How Artificial Intelligence-Enabled Customer Service Could Resurrect Brand Loyalty

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Consumers today have choices. With choices comes freedom. With freedom comes power. With power comes the ability to walk away from shoddy products or poor service.

With these shoppers, you’ve got one shot to get it right. Get it wrong, and 82 percent of consumers will abandon your brand and happily hop over to your competitor to get their needs met.

If that’s not convincing enough, just think: for every shopper who abandons a retailer for another, it costs that store five times as much to acquire a new one, according to Gartner. Further, profits can leap by 75 percent with just a 5 percent increase in customer retention, Bain & Co asserts.

With stats like those in mind, retailers are constantly looking for new ways to bolster their customer service. A recent report from BrandGarage shows the majority of them are implementing or testing consumer-facing artificial intelligence tools.

Eighty-seven percent of the 104 retail marketers and executives polled believe artificial intelligence will help their customer service efforts. They also expect it to save money (59.4%), increase customer lifetime value (47.8%), increase revenue (36.2%) and decrease return rates (23.2%).

Customer service & its challenges

It’s challenging—and costly—to meet the needs of the always-on consumer.

“[Customers] choose communication methods with brands based on perceived ease, quality, and timeliness of service,” the report noted. “And, they expect to receive that service in the same way they originally engaged—if they messaged you on Facebook first, you better message them back and not ask them to email!”

Covering all of these bases has resulted in rising customer service-related expenses for more than 50 percent of respondents. For those who report rising costs, 54.7% attribute it to staffing, 37.7% have seen shipping, logistics and reverse logistics costs increase and 24.5% are spending on technology.

Currently, it costs between $2 and $4 to field a call related to order tracking, according to Jon Mandell, former SVP of marketing for 1800flowers.com. A chatbot could do the same for much less, he said.

[Read more about retail’s adoption of AI: Is AI Smart Enough to Save Retail?]

Currently, companies universally offer support via email and phone, while only 66 percent support live chat on their sites and about half use their Facebook Pages and Twitter. Only 32 percent currently communicate with customers via Facebook Messenger, though 51 percent think it will be more important in the coming years. In the next two years, 25 percent predict voice will be vital though only 1.9% use Amazon Alexa now. About a third of respondents expect in-app live chat, which is only used by 14.6% now, to surge in popularity as well.

AI & its rewards

BrandGarage says employing artificial intelligence across these platforms will lower costs and boost customer loyalty.

Though the majority of companies polled seem to recognize the potential artificial intelligence affords, only 7.7% use it regularly for customer service. For 56 percent, AI is not employed at all, while 34.1% are at least piloting trials.

[Read more about AI’s benefits beyond customer service: 8 AI Trends to Watch in Retail]

Of those looking to implement AI-powered voice and messaging tools, they’re planning to use it to handle some of the most common customer service issues like routing requests (68.1%), tracking packages (52.2%), personalizing product suggestions (43.5%) and handling returns and exchanges (42 percent).

For 1800flowers.com, chatbots not only answer customer inquiries, they also gave them new ways to shop through Messenger as well as concierge-level product recommendations. “AI means customers can interact with a brand on their own terms and it makes what’s old new again—having a conversation! The same conversations that took place with in-store customers, now occur online and at scale,” Mandell said.

And though companies are looking to automate these rote interactions, the real value is having AI lift some of the burden from staff members so they can provide better service for more complicated issues.

Fashion brand Rebecca Minkoff, which has also invested in AI for both internal and consumer-facing tasks, expects the technology to evolve to the point where it helps the company develop deeper relationships. “For example, imagine if the AI was integrated with a CRM like Salesforce and could identify high value customers. They could actually service those customers even better than a human who wouldn’t automatically and instantaneously know that,” said Nilofer Vahora, VP of licensing and product innovation.

Though the survey respondents seemed to agree on AI’s potential for aiding their customer service efforts, the adoption rate is still low for a number of reasons. “Retailers are still holding back on implementing AI for a number of reasons—36 percent of respondents believe technology is not yet sophisticated enough for what they need, while 35 percent are concerned about the potential issues when integrating AI technology into legacy e-commerce, OMS, ticketing, and community management systems,” the report said. Of those holding back, they also say they lack the technical resources, don’t feel consumers are ready yet, lack the funding or worry that the direct connection with consumers will be lost.

Ultimately, BrandGarage says its time for retailers to unlock the retention, profitability and customer lifetime value that AI can help facilitate. In a customer-driven market, lagging behind isn’t an option. “Shoppers aren’t waiting for retailers to catch up, they simply shift their loyalty to a competitor with superior experiences,” the company says.

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