According to Twilio, companies around the world are enthusiastic about AI’s potential to deliver personalized customer experiences, but customers remain cynical.
This year’s report highlights the value of AI-driven personalization strategies for brands looking to both retain existing customers and acquire new ones, especially in today’s competitive market.
Sixty-two percent of business leaders cite customer retention as the top benefit of personalization, and nearly 60% say personalization is an effective strategy for acquiring new customers.
Consumers are also increasingly recognizing the value of personalization, with 56% saying they will return after a personalized experience, up 7% from last year’s report. These findings underscore the growing opportunity to build customer loyalty and lifetime value by engaging consumers with customized experiences. In this time of macroeconomic uncertainty, companies should not overlook such potential his ROI.
The report also highlights how a staggering number of companies are using AI to differentiate themselves and drive business growth, but there is a critical need to increase consumer trust in technology. It also provides guidance on how to do this correctly, starting with
AI will be a game changer for business
To power a more sophisticated real-time customer experience, the majority of businesses are turning to AI to leverage massive amounts of real-time data and enhance their personalization efforts. According to the report, 92% of businesses are now using AI-driven personalization to drive business growth.
But there is a disconnect between this enthusiasm and consumer comfort levels. Only 41% of consumers are satisfied with companies using AI to personalize their experiences, and 51% of consumers are satisfied that brands keep their personal data safe and use it responsibly. trust in
To effectively leverage intelligence technology in a way that balances current consumer comfort levels, businesses must first establish a baseline of trust regarding the data used to deliver that personalization. is needed.
“Today’s consumers are more knowledgeable than ever, and their demand for real-time, personalized experiences is growing every day,” said Katrina Wong, vice president of marketing at Twilio Segment.
“Our report shows that businesses are rushing to implement AI-powered personalization and reaping benefits such as increased customer lifetime value as a result. It’s important not to overlook the importance: AI augments and enhances the toolkits of marketers and CX professionals across the industry, based on real-time, first-party data that is used judiciously and responsibly. , has the potential to usher in the next generation of fine-tuned categories: customer experiences that drive sustained growth,” Wong concludes.
The Importance of Data Quality in AI-Driven Personalization
AI-driven personalization is only as good as the underlying dataset, and without robust data, customer experience may fall short of consumer goals. This is a big challenge. Half of the companies report difficulty getting accurate data for personalization, an increase of 10% compared to 2022. And 31% of businesses cite poor data quality as the main barrier to AI adoption.
Meanwhile, accuracy (47%), speed of real-time data (44%), and customer retention or repeat purchases (44%) were key indicators of AI-driven personalization success.
To improve AI results and personalization overall, enterprises must continue to invest in data quality, leverage effective real-time data management tools, and increase the use of their data.
The report also highlights how companies such as Camping World and Toggle, a Farmers Insurance Group company, recognize the importance of maintaining trust while continuing to improve personalization. Almost all companies surveyed (97%) have taken steps to address consumer privacy concerns, demonstrating a commitment to responsible data use.
The most common step is to invest in better technology, such as a customer data platform, to manage customer data.
AI and Generation Z
One of the big opportunities for AI-driven personalization is engaging Gen Z consumers. Growing up with smartphones and tablets at their fingertips, this digital native demographic expects an unparalleled digital experience. Gen Z is a particularly welcome demographic for brands, as they are strongly influenced by personalization and embrace AI. In fact, one-third (34%) of Gen Z consumers already expect AI to be used in brand experiences.
For example, Gen Z consumers are much more likely than other generations to say that a personalized experience influenced their purchase.
- Generation Z – 72%
- Millennials – 66%
- Generation X – 57%
- Baby boomers – 42%
And 49% of Gen Z consumers say they’re less likely to make repeat purchases if the experience isn’t personalized.
Gen Z consumers, on the other hand, are far less likely to be offended by AI being used by brands to personalize their experiences.
- Generation Z – 15%
- Millennials – 24%
- Generation X – 34%
- Baby boomers – 43%
Today’s consumers want to feel valued and understood, and personalization is a key tactic to achieve that. Businesses are clearly excited about AI’s potential to accelerate their ability to tailor experiences to each customer’s unique tastes and behaviors, but to succeed in this, brands must also engage consumers. is needed.
When AI is thoughtfully and responsibly implemented to improve consumer comfort and informed by high-quality data, brands build deeper connections leading to higher spend and brand loyalty. can do.
