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How Will AI Step Change Customer Loyalty?

by Simon Spyer on Nov 11, 2016 2:05:33 PM

 AI Has Profound Implications For Customer Loyalty & Marketers

How Will AI Step Change Customer Loyalty?

AI is going mainstream. Many of the services that we use on a daily basis are powered by AI.

And AI will only become more pervasive with compound growth rates of 19.7% forecast between now and 2020.

Rather than being something to fear or be suspicious about, AI has the potential to radically change customer experience and marketers ability to deliver personalisation.

What's AI?

Artificial intelligence (AI) is intelligence exhibited by machines. In computer science, an ideal "intelligent" machine is a flexible rational agent that perceives its environment and takes actions that maximize its chance of success at some goal.

There's two key aspects to Wikipedia's definition above:

  • The machine understands the environments it's operating in;
  • It takes a specific set of actions to meet a specific goal

Yes, it's one of 2016's buzzwords and firmly embedded in Gartner's hype-cycle but AI does have real commercial value.

Accenture forecast that he impact of AI technologies on business will increase productivity by up to 40 percent and enable people to make more efficient use of their time.

A small aside, 'Bots' (chatbots, internet bots) are also a buzzword closely linked with AI. These are software applications that use AI.

Going Mainstream

AI is already in the mainstream. It was fascinating to hear both Shopdirect and Just Eat at The Telegraph Festival of Business describing how they placing huge bets on AI and already seeing some of the benefits.

Other examples of daily interactions with AI are:

  • A car's computer that figures out when the anti-lock brakes should activate.
  • Spotify's music recommendations.
  • Siri, Alexa and their ilk.
  • Email spam filters that learn and tailor the experience for you as it gets experience with your particular preferences.

These applications are narrow in nature and the race is on to expand them to more general applications.

So How Will This Step Change Customer Loyalty?

For Customers

The benefits of AI for customers are significant and will be noticed in two ways:

Personalisation

The pace at which high levels of personalisation are experienced will only accelarate.

This personalisation will be delivered by:

  • A customised offer and the use of the most relevant channel. The machine will know individual preferences and behaviours and be able to customise communication channels accordingly.
  • More responsive interactions. When appropriate these will be instant. Rather than friction and frustration at key points in the customer journey, AI will mitigate the impact and be equipped to resolve transactional issues.
  • More intuitive interactions. Through more interactions, AI will build its experience of the customer and their behaviour. Just as the shopkeeper of the early 1900s knew every customer personally, AI offers the potential to demonstrate this on a mass-scale. And in far more engaging ways than triggering an email based on specific business rules.

Greater control

Just as the experience will be come more personal, customers will be able to exert greater control over the quality of their experience and interactions will increasingly be on the customer's terms.

Control is a primary driver of customer loyaltyConsumers want more control over their interactions with brands - the touchpoints that they want to use, the access to their information and the the content that they wish to use.

For Marketers

The opportunities and implications for marketers seeking to build customer loyalty are equally profound:

  • Autonomous processes will be the norm. These processes will need careful design and governance.
  • With responsiveness comes strain. It's relatively straightforward to be highly responsive in a digital-only environment. But where there is a cross-over between the digital and real world business will come under pressure to deliver consistent customer experiences. 
  • Centralised data becomes a necessity. Data is the fuel of AI and only those companies able to build an holistic view of the customer will be able to leverage the possibilities of AI.
  • Efficiencies and ROI will increase. Manual processes can be eliminated; equally, quantitative decision-making should increase the commercial benefits that marketing can deliver.
  • Heightened customer expectations to manage. With the step change in customer experience will come higher expectations and the barriers to switching will become evermore limited.
Are you placing big bets on AI or seeing brands that are? We would love to hear your experience.
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This post was written by Simon Spyer

Co-founder & Insight Partner at Conduit, professional insight-monger, dad, lover of all sport and Spurs.

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