Virtual Retail – How AI is enabling a dialogue to make customer engagement personal

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Retailers are on the front line of a dramatic shift in the way customers engage with businesses. The internet and smartphones have ushered in an “always-on” culture whereby we expect to be able to find everything we want and need at the swipe of a screen, to be delivered at a time that suits us. We communicate with friends and family through instant messenger. A trip to the shops during daylight hours is a rare occurrence, and sitting on hold to customer services is many people’s definition of hell.

New digital-only retailers have sprung up, meeting the needs of those who value convenience above all. But many people remain loyal to the brands they have known and loved since childhood, and traditional retailers have adapted to the digital age with varying success with e-commerce platforms and apps. Within either model, there will always be a need for a dialogue between brand and consumer.

Customer engagement is a retailer’s most important currency. In order to keep up with digital start-ups, retailers must now look to embed AI into their operating model as a means to sustain customer loyalty through an effortless, ongoing dialogue and fast, effective service.

Where today every retailer has a website, in the near future, every retailer will have a virtual agent or chatbot. The question will be: what depth and breadth of service can you provide through your virtual agent?

These AI-enabled virtual agents will make retail personal – and your customer experience delightful. They will enable engaging, meaningful interactions that take place when and where the customer chooses. They will build a deep understanding of customers’ evolving needs through highly personalised conversations – and allow customers to shop in a way that suits them.

At one end of the scale, a chatbot is a computer program that simulates a human conversation. They are usually deployed for simple exchanges in which the customer’s request is mapped to a selection of key words and tasks, close to an FAQ service on a website.

A virtual assistant or conversational agent is much more advanced. They use natural language processing to sustain a nuanced, one-on-one conversation, responding to the customer’s specific needs and increasing their knowledge over time with usage. They can integrate with the retailer’s CRM to gain an understanding of the customer as well as back-end systems to trigger fast action through conversation.

By underpinning customer service with AI in this way, retailers can forge meaningful, long-term relationships with their existing customers but also attract new customers like millennials , while keeping costs down.

Customers will not tolerate a substandard virtual agent. In order to get it right, it is important to ensure the customer experience is consistent throughout all your engagement channels. True value lies in creating a highly trained virtual assistant with a character unique to your brand, with unique knowledge of your customer journeys.

The customer engagement benefits are clear. But getting started can be a challenge for many businesses. Below are three steps retailers should take in order to get an AI project off the ground.

1. Target a business issue 

Don’t try to think too big, or to imagine the long-term implications for your AI project. Start with a defined scope by identifying a precise business issue that needs solving. For example, inefficiencies caused by product returns, tracking order, attract young male millennials, increase loyalty program return in revenue. Find a way to tackle this. If it works for a customer segment for example, or a location, then scale it; if not, start again. This type of agile, iterative approach means you will constantly learn from and adapt to your customers’ needs.

2. Find a sponsor at board level

Gaining board-level support – ideally from someone connected to the business issue you have identified – will help you to progress past the initial MVP – minimum viable product phase. AI-enabled innovations will very quickly begin to impact processes and job roles inside your organisation. It’s important that you gain an understanding of the change required across the whole organisation, and have the mandate to implement that change.

3. Set expectations around KPIs

Evaluate the business case for investment, define the KPI you will measure before and after, and set the expectations around this. If you’re aiming to increase customer engagement, get a view of the current state, establish your goal and estimate your extra revenue or saving. And bear in mind that this may be a moveable target as you build for continuous improvement. AI can almost deliver anything, but this has a price, and it’s key to evaluate the investment compare to the potential return on investment before starting.

The benefits of AI-enabled customer experiences are becoming clear to businesses across the retail spectrum. For example…

• A major European department store is enabling natural language search across all their products through a virtual assistant that can assist customer to find the perfect outfit for a specific occasion
• A major US department Store is providing a personalised journey to their customer while knowing and learning their preferences and style over time and pro-actively showing matching style products.
• SNCF allows their customer to submit their claim through a virtual assistant that will help them ensure that their case is completed before submission to guarantee they will get an answers within a short timeframe.

If customer engagement is your priority this year, email anne-gaelle.chasles1@ibm.com