Personalization power: how AI boosts customer engagement in eCommerce

Personalization power: how AI boosts customer engagement in eCommerce

The rapid development of artificial intelligence greatly impacted all industries, helping companies enhance their productivity and increase profits. The eCommerce industry is no exception to this trend, with many AI-powered tools seamlessly integrating into existing processes. Digital businesses use them for predictive analytics, dynamic pricing, supply chain management, customer experience personalization, and many other cases.

According to the Forbes Advisor survey, 64% of business owners believe using AI will improve customer relationships. Considering that many other reputable sources also indicate this technology’s revolutionary power, implementing AI in eCommerce for better customer engagement is likely to become a prerequisite for success in the industry.

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Let’s find out the possibilities and benefits of using AI to improve client engagement in eCommerce.

Benefits of using artificial intelligence in eCommerce

While there are many benefits of using this tech for AI-powered customer engagement, we decided to point out the three most important advantages. Check them out:

1. Tailored customer experience

The most important benefit of using AI in customer engagement is providing your clients with a tailored customer experience. This includes product recommendations, ad personalization, customized content, and many other features. AI models analyze customer data from various sources like browsing histories, purchase behaviors, and personal preferences to determine how to best approach the customer.

For example, Amazon is the biggest online brand that uses its own AI solution named “Amazon Personalize” to provide customers with relevant recommendations they are most likely to buy. The corporation’s model refines its data in real time and tries to predict which offer would suit the customer’s expectations the best. This strategy creates high conversion and retention rates.

2. Improved operational efficiency

AI-powered automation can aid companies in inventory management, order fulfillment, and customer support. All routine tasks can be scripted and left to artificial intelligence, freeing up human resources for more complex and demanding tasks.

For example, your company could use predictive analytics and AI-driven insights to optimize inventory levels and manage your supply chain. This would reduce the likelihood of stockouts or overstock situations, saving you time and money.

3. Data-driven decision-making

Using artificial intelligence allows eCommerce businesses to make well-informed and data-driven decisions. Applying AI algorithms to analyze vast amounts of information gets you useful information on customer behavior, market trends, and operational performance. 

For example, using AI-based predictive analytics could help your shopping company forecast demand and anticipate market changes. This would allow you to change your inventory in advance, preparing for any situation to get a profitable outcome.

5 best features for boosting customer engagement using AI

There are many customer engagement innovations through AI in the eCommerce industry. Businesses often combine various tools to get the most out of this technology, saving costs and increasing sales. Let’s review the most popular applications of artificial intelligence that improve customer engagement.

1. Personalized recommendations

A report from McKinsey & Company states that 71% of today’s consumers expect personalized interactions with brands, while 76% find it frustrating if that doesn’t happen. This indicates the importance of providing your customers with tailored content to meet their expectations.

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Personalized recommendations are the simplest example of using artificial intelligence in customer engagement. The AI model analyzes multiple data sources like behavioral metrics, related search queries, and former interests to provide the perfect product match.

Let’s take Netflix as an example of developing a perfect recommendation mechanism in their SaaS product. They have a whole system based on rankings, interactions, descriptions, devices, watch time, the time of the day, and other factors. This allows Netflix to provide their customers with relevant content, and the strategy is highly applicable to eCommerce.

2. Chatbots and virtual assistants

Another report from McKinsey’s research indicates that integrating AI into customer interactions improves engagement by 10-15%. This includes the usage of chatbots and virtual assistants to automate answers to frequent and repetitive questions.

While most solutions are focused on providing written automated support, some AI-based models are capable of communicating with customers by speech. Both options significantly reduce the load on the company’s employees, simultaneously providing customers with fast and precise responses.

For example, H&M used its chatbot to give its clients style tips based on their preferences, increasing the chances of making a sale. Of course, the company also uses virtual assistance to answer commonly asked questions.

3. Personalized communication

Marketing is another area where you can use AI for customer engagement. The simplest option is to target users with ads relevant to their interests, wish lists, and viewed items. A more complex way of using this tech could be to identify patterns in the user’s purchase behavior for later use. 

For example, let’s imagine a user who buys a certain item at the beginning of each month. You can create a prompt or reminder based on this user’s buying history, sending a notification in the mobile app or an email. eCommerce businesses usually aim to reach their clients across all possible channels, so additional data is invaluable to make such communication non-intrusive.

4. Dynamic pricing

You can use AI algorithms to analyze demand, competitor pricing, and customer behavior to set dynamic prices. Offering personalized discounts or pricing strategies based on individual customer interactions certainly attracts attention and improves engagement.

For example, airlines often apply this tactic when selling tickets online. They have a whole set of criteria to increase or decrease the price per ticket:

  • Number of users viewing tickets for a specific route;
  • Number of seats available;
  • Time between booking and departure dates;
  • Competitor pricing;
  • Historical data and trends.

The dynamic pricing feature is appropriate for various areas. If you’re planning on creating an antique eCommerce platform, integrating this feature can help you increase revenue when demand is high. Other industries that can benefit from dynamic pricing are hotels, ride-sharing, car rentals, events, and retail.

5. Visual search

The current state of AI allows image recognition to work with nearly any item type. Users can simply use their cameras or upload images to look for similar products. This technology simplifies the search process and improves sales as a result.

For example, Pinterest is one of the most successful services that adopted visual search in their system. It gets over 600 million visual searches per month because people use it to find various products and items. eCommerce companies can use this feature to increase the chance of users finding the products they look for and buying them.

Key steps for implementing AI with eCommerce

While there are different types of AI that could be implemented into your eCommerce app or website, the steps you’ll need to go through are usually quite similar. Let’s take a look at the basic strategy  of integrating your future AI tech into your business strategy.

1. Set goals and challenges

 Before committing to AI integration, you must decide on how it can be useful to you. You can start by defining the objectives of the implementation: enhancing customer engagement, optimizing pricing strategies, increasing sales, and others. Clear expectations will guide you through the next steps of the process.

2. Set relevant data sources

Identifying and gathering relevant data is a must for creating an effective AI model. Depending on your needs, you’ll require customer behavior, sales records, website interactions, social media data, etc. The more, the better.

3. Choose AI software

Choose or develop your own AI tools to meet your goals. Whether it's recommendation engines, chatbots, predictive analytics, or image recognition, you must choose solutions aligned with business objectives and data availability. If you don’t know how to choose the best eCommerce platform, check out our previous articles for some useful tips and advice.

4. Prepare data for analysis

You should cleanse and process the data for analysis. This involves removing inconsistencies, handling missing values, normalizing data, and ensuring it's structured for AI algorithms to derive accurate results.

5. Train & test the model

Training the model includes feeding it all your relevant data to teach it to make accurate predictions and recommendations. You must also test it to ensure it works as intended. Using A/B testing might be a great solution to compare results.

6. Integrate the model

After testing and refining the model, it’s time to implement it into your eCommerce solution. Companies usually have various channels like websites, mobile apps, and others. Integrating the model into each channel will help you get the most out of it.

7. Monitor and enhance performance

Once you’ve added the AI instrument to your product, you must monitor its performance to ensure it stays effective. You can use customer feedback and engagement metrics to find ways of improving the AI and making your business more profitable.

Top 3 eCommerce AI tools for improving customer service

1. Google Contact Center AI

Google Contact Center AI is designed to enhance customer service by integrating artificial intelligence into contact center operations. It uses NLP and ML to understand and answer customer queries quickly, precisely, and effectively. 

It helps businesses implement virtual agents and chatbots that can handle routine inquiries, allowing human specialists to focus on more complex issues. This cloud-based solution stands out for using call drivers, sentiment analysis, and generative AI to provide a rich conversational experience.

Another important feature is that Google Contact Center AI is also capable of supporting live agents by analyzing calls and chats, providing real-time step-by-step assistance based on the available data.

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Source: Looker Marketplace

2. AWS Agent Assist

AWS Customer Care Agent Assist is one of the AI-driven tools provided by Amazon Web Services. It is designed to aid customer service agents by providing real-time information and recommendations during customer interactions. 

The tool uses machine learning algorithms to analyze customers and offers agents relevant information based on the company’s knowledge bases, helping them resolve issues more efficiently. AWS Customer Care Agent Assist aims to enhance the overall client experience by providing the right insights and data at the right time, ultimately improving the quality and speed of customer support.

You can get both post-call and live-call analytics to analyze sentiment, spot emerging trends, identify agent coaching possibilities, and evaluate your calls. 

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AWS live call analytic's screen

3. Zendesk AI

Zendesk AI stands out for its accessibility. It's designed to be user-friendly, making AI implementation feasible for businesses of all sizes. Unlike traditional AI solutions that often require substantial IT investment and months of lead time, Zendesk AI is ready to use immediately. It doesn't demand coding or developer support, making it a hassle-free solution.

Generative AI is a core feature, enabling Zendesk AI to provide accurate, conversational responses to customer queries. This feature allows for more natural conversations and accurate communication.

Also, Zendesk AI empowers businesses with efficient bots. The bot builder is a click-to-configure tool that allows customization without coding. It can handle repetitive tasks such as password resets and refund requests, freeing up human agents for more complex issues.

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Partner with COAX Software

COAX Software provides top-tier eCommerce development services for businesses across various industries. Our team has over 14 years of experience creating complex and scalable solutions for clients worldwide. With an average score of 4.9/5 on Clutch and 5/5 on GoodFirms, you can be sure that we are your reliable partners in the development of an eCommerce solution from scratch.

We helped one of the UK’s largest eCommerce platforms get an AI-powered add-on that helps sellers fill out product cards on the fly. Previously, the sellers had to enter the product’s material, its belonging era, category, and all other data manually. Now, it is enough to type “Victorian Chair” for the AI tool to offer options on the class, material, century of production, and all other necessary data based on similar products in the database. Click to read the full case study.

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