Creating a personalised customer experience with AI

Using data and AI to create a personalised customer experience

Artificial intelligence offers companies many opportunities to improve their business. More specifically, it can help improve the customer experience and change the way your business interacts with customers. In this article, we explain how you can ethically use AI to reshape your company's customer experience. Earlier, we wrote about how you can use data and AI to reduce (food) waste within your value chain as another way AI can help improve your retail business.

1. COLLECTING DATA

The important first step in using AI for your business is collecting the relevant data. The AI model cannot deliver the desired output if it is not trained with this data. You can collect data from different touchpoints, from online interactions (e.g. using cookies) to in-store purchases.

For example, you could collect data on:

• The buying history of customers;
• The questions customers ask a chatbot;
• The current location of customers;
• The time customers spend in-store or on your website; 
• The browsing behaviour of customers. 

A crucial ethical aspect of data collection is to be transparent about it and respect customer privacy. You will need a valid ground for processing personal data, based on the GDPR. Furthermore, it is important to ensure data security. Since AI models use vast amounts of data, security is a critical ethical concern. Robust data protection measures will protect customer information from breaches, preventing damage to your business’s reputation and customer trust.

2. TRAINING AND USING AI

With the relevant data, AI models can be trained and eventually start creating personalised shopping experiences. The system learns from customer behaviour and interactions, becoming more accurate over time.

Developing an ethical AI model means ensuring that algorithms avoid biased recommendations and cater to diverse customer profiles. This means testing the algorithms on different demographic groups and refining them to ensure fairness. It also means communicating with your customers when and how you use certain AI applications. In other words, you need to be transparent about the use of AI.

3. USING THE OUTPUT

The output of an AI system can improve the customer experience in several ways, such as:

• Specific personalised product suggestions in line with individual preferences, leading to higher customer satisfaction and engagement;
• Real-time assistance and chatbots that help customers find products, offer information and even process transactions. When using chatbots, you need to make sure customers are aware that they are communicating with a chatbot and not a human;
• Predictive inventory management, where inventory needs are predicted to reduce the risk of under-stocking; 
• Dynamic pricing, where prices change based on supply and demand. However, you should avoid unfair price discrimination. Communicate dynamic pricing so there is no sense of manipulation.

Implementing these strategies in your business can boost customer experience and customer loyalty. However, using AI in practice does come with some ethical implications. To do it ethically, you must prioritise transparency, data security and fairness in algorithmic decision-making.

QUESTIONS

If you have any questions about (the ethical complexities of) AI in retail or responsible data use, please feel free to contact us at info@legalair.nl.