Artificial intelligence (AI) has the potential to increase corporate profitability by an average of 38% by 2035, as per a report by Accenture.
With that in mind, could improvements in the customer experience through the use of AI be the key to improving your brand’s user engagement, retention, and conversions?
Let’s take a closer look at what AI is and how it shapes customer experience. Then we’ll share some examples of how AI helps companies connect with their users to increase engagement.
What Is AI in Customer Experience?
AI customer experience is the practice of using technology (including machine learning) to provide an intelligently informed and enhanced user experience at every touchpoint.
Here’s a well-known customer experience (CX) fact: 80% of customers say they’re more likely to buy from brands that deliver a customized experience.* AI provides the technology and advanced insights to help you create that reality for your users.
In our always-on, hyper-connected society, AI is a CX game-changer. Leading brands embrace AI as a way to seamlessly provide their users with an experience that feels relevant and personalized.
An Example of AI Customer Experience
Imagine Taylor has finally found a specialized brand of fair trade coffee that she loves. One morning, when she checks her email, she sees a message from the brand telling her it might be time to reorder so she doesn’t run out.
She starts her morning routine and realizes that yes, she is indeed running low on coffee. Later, when she visits the company’s website, the site recognizes her IP address and displays a reminder of her last order so she doesn’t have to search for her favorite roast. In mere moments, she’s placed her order and her products are on the way.
Through AI, the coffee brand personalized Taylor’s experience by tracking her order frequency, emailing her a friendly reminder when it was time to reorder, and remembering her most recent purchase. The customization that happened behind the scenes made her shopping experience feel both customized and effortless.
9 Ways AI Helps Companies Improve the Customer Experience
Although AI and machine learning (ML) are powered by technology, they actually help make for a more personalized customer experience that can feel surprisingly “human.” In fact, Hubspot discovered that 63% of people who used AI-driven services like chatbots didn’t realize they were using AI.* With AI tech constantly improving, that number is likely to be even higher today.
Here are some of the remarkable ways that AI can help your company shape a meaningful customer experience.
1. AI Helps Predict Customer Behavior and Needs
Predictive personalization is an AI technology that can make a customer’s experience feel as though it was crafted just for them.
By assessing things like past purchases and behaviors, AI can help predict what items a customer might be interested in or tell them when it’s time to reorder. Streaming services can suggest movies and TV shows to watch or new music and podcasts to listen to.
Learn more about how behavioral analytics can uncover customer trends.
2. AI-Powered Insights Improve Decision Making
Not so long ago, we relied on the manual collection of data combined with intuition and a hefty dose of guesswork to make important business decisions.
Today, among leading Fortune 1000 companies, investment in Big Data and AI is almost universal — 99% of companies report that they’re actively investing, and another 91.9% say that the pace of investment is accelerating.*
Now, through AI and machine learning, your insights can become much more data-driven. AI can help you analyze user behavior to uncover trends, quickly identify problems, or reveal insights that can help you make improvements to your website or app interface.
3. Omnichannel Messaging Capability Boosts Engagement
Odds are good that your customers engage your brand in more than one place. They may connect with you across your website, app, social media channels, and customer service platform.
AI can help your business link all of these channels seamlessly to create a truly omnichannel customer experience. How? By creating a sense that your brand’s individual channels — social media, email marketing, and support, for example — are unified and consistently functioning as a cohesive whole.
4. Marketing Becomes More Targeted and Effective
AI has become extraordinarily useful for understanding and influencing customer behavior. In fact, a 2021 study found that targeting messaging toward people with specific personality types was more persuasive and effective, resulting in higher click-through and conversion rates.*
When Big Data (driven by AI) meets behavioral psychology, you’re better able to predict your customers’ response to your marketing messaging. AI can help you identify and segment your customers based on their behavior and psychological profiles. You can gain a better understanding of the needs and interests that drive them to purchase and then create targeted messaging that’s more likely to persuade and motivate them.
5. AI Improves Customer Retention Efforts
As AI advances by leaps and bounds, so does your ability to retain your customers. Machine learning algorithms can now effectively help businesses identify and head off problems that could lead to churn by helping to identify pain points.
Through AI, you can pinpoint and prioritize based on real data rather than guesswork. Features like uninstall tracking, for example, turn the loss of users into valuable insights that can help you not only solve customer retention problems but also craft effective strategies to win them back.
6. Pre-Qualifying Leads Boost Conversion
If you want to give your business a competitive edge, making a purchase needs to be a smooth, stress-free experience for your customers. Popular or essential retail products may sell themselves, but what if your product is new and its benefits less well established? How will you build trust?
