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How generative AI can help retailers achieve better personalisation

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With its conversational capabilities, generative AI can help retailers understand their customers better, create personalised experiences, optimise operations while driving revenue growth

Retailers in India are facing challenges on multiple fronts – the global economic downturn, rising customer expectations, supply chain woes, the increasingly complex commerce landscape…. the list goes on. Consumers themselves aren’t spared, weighed down by concerns around the cost of living and personal finances. In April 2023, a study conducted by PwC revealed that 63% of Indian consumers are cutting back non-essential spending.

Inflationary cycles are not new to businesses—the most resilient of them adapt to the changes and find innovative ways to retain customers. And retailers can win the consumer wallet share by driving personalised, seamless shopping experiences that harness the power of emerging AI technologies — as 3 in 10 customers expect increased interaction with AI.

Breakthroughs like generative Artificial Intelligence (AI) have put the capabilities of conversational AI at everyone’s fingertips and people all over the world are now recognizing that these tools can do incredible things for businesses. Generative AI can answer questions, create texts in various voices and translate text among other things. However, it has limitations of its own. When integrated with CX (customer experience) solutions that operate on large CX-specific data sets, it can transform retail.

Here’s how generative AI can help retailers drive deeper personalisation:

Tracking customer intent and sentiment

Poor customer service interactions have a significant impact on customer retention. In the APAC region, 71% of consumers say that a bad interaction with a business can ruin their day. And nearly half feel that brands don’t care about their wellbeing. Customers want to be understood. Businesses can do this by actively tracking customer sentiment and intent to anticipate and fix issues before they turn into bigger problems.

Many retailers are challenged with delivering compelling customer experiences, and understanding customer sentiment and intent can provide valuable insight into improving customer journeys. Businesses in India have much to catch up on—currently, 91% say their approach to tracking customer sentiment and intent is ad hoc.

Here’s where generative AI can play a significant role when deployed correctly. Having a layer of intelligence that draws from large CX-specific datasets means triaging customer queries is faster and more accurate with that level of sentiment and intent analysis. Picture this—a disgruntled customer reaches out through a messaging channel about an item he wanted to purchase that is now out of stock. A CX solution with generative AI capabilities would be able to instantly detect that he was upset, had an active cart, and thus, craft a perfect reply recommending similar items based on his browsing and purchase history for the agent to review before hitting ‘send’, all within a matter of minutes.

Unlocking conversational commerce

Generative AI has gained much of its popularity from its highly conversational nature, which adds more personalisation to the experience. Globally, 76% of customers want generative AI to instantly create unique promotions or sales specifically for them and 61% want generative AI to communicate with them in a hyper-personalised way based on their past interactions with the company.

With the power of generative AI embedded in CX solutions, retailers can share feature promotions in the moment to create personalised experiences. This comes with the added ability of actioning abandoned carts, supporting active carts, and also informing customers on nearby stock to complete purchases.

Generative AI has the potential to transform the entire purchasing journey, especially with the power of conversational commerce. A customer visiting a retailer’s website looking to purchase a phone can ask the retailer’s generative AI-powered chatbot for recommendations based on his or her budget and criteria, and receive a detailed list with a ‘buy’ button for seamless checkout.

Should the customer receive a damaged phone and email the customer service team for assistance, an integrated omnichannel CX solution would enable an agent to immediately see a summary of the customer’s purchase history, understand which phone model is in question and send a request to the fulfilment team to deliver the replacement phone.

It is predicted that in the next five years, AI will drive every customer touchpoint. Even so, we are still at the initial stages of using the technology and must stay grounded in the knowledge that generative AI still has some limitations that may detract from a customer’s experience. Moving quickly is important, but retailers need to be thoughtful about how they implement such technology within their business. To avoid this, companies must understand where generative AI is ready to shine and where it isn’t—yet. Having a well-thought out human-AI strategy in place is a good starting point.

With its conversational capabilities, generative AI can help retailers understand their customers better, create personalised experiences, optimise operations while driving revenue growth. As the retail industry evolves, generative AI holds much promise for retailers and will continue to play an important role in defining the best customer experiences.

Vasudeva Rao Munnaluri is regional vice president -India & SAARC at Zendesk.

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