The Promise of Personalization is Here: 3 Ways Retailers Should Take an AI Approach to Innovation

Over a decade ago, the mobile phone revolutionized e-commerce and shaped the importance of mobile-first shopping experiences, data collection, and trust. With consumers now expecting personalization from brands, retailers are racing to deliver one-to-one experiences to grab their attention and loyalty.

Here are three ways retailers can harness the power of AI to transform the customer journey and drive impactful marketing outcomes:

1. Develop a customer identity strategy.

According to Pew Research, 81 percent of U.S. adults shared they have very little or no control over the data companies collect on them. Yet, an eMarketer study reveals that 73 percent of individuals believe that personalized experiences enhance their loyalty to a brand and increase the likelihood of repeat purchases. This challenges retailers as they navigate the delicate balance between meeting evolving consumer preferences while safeguarding and responsibly utilizing data with consent.

As the industry moves towards a cookie-less future and relies less on third-party data, retailers can use artificial intelligence and other technologies to rethink how they centralize data, reconfigure their customer identity strategy, and implement solutions to deliver tailored retail experiences. For instance, as the rise of mobile shopping has made it crucial for brands to engage customers where they are, phone numbers have become great identity markers. Consumers are increasingly comfortable sharing their phone numbers during discovery and checkout experiences, and they're more likely to click and engage with text messages rather than email. This enables marketers to leverage first- and zero-party data to build customer identity data and deliver hyperpersonalized experiences with generative AI to achieve the highest possible engagement.

2. Boost loyalty with one-to-one personalization.

Many retailers are still accustomed to executing their marketing campaigns on legacy platforms. When marketing teams need to personalize a message, they have to create multiple segments, resulting in an increased workload of writing numerous messages and handcrafting bespoke audience segments. This cycle often leads to outdated "batch-and-blast tactics," where the same message is sent to many subscribers without customization, leading to low engagement.

With AI, the era of treating every customer the same is behind us. More than two-thirds (68 percent) of consumers say they would leave a brand if they didn't receive a personalized experience and have clarified that one-to-one personalization is now imperative to retaining their loyalty (FTI Consulting). This starts with data analysis — AI can process consumer preference data starting from a website visit, enabling retailers to identify and create a unique profile instantly. Plugging in this data, generative AI can produce original content in the brand’s voice that can nudge consumers along the lifecycle marketing funnel from consideration to purchase. As a result, AI can take the heavy lifting out of personalization to create the highest performance at every stage.

3. Create conversational experiences via SMS.

It's become clear that mobile shopping dominates digital commerce website visits and contributes the largest share of online orders. Retailers must shift their approach by developing strategies to meet mobile shoppers' growing needs and create conversational experiences in the channels most used by consumers. By adopting an AI-powered SMS marketing approach, retailers can text back and forth every customer’s question or comment, at a large scale, with sophistication and in their brand voice. For instance, e-commerce retail brand SwimOutlet implemented AI to send contextually relevant messages to subscribers at cart abandonment, resulting in a 600 percent increase in total revenue.

With the power of AI, retailers can now proactively anticipate shoppers' behavior and preferences, enabling them to unlock hyperpersonalization and deliver the highest performance. As the retail landscape evolves, embracing AI solutions is essential for staying ahead of the curve and delivering exceptional customer experiences.

Nakul Narayan is the chief product officer at Attentive, an AI-based SMS marketing platform.