You don’t have to look far to find a sweeping claim about how artificial intelligence (AI) is set to disrupt an industry or revolutionize a business practice. In retail marketing, however, that claim isn’t hyperbole. AI enables retailers to reach their customers in exciting, effective new ways and take promotional and customer engagement strategies from mass to personalized.
by Cédric Chéreau
As we assert in our latest anthology, AI will help retailers reimagine their traditional approaches. Already being utilized or experimented with by some of the world’s largest retailers, AI can create a more personal customer experience in multiple ways, including building the right promotional offers for each and every customer to finally deliver on the promise of one-to-one personalized engagement. AI’s ability to use historical data to project future outcomes and create bespoke experiences is giving rise to new services, interactive shopping, and increased brand loyalty. 
Despite the impact it is already delivering for some retailers, many others have yet to leverage AI and face challenges in adopting and integrating it into their existing systems. According to the Retail Industry Leaders Association, only 20% of retailers use data science tools like AI to their full potential, leaving a substantial number of opportunities (and revenue) on the table.
That percentage is bound to change. With increasing consumer demand for personalization and AI giving retailers the ability to implement personalization at scale, retailers are actively seeking solutions that allow them to unlock this potential.
But how should retailers implement AI within their current marketing strategies? First, they should focus on the areas where AI can create better customer experiences: loyalty and personalization. Once retailers understand how AI will enhance these aspects of their operations, they should keep four important considerations in mind as they proceed to integrate an AI solution or suite of data science tools.
Customers consistently voice their support for personalization initiatives, reflecting a desire to have retail brands anticipate their needs and recognize their preferences. McKinsey reported that 71% of consumers expected personalized interactions, with 76% frustrated when they didn’t get them. Our Grocery’s Great Loyalty Opportunity report revealed that 60% of shoppers find personalized offers “very” or “extremely” important, and 84% say these offers save them money.
In the past, retailers have built targeted marketing strategies by creating broad segments of similar consumers and targeting them with specific campaigns – many still do. AI turns those audiences of thousands of customers into segments of one. In other words, AI leverages superior data utilization to achieve the holy grail of customer-brand experiences: true one-to-one engagement.
Importantly, AI is the only tool that can truly enable retailers to achieve personalization at scale. For a large grocery chain with millions of customers, traditional approaches to personalization simply won’t work –no spreadsheet or database can handle the complexity of delivering individualized offers to each of those millions of customers. Only the power of AI can make one-to-one personalization a reality.
With one-to-one personalization, retailers can deliver offers tailored specifically to each shopper, increasingly executed in real-time to accompany each customer on their journey. AI enables retailers to generate these offers from a near-infinite offer pool and do it at the precise moment that will influence a sale or specific action. This process combines existing data with contextual triggers to unlock new purchasing opportunities.
Shoppers who opt into loyalty programs are effectively seeking a deeper relationship with a retailer or brand. For these loyalty members, AI-enhanced personalization can help deliver the experience they want. Research suggests that consumers agree; 72% of shoppers said AI would improve their customer experience.
AI achieves this by analyzing a shopper’s purchase history, loyalty information, account preferences and other relevant data to present challenges and offers that reflect the individual’s motivations and priorities. This marriage of personalization and gamification inside loyalty programs is ushering in a new way for retailers to build a stronger customer relationship. For example, UK retailer Tesco introduced its Clubcard Challenges this year, a program that delivers unique challenges for loyalty members to complete and receive personalized rewards.
By gamifying a loyalty experience, retailers engage consumers beyond just the transaction with customized promotions, challenges and rewards tailored to individual preferences. This approach transforms loyalty interactions into one-to-one experiences that are all about the consumer.
AI can help retailers achieve personalization at scale and introduce customized gamification into their loyalty program experience. The only question, then, is what should retailers keep in mind as they seek to implement AI solutions to help them realize the marketing benefits AI can deliver? Here are four key steps to consider:
- Ensure data is clean, accurate, and comprehensive, enabling AI to deliver effective, actionable outcomes.
- Utilize only those AI tools that allow for the dynamic creation of offers and customer interactions based on consumer behavior and preferences.
- Be sure to use AI solutions that easily integrate with existing systems and marketing tech stacks to optimize processes, improve data utilization, and enhance customer experiences without disrupting current operations.
- Partner with AI experts or vendors specializing in retail-focused AI solutions that can provide the necessary expertise and technology to ensure a successful AI implementation, avoiding pitfalls and accelerating adoption.
AI technology allows retailers to use their customer data to deliver genuine one-to-one personalization, increase loyalty program engagement, and create more value for their customers. As an evolving technology, there may yet be unanticipated opportunities for AI to improve the overall customer experience and drive bottom-line results for retailers.
For retailers exploring AI, the key to gaining a competitive edge lies in seamlessly integrating it into existing systems and workflows. Partnering with experts who can simplify the adoption process ensures that AI will deliver positive marketing results right now and in the long term.
Cédric Chéreau, Managing Director at EagleAI has more than 20 years of experience in retail analytics, supporting retailers and FMCG companies from Europe and North America. He holds a Master of Science in Marketing from EDHEC.