Through preprogrammed questions and answers, AI chatbots can help answer customer questions. Through that AI-assisted Q&A process, your company is able to qualify leads. As your chatbot fields questions, it also helps to make sure your product is a good fit before sending a new customer to sales. By using AI chat to assist with pre-sales questions, you save both your customer and your sales team valuable time.
7. Content Becomes Deeply Customized
Does personalization matter? Absolutely! And although privacy is important to us, so is feeling like we’re more than just a number. According to a Statista report, 90% of US consumers find the idea of personalization appealing.*
AI changes the customization game in many ways by allowing you to analyze customer behavior and interests in depth and then deliver personalized content such as:
- Product recommendations
- Relevant written, audio, or video content suggestions
- Targeted marketing emails
Let’s say you’ve spent time browsing frames on the app of your favorite eyeglasses retailer. It’s no accident that you later receive an email from them prompting you to read an article about the best frames for your face shape, followed a week or two later by a notice of a sweet sale on those cat-eye frames you look good in.
8. You Get Better at Engaging Your Customers
Imagine that you could nurture your users through every stage of the customer lifecycle. AI-powered solutions put that ability in your hands.
If you’re a SaaS company onboarding a new customer, once the customer has registered, you might direct them to a video tutorial or a step-by-step walkthrough to get them started.
Then, you might follow up with an email drip campaign that highlights one key product feature every few days to help them make the most of your product.
Later, you might send them personalized insights related to how they’ve used your product, or targeted premium upgrade offers.
Guided by AI, the customization you provide at every touchpoint helps your customer feel connected to your brand.
9. Workflows Become More Streamlined
AI can reduce the need for human intervention to solve a customer service problem, and that makes for both a positive customer experience and streamlined internal processes.
We already mentioned how AI can help you pre-qualify sales leads. It can also help your customers navigate support queries.
AI chatbots can answer common questions and direct users to online resources for help. That means your customer service team has fewer requests to field, which allows them to focus on higher-priority customer needs.
AI chatbots can also help direct support requests to the right department or provide context about a support request to the agent before they engage the customer, which can help streamline the support process.
How Major Brands Use AI to Improve Customer Experience
You don’t have to look far for evidence of companies using AI and ML to craft excellent experiences for their customers. Here are some ways Spotify, Starbucks, and Airbnb have used the power of AI to keep customers engaged, make effective product recommendations, and improve in-app search functionality.
Spotify Discover Weekly
Every Monday, Spotify delivers Discover Weekly, an AI-driven personal playlist. Spotify’s algorithm curates the playlist based on each user’s unique listening habits. By helping their users discover new music they might like, Spotify keeps users engaged and happily streaming music week after week.
To sweeten the collaborative listening experience for their users, Spotify delivers Spotify Wrapped at the end of each year. Wrapped is a rundown of the user’s most-listened-to songs, genres, podcasts, and more. Every December, Wrapped is a viral sensation on social media as people (including celebrities and influencers) share their stats.
Spotify is also flipping the script on user data, which is normally collected passively then analyzed on the backend. It’s not often that user data is shared with, let alone celebrated by, the customer! AI provides a win-win situation for both Spotify and its user base.
Starbucks Product Pairings
When customers use Starbucks’ app to place an order, they’re almost certainly unaware of the AI magic working behind the scenes. But it’s no coincidence that when they place an order for their favorite brew, they’re tempted by an image of a sandwich or danish that would pair with it perfectly. That’s the magic of Starbucks’ DeepBrew AI platform at work.*
The Starbucks AI platform uses contextual information (such as product availability) from the store where the customer placed their order. It also accounts for factors like local weather and the season itself. It’s no surprise that, love it or hate it, pumpkin spice is an annual autumn sensation.
Airbnb Listings Search
To a user browsing Airbnb, it may seem as though their search for lodging is based solely on the city or region they searched. It turns out there’s a lot more going on below the surface.
When a user performs a search, Airbnb’s algorithm goes to work finding the best match for them based on more than 100 factors.* Those factors include not just location, but also the user’s trip duration and their price preferences. It also considers things like listing views, reviews, and a guest’s previous stays to help surface listings that the user is likely to book.
AI Continues to Help Businesses Improve Customer Experience
We’ve only scratched the surface of AI’s capabilities and the many ways that it’s changing the customer experience game. AI and ML are constantly evolving, and smart companies and platforms are discovering ingenious new ways to leverage this powerful technology.
Our infographic recaps some of the fascinating ways AI will continue to improve customer service in 2022 and beyond.