How AI-Powered and Data-Driven Retailers Can Prosper in Tough Economic Conditions
Rising inflation and changing marketplace trends are among the key concerns of retailers around the U.S., as shoppers not only display unprecedented behaviors but also watch every dollar they spend. This makes it even more difficult for businesses in this space to create compelling marketing campaigns that drive conversions and increase loyalty
Shopper Behavior in a Tight Economy
As customers find themselves with fewer resources at their disposal, shopping has become a complex undertaking that requires more time and effort to get the desired outcomes.
Some examples of the unique behavior shoppers exhibit in today’s economy include closely watching how they spend every dollar, which results in staying on the lookout for the best deals, but also the best customer experiences, as well as constantly trying to get the most out of their money without sacrificing any value they had gotten used to during more favorable economic times.
What’s a Positive Customer Experience?
A positive customer experience encompasses a wide range of elements shoppers are looking for. In the retail world, it can include store displays, staff, and factors related to the product, such as quality or availability.
What’s a Negative Customer Experience?
A negative customer experience involves the retailer not being able to meet a shopper’s expectations related to one of the areas listed in the previous section. This gap can then lead to not only lost opportunity, but also negative word-of-mouth, which may contribute to the brand losing more prospective clients.
The Danger of Blind Spots in Customer Experience
One of the biggest dangers of negative experiences in retail is not knowing that such an experience happened in the first place. Because many retail managers don’t have a system in place for collecting customer feedback, they often fail to notice blind spots, which is especially true in periods of increased shopper activity, such as the approaching holiday season.
Using AI to Analyze Consumer Behavior
Not so long ago, the latest technology was only used by businesses with sizable marketing budgets, preventing smaller brands from competing and effectively leading to their slow but sure demise.
Today, however, artificial intelligence (AI) is making it accessible for retail businesses of all sizes to measure the customer experience they provide to their shoppers as well as identify gaps in the process, contributing to lasting improvements and improved bottom lines.
How AI Supports Retail Businesses
As the holiday season approaches, many retail businesses will find themselves investing in areas they believe will contribute the most to their success, boosting revenue and customer satisfaction for long-term results.
However, without data to back their decisions, every strategy they embark on remains guesswork. AI emerges as the answer to this challenge, providing clear insights into the areas consumers might not enjoy, making it easier to allocate resources for maximum impact.
3 Benefits of AI and Data Analytics in a Tight Economy
- Actionable insights: Retailers can now make data-driven decisions based on actual feedback they received from their customers, making any change to how they operate more likely to bring a return on investment.
- Customer loyalty: When customers have a chance to share their feedback and see it being applied in the future, they become more loyal to the brand and continue to choose it over the competition.
- Efficiency: Combining AI with data analytics has proven a much more time- and cost-efficient solution than having an in-house data analytics team.
Why is AI so Important to Stay Competitive
As technology becomes more accessible to businesses of all sizes, retailers don’t need large budgets to leverage the latest solutions available. This means that brands that don’t take advantage of the opportunity ahead will struggle to stay competitive, especially as time passes. Competitors continue to collect large amounts of data, only to use it to make even more informed decisions and widen the gap.
The holiday season has created many challenges for retail businesses in the U.S., mainly caused by rising inflation rates and changing consumer behaviors. But luckily, a new solution has emerged, giving hope to all businesses that wish to provide even more value to their customers across all critical areas of the customer experience.
AI, along with data-driven tools utilizing its power, has not only become a benefit retail businesses can leverage in a tight economy, but a necessity as its prevalence grows and more companies, regardless of their marketing budgets, are implementing some form of this technology to create a better experience for their customers.
Miika Mäkitalo is the CEO of HappyOrNot, a leader in data analytics and customer experience improvement solutions for emerging and enterprise businesses.
Miika Mäkitalo is the CEO at HappyOrNot. Prior to this, they worked at Guidin, Teknologiateollisuus – Technology Industries of Finland, Tampere University, Microsoft, and HappyOrNot. Miika has also been the Chair of ICT Committee at Tampereen kauppakamari, and a Board Member in Advisory Board at Tampere University of Technology. Mäkitalo has over 10 years of experience in leadership roles, including Chief Operating Officer / President of EMEA at M-Files Corporation and Transport Director at Finnish Transport Agency.