AI Alchemy: In Search of an AI Strategy to Reshape Retail Experiences

AI Alchemy: In Search of an AI Strategy to Reshape Retail Experiences

AI Alchemy: In Search of an AI Strategy to Reshape Retail Experiences

Did anyone else notice how many “AI experts” suddenly emerged around November 2022? Of course, there are genuine experts out there: data scientists, researchers, and founders, to name a few. But a lot of the recent hype has felt like noise – designed to sellservices rather than improve lives.

I do not claim to be an AI expert, but I am extraordinarily passionate about customer experience (CX). That’s why, after being approached to speak about AI at various events, I put a lot of thought into how companies can approach AI in a way that makes sense for their core business, minimise the risk associated with hype, and get to the real value of AI for retail CX.

AI is the future of CX

According to IDC, 60% of Asia’s top 2,000 firms will reallocate customer experience budgets towards generative AI and phase out outdated software by 2027. And with good reason: one report found that for every $1 a company invests in AI, it realises an average return of $3.50 – and 5% of companies are seeing an average return of $8¹.

Better still, AI is not as time- or labour-intensive to implement as previously thought: 92% of AI deployments take 12 months or less . But I wonder if this rush to adopt AI will end up selling the technology short, because most current uses of AI treat it as a finished product – which it emphatically is not.

Technology is about evolution, not revolution

We love the idea of a singular, revolutionary moment. Think about how excited we all were after Steve Jobs’s iconic iPhone launch speech: it was like one man had invented the future. But in reality, the iPhone was the product of multiple important factors converging – from 3G and Wi-Fi to the success of earlier products like Blackberry that set a precedent for widespread smartphone adoption.

Furthermore, the truly revolutionary aspect of the iPhone wasn’t the phone itself: it was the creation of an “app store marketplace” – and that didn’t emerge until later.

The takeaway? Real progress requires two things: a convergence of technologies and an impactful use case. So, at Twilio, we’ve been thinking through what that would mean for AI – and I think we’ve started to find an answer.

Spinning the CX flywheel with AI

There are numerous factors that have spurred the generative AI phenomenon – from innovative algorithms to massive data processing capacities. But at the heart of it all is an unprecedented volume of data – and for businesses, the data element is absolutely central.

In order to generate CX value, you need to:

• Use data to understand and engage with customers.
• Then, we will get more data from each engagement to improve the customer experience.

This creates what we call the “Data Flywheel,” where your collection, analysis, and use of data becomes self-sustaining – and the accuracy and value of customer insights skyrocket.

AI is already capable of supporting this process. It can help us capture the data, do the work of understanding the data, and keep the flywheel spinning with little or no human intervention.

But note that this is not the product of a singular innovation. Instead, it is the convergence of predictive and generative AI – with the killer use case being unprecedented customer engagement systems.

Just imagine what this could mean for CX:

• A customer makes a purchase from a targeted ad, only to realise they’ve ordered the wrong size.
• Upon calling support, the customer is greeted by a virtual agent who anticipates they’re calling about their recent purchase.
• The agent then guides the customer through the return process, suggests a better size, and promptly ships a replacement.
• Post-delivery, the customer receives a message on their preferred channel asking if the new item is a better fit – plus product recommendations based on their purchase history.

That is the future of CX – and it will be driven by the right combination of generative and predictive AI.

Want to Prepare Your Business for AI?

Clearly, AI is essential for the future of retail CX. However, most organisations are not ready to deploy this kind of tool, which is why we created a take-home crib sheet for my keynote with actionable guidance to create an effective AI strategy, including:

• What to consider when preparing your strategy
• How to raise awareness and get your people on board
• How to vet different tools and technologies

If you’d like to learn about how AI can fit into your current tech stack and CX strategy, see more about how Twilio's CustomerAI can help, and get in touch.

¹ - Demystifying AI in Retail: Connecting Consumers and Retailers, Microsoft & Power Retail