AI-powered personalization: The key to unlocking ecommerce growth

The ecommerce scene has evolved. Every other business is progressing online and trying to scoop some internet-driven profit.

While certain enterprise tools can help digital-first businesses, increasing competition means that barely existing online or running half-hearted campaigns isn’t enough for brands to make it big in ecommerce. They need to up their marketing game and reinvent how they deal with their customers. Modern businesses need to predict their customers’ requirements and be proactive with solutions. They need to tailor their messages to be relevant.

Fortunately, technology has not left them to do all of this alone.

Artificial intelligence, more popularly known as AI, helps businesses revolutionize how they interact with their customers and allows them to carve out their portion of online success. This revolutionizing technology empowers brands to step up their game by offering what customers demand: personalization.

Introducing AI-powered personalization

AI grew beyond fantasy writers’ brains and sci-fi movies a long time ago. Yet many brands still fail to leverage its true potential, which restricts their growth.

We are not living in just the era of AI. The world has successfully entered the era of advanced AI.

Today, brands use artificial intelligence to tailor their offerings, personalize experiences and increase revenue. With the rapid adoption of AI-powered personalization, many ecommerce businesses are looking forward to shaping a brighter, more successful online future.

AI-driven personalization uses machine learning, deep learning, natural language processing, etc. to personalize a brand’s marketing messages, content, products and services. This technology reshapes how brands interact with their customers and sets them up for more profitable customer journeys.

Personalization, of all kinds, is inherently rooted in data.

The point where AI hits home is its ability to mine, read and draw conclusions from huge volumes of data. Brands with deeper access to data can personalize more accurately. And by doing so, they can deliver optimal customer experiences, the crux of all modern business-customer interactions.

How AI-powered personalization helps ecommerce businesses

AI-powered personalization has multiple use cases within the ecommerce industry. And when used to its full potential, it leads to numerous benefits that we will discuss below.

Targeted marketing: Lower marketing spend, higher revenue

Forty percent of customers prefer targeted ads aligned to what they are looking for to make the buying process easier. This could be why behaviorally targeted ads are twice as effective as non-targeted ads. AI helps marketers run more targeted brand campaigns, which eventually helps them decrease their marketing spend and increase their revenue.

How does targeting increase revenue? With AI working behind the scenes, your ad reaches people who are most likely to take action somewhere down the line. This makes the ad impressions worth the money spent on acquiring them.

AI digs through significant volumes of data and offers better customer segmentation. It also helps create more impactful ads based on previous ad performances. With these conclusions, marketers can reduce their ad spend by deliberately avoiding the ads that are nothing but money-draining pits. Additionally, AI helps to create and deliver tailored marketing content, like blogs, ad messages, CTAs, videos and much more.

There are numerous AI-powered reporting tools available that collect, sort and draw valuable insights from audience data, helping you understand your customer better.

Once you know that your audience is more receptive and responsive to a certain type of content — for example, video tutorials over written blogs — you will spend on creating the former and save your marketing budget from being spent on the latter.

An SaaS startup deployed AI to tailor its marketing messages. The company personalized the images sent via emails to their subscribers, and as a result, the CTR from their opened emails increased four times.

That’s why personalization matters.

Despite all the benefits of targeted marketing, 76% of marketers fail to use behavioral data to run targeted ads campaigns. This statistic points toward the opportunity for brands to adopt AI-powered ad personalization and gain a competitive edge.

Personalized product recommendations increase order value

When you are an ecommerce merchant, you want your existing customers to keep buying from you because we know upselling to existing customers is more profitable than acquiring new customers.

AI-powered personalized product recommendation helps you do just that. When your customers visit your website, the AI algorithm picks up their buying behavior, previous transactions, demographic, interests and other such data. With this information, the website presents relevant and unique suggestions to the visitor, increasing their chances of buying more than what they came for.

Put yourself in your customers’ shoes to grasp this concept.

Say you have been looking for new clothes and finally on an apparel ecommerce store you find some shirts you like. As you are considering one of these shirts, the web page starts recommending some nice pants to go with them. You suddenly feel these pants are a good match for the shirts you like. This whole process brings the convenience of ordering both items from the same store, and hence you end up adding the pants to your cart. This is how personalized product recommendations increase order value, which eventually reflects in your revenue.

A shoe retailer from London experienced an 8.6% increase in add-to-cart rate after serving personalized recommendations that appeared when a customer added one item to their cart.

Personal touch: Excellent customer service via chatbots

Personalization is just one part of building a pleasant customer experience. Offering excellent customer service is the other side of the coin.

The modern customer is spoiled. Seventy-five percent of customers expect to be taken care of within five minutes.

AI-powered chatbots come to the rescue here. And before you dismiss this, saying robotic, monotonic responses have become a thing of the past, know that the chatbots we are talking about today run on advanced AI. These chatbots are programmed to imitate humans as much as possible and are not limited to generic, scripted, rule-based conversations.

Modern AI chatbots deploy NLP, sentiment analysis and other AI techniques to understand not just the meaning but the context, emotion and nuance behind each query. By doing so, they can carry a more resounding and contextually-accurate conversation with the customer and solve their problems.

When a chatbot offers a tailored response for each unique query, this one chatbot becomes enough to compensate for an army of customer support representatives. Apart from offering a pleasant user experience, these chatbots also allow customers to enjoy the “self-service” they prefer. It solves their problems without making them wait for human representatives and may increase lead generations and conversions.

A public transportation company that caters to thousands of customers every day increased its bookings by 25% and saved $1M in customer service within a year of deploying a chatbot designed to be its customer support representative.

Optimized search leads to better customer experience

Optimized search learns from customers’ buying behavior and previous searches to customize search results in real time.

Optimized search also deploys NLP to understand the nuances of human language and display accurate results. For example, it understands that “running shoes” and “runner’s shoes” both mean the same thing and hence would display similar results. When customers come across the results they want to see; they are more likely to be happy with your service. And it’s the customer’s experience that we are pursuing, aren’t we?

Final words

Customers these days switch loyalties based on the experiences brands offer. AI-driven personalization helps you offer tailored services, serve relevant content to customers and enjoy more profitable business relationships. But along with all its benefits, advanced AI adoption has its complexities. It can be expensive and may demand training.

However, these complexities might be worth the results that you are likely to enjoy after the successful deployment of AI.

Atul Jindal is a web design and marketing specialist.