AI’s Impact on the Customer Experience and What it Means for Retail

By Brian Hannon

As we begin 2018, it’s safe to say that artificial intelligence (AI) will continue to infiltrate our everyday lives and challenge business processes to become more intelligent and proactive. In fact, according to Forrester, 38 percent of enterprises are already using artificial intelligence, growing to 62 percent by 2018. Additionally, IDC believes AI will be a $47 billion market by 2020. However, it’s important to remember that AI still has very broad definition, and there's a learning curve occurring for those enterprises, and specifically the retail industry.

There has been significant chatter around AI and the effects it can have on the customer experience. It’s clear that the consumer market has an appetite for AI-based technologies. One of the most interesting and prevalent AI examples in the marketplace today comes from Apple’s Siri and Amazon’s Alexa, which have been swiftly brought into millions of American homes due to their intuitive interaction with consumers. For how widespread this technology feels for consumers, it’s still early in its lifecycle. It’s just recently that the Amazon Echo was even made available in Canada.

Companies still need to determine the best strategy for how to leverage AI internally and in consumer-facing applications. Perhaps one of the best ways to do this is to look at how well-known companies are using AI and acknowledge the technology’s limitations.

Dynamic Pricing

Take Airbnb as an example. This company has not only changed lodging experiences in cities around the world, but it has leveraged AI to create great customer experiences. In a blog post, Airbnb’s pricing strategy is revealed. Airbnb creates a pricing algorithm that allows the company to set pricing based on the most popular elements of a property, from the most obvious, like location, through to the more obscure, like the way the photos are taken. Airbnb’s AI model doesn’t stop here with pricing; it's starting to leverage AI with increasing diversity and detection with fraudulent payments, for example.

Customer Insights

Spotify is another great example of how AI can be leveraged. Among AI’s several benefits, it has the power to store far more information in its memory banks and to pull it out anytime, seamlessly. The data that's picked up is then filtered and automated to ultimately help sift through data that may have otherwise been ignored. Spotify has been able to apply this to humanize data in creative ways.

For instance, Spotify used all of its data to launch a global ad campaign that highlighted some of the more bizarre user habits of 2016. Headlines included:

"Dear person who played ‘Sorry’ 42 times on Valentine's Day, what did you do?”
"Dear person in the Theater District who listened to the Hamilton Soundtrack 5,376 times this year, can you get us tickets?"
"Dear 3,749 people who streamed ‘It's the End of the World as We Know It’ the day of the Brexit vote, hang in there."

This is just a small example of what customer insights can be gleamed using AI to sort through user interaction data. The next step is to use insights to master customer interaction.

Human Interaction

A recent report revealing top IT trends for 2018 shares there will be a “shift in 2018 towards agents performing higher value, more complex tasks, and increasing their focus on providing assisted service to more digitally primed self-service channel engagements, where required. People and machines will combine their respective strengths and compensate for one another’s limitations, ultimately enhancing the experience of the customer.”

A key attribute of AI is its ability to offer a high degree of personalization and having the knowledge to not only understand how customers would like to be serviced, but sparking some emotional communication with them. While AI continues to power some of our relationships, some indispensable, it becomes vital for the customer experience to ensure companies have a business strategy in place to support the need for a human touch in our interactions.

AI Limitations

AI can address certain desires a consumer might have, but the technology has limitations in its ability to shift and pivot quickly as customer demands change. It operates and thrives within certain parameters, but it throws everything off if those change. As Daniel Hong of Forrester recently described it, “AI requires a lot more resources than most people think. It's not a ‘set it and forget it’ technology.”

Human interaction, which can be unpredictable, is at the epicenter of driving AI in customer service and imperative for it to be successful. We still need cognitive thinking that can tweak the algorithms and step in to help customers when needed. Nothing can be left solely to a bot.

Ultimately the integration of AI pushes the customer service experience more into real-time engagement. AI assists in fielding requests and agents take over as the inquiry becomes more complex. Consumers will not only start to experience more satisfaction around customer service experiences, but internally, business operation in like places like contact centers will iron out and become more efficient as AI is fielding simple requests and the tough inquiries are left to humans.

2018: AI and Beyond

While we see AI benefiting companies worldwide today, it’s important to ask ourselves the question: Where will AI take us in 2018?

With a consistent and personalized approach in real time, there's no doubt that AI will bolster our relationships and continue to impact all aspects of growing business. However, that humanized approach is a key theme moving forward.

Brian Hannon is the chief commercial officer at Voxpro, a multilingual business process outsourcing company.