The rise of AI-enabled CRM & CX
To give customers the personalized experience they’re looking for, brands need to do a couple of things. First, they need to commit to building a single view of customers: across channels, touchpoints and context. And they need to commit to using technology to create next-level personalization (call it hyper or extreme personalization if you must…)
AI drives the next level of personalization
The top 1% of customers are worth 18 times the average customer. The best way to keep customers engaged is to personalize CX, and for your most valuable customer it’s not enough to just repeat their name in an email or a push message. They’re valuable because they’re engaged (RFM is one way to measure this), so you should already have data on where they shop, when they shop, and what they buy. AI-powered tools work that data to show you what to offer them next to increase their engagement. And it might not be a promotion: the most engaging next best action might be a call from a service rep, or an in-store reminder to spend points before they expire.
Adding AI to analytics to find the next best action
Brands trying to create personalized experiences across a large, distributed customer base will have an embarrassment of data to deal with. AI-enabled analytics automate insights from massive data sets and can flag areas of interest or concern before a human data scientist can crunch the numbers. The focus shifts from the numbers to prioritising action based on generated insights: predicting future behaviour, prescribing activities, offers and other marketing. What’s working? What will work better? Being able to run algorithms on the data to provide the optimal engagement for any given customer is a massive competitive advantage. AI replaces gut feel and guesswork with testing and refinement.
AI-influenced CRM activities will boost global business revenue to $1.1 trillion by 2021
In 2017 Salesforce and IDC released research into the economic impact of AI and related technology on CRM activities, which includes business functions like marketing, customer support and logistics. What they found is unsurprising given the trend we’ve been seeing in the market: AI is growing in popularity in customer-facing applications. Businesses are looking for ways to connect more personally with customers, as well as to introduce efficiencies into their operations. AI and its kin (what IDC calls ‘a constellation of cognitive system technologies’ that includes machine learning, NLP, voice recognition and virtual assistants) are enabling this in a growing number of companies, and IDC forecasts spending on cognitive will rise to $46b by 2020.
“AI-powered CRM activities will drive new efficiencies in how companies sell, service, and market, ultimately expected to create more than $1.1 trillion in new GDP impact worldwide and 800,000 net-new jobs by 2021—surpassing those lost to automation.”
We’ve already seen the dramatic impact machine learning has on delivering better customer experiences, so it’s no surprise to hear that the companies IDC surveyed generally agreed that the rise of AI is a positive if ultimately disruptive development, with most highly rating the statements “Implementing AI could change our organization's culture, workforce, and operations entirely” and “AI is a positive technological advancement”.
Those already using AI to enable their CRMs are also increasingly likely to use cloud-based systems, and IDC predicts the growing importance of vendors in the proliferation of AI, as they integrate AI (and machine learning, and NLP, etc etc) into their offerings and expose the tech to a wider range of customers. Which makes sense: for most companies choosing software and systems with these capabilities baked will be a far simpler – and less costly - proposition than adding the functionality after the fact.
Retail has embraced AI
The retail industry is expected to invest $5.9bn into AI-enabled solutions this year, more than any other industry.
It’s interesting to see that 51% of companies are using AI-enabled CRM for cross- and up-selling. 68% of respondents planned to use this function in the future, so this continues the steady rise of technology as a retail enabler. In comparison though, email was still the main use of AI in CRM: with 74% using the tech and 87% planning to do so. Using marketing automation to control email flows is a well-established and understood practice however, so we’d expect to see emerging tech take off as it proves its value (interestingly chatbots are used by 47% with 75% planning to use them, so this may be the start).
Originally published June 2017. Updated August 2019.