rewards of business strategies that combine the insights provided by AI, and the decision making and personalised service offered by ‘real’ people. If Customology’s insights are correct, people working in collaboration with advanced technology could be the key to unlocking customer behaviours, and improving brand loyalty.