Driving Value through AI in Customer Experience

Please, please, please keep it simple. My biggest current bugbear is the current trend in over-conceptualising the use of AI, making it feel harder to leverage than it really is, and making feel like the domain of only the super-sophisticated, super-savvy exponents.

Keeping AI simple in CX

Context

Many organisations know that delivering exceptional customer experiences has become a top priority for organizations across industries, and that by offering superior customer experiences, they can enhance their valuation and gain a competitive edge. At the same time there has been a lot of talk (and hot air) about the emergence of AI in revolutionising the way businesses approach customer experience, enabling them to leverage data, analytics, and automation to drive value creation.

There have been many articles on AI in Customer Experience, so i thought I would create a short guide to explore just some of the key trends and strategies in driving value through AI in customer experience. But I also wanted to share my thoughts on how busiensses easily work out where to start, where to allocate effort, and importantly where not to play.

The Importance of Value Creation as the guiding principle for leveraging AI for Customer Experience

Customer experience value creation has a significant impact on business growth and sustainability. Leading companies understand that by prioritising the right customer-centric strategies and initiatives, they can enhance their valuation by a substantial margin. Research conducted by KPMG in India and EQUiTOR reveals that being able to successfully identify and unlock the potential ROI of valuable customer experience programmes can enable brands to realise billions of dollars in value across various industries.

In customer experience, ROI involves assessing the financial benefits (returns) of investments made to enhance customer experiences compared to the costs incurred. This includes the impact on customer retention, reduced churn, increased customer lifetime value, and operational efficiencies achieved through improved processes.

We advocate taking a more granular, journey-aligned approach to ROI to ensure businesses laser focus on doing the right things at the right stages of the customer journey. Developing metrics and KPIs for stages of the journey and so measuring Return on Journey Investment (ROJI) helps to ensure the business is organised into journey teams ‘hacking’ those KPIs to rapidly and iteratively drive growth

Leveraging AI for Customer Experience Value Creation

Artificial Intelligence (AI) is a potential game-changer in the realm of customer experience, but it is also a potential hinderance, with organisatiuons chasing their tails to 'do AI', rather than really thinking through the priority use cases where AI can actually help to create most value, easily. By ensuring it can be leveraged easily accelerates time to value and demonstrates to the rest of the organisation the benefits of adopting AI - and so incubating a more data / AI driven mindset.

By harnessing the power of AI in the right way, on the right use cases, businesses can unlock new possibilities in data analysis, insights generation, personalisation, and automation. The combination of AI and data science empowers organisations to understand customer preferences, anticipate their needs, and deliver customised experiences. Additionally, AI enables businesses to automate repetitive tasks, optimise operations, and provide round-the-clock availability. The integration of AI into customer experience strategies allows companies to stay ahead of the competition and deliver exceptional experiences.

Here we explore some of the value creation opportunities, but please remember to 'think big, start small, scale fast' and only focus on journey initiatves that will drive the maximum value:

Driving Personalisation with AI

Personalisation is a key driver of customer satisfaction and loyalty. With the help of AI algorithms, businesses can analyse customer behaviour, preferences, and purchase history to generate highly personalised product or service recommendations. This level of personalisation enhances customer satisfaction and engagement, fostering long-term loyalty. AI-powered recommendation systems can also analyse vast amounts of customer data to identify patterns and automate personalised experiences. By leveraging AI for personalisation, