Conversations About AI – Part 8: The Impact of AI on Consumer Behaviour and Customer Retention

Please welcome Chirag Bhavsar to 21st Century Tech Blog. Chirag is the founder of Coduzion, an e-commerce solutions provider.  Chirag loves sports and reading financial books. And when away from his desk he is passionate about outdoor sports and games.

This is his first contribution to this site where we have been tackling the subject of artificial intelligence (AI) for some time now. His interest is all about how AI can guide customers to make purchases and then learn from their buying behaviours how to keep them engaged.

As you read this posting you may be asking yourselves, “Do I want to be manipulated by AI? Is that where this technology is taking us?” Before concluding, ask yourself if advertising and sales pitches aren’t doing the same thing. For much of my business life, I was selling. I got to know my clients well. I made a point of doing detailed needs analysis and if I thought what I was being asked to sell was a poor fit, I said so. But would an AI with the wrong initial instructions and parameters try to sell a square peg to fit a round hole? And would it then get the client to come back and buy more square pegs when that’s not what was needed? That’s the essence of determining the type of intelligence we are creating that we call AI. 

So please read Chirag’s posting and feel free to give us your perspective on using AI in sales situations. 

Artificial Intelligence (AI) is quickly becoming an indispensable element of modern society, shaping our choices and preferences in many aspects of our daily lives. From personalized recommendations to chatbots, AI has transformed the consumer environment. As businesses strive to enhance customer experiences while keeping loyal clients, understanding AI’s impact on consumer behaviour has become critically important for companies for customer retention and loyalty programs. In this article, we look at how companies harnessing AI can gain a competitive edge.

Understanding Consumer Behaviour Through AI

It has been stated that 75% of businesses today fear they could go bankrupt within five years. Not employing AI in marketing strategies is the reason given. And the global growth of AI reflects the commitment business is making estimated to already be worth U.S. $190 billion.

AI allows businesses to process vast quantities of data and detect patterns and trends that are harder for human analysts to spot. Employing AI algorithms gives an organization deeper insights into consumer preferences, behaviours, and purchase patterns. This allows for tailored marketing strategies and product offerings specific to individual customers. 

If you don’t have in-house AI expertise then consider investing in eCommerce AI design and development services to get your target customers paying attention to what you have to offer. 

Providing Individual Recommendations

AI’s greatest impact on consumer buying behaviour lies within its personalized recommendations. AI recommendation engines analyze past purchases, browsing history and demographic information from target consumers to provide highly pertinent product suggestions based on what has already been purchased or browsed. This enhances a consumer’s shopping experience and not surprisingly increases the likelihood of purchases too. So, businesses offering personalized recommendations can significantly boost both sales and customer satisfaction through this strategy.

Chatbots and Virtual Assistants

AI virtual assistants and chatbots are rapidly gaining prominence online, serving customers’ inquiries, assisting in purchasing processes, and more. Using these virtual assistants allows businesses to offer 24/7 customer service, shorter response times to enquiries, and an improved overall customer experiences. AI chatbots also benefit from these interactions providing increasingly accurate assistance over time.

Customer Service Tools

AI customer service tools use customer feedback and sentiment analysis to detect potential issues and identify areas for improvement. By tracking interactions and sentiment analysis, businesses can address customer issues promptly. These AI tools can even automate customer service tasks such as order tracking or returns further streamlining the customer experience.

Predictive Analytics

AI allows businesses to utilize predictive analytics to provide accurate consumer insight and behaviour prediction. By analyzing past consumer behaviour data as well as external influences, AI can predict consumer buying patterns, helping businesses to optimize inventory management, pricing strategies and marketing initiatives. In utilizing AI this way businesses can cut costs while satisfying customers and increasing revenue growth.

Hassle-Free Shopping

AI can work wonders for customers when shopping. AI-powered image recognition technologies like visual search are one example, making product browsing much simpler for customers through uploading image files of potential purchases based on knowing past preferences and needs.

AI is also being used to streamline checkout processes with information retention capability such as address verification and preferred method of payment to reduce potential bottlenecks and increase conversion rates. Seamless shopping experiences bring customers back.  

Customer Loyalty and Retention

Loyalty programs are everywhere these days. A loyalty program that uses AI, however, can identify those at risk of leaving the program and offer personalized incentives to encourage them to remain. AI can segment customers by purchase history, buying and browsing preferences which allows businesses to craft engagement programs that can be personalized.

Last Words

Don’t think of AI as being manipulative. The benefits that employing AI in business provide not only help companies but also their buying audiences. Utilizing these types of tools and strategies provides competitive advantages. AI tools can bring businesses closer to customers. They can help optimize operations and drive growth while building loyalty from within the customer base. I would say AI tools employed for this purpose are both a win-win for sellers and buyers.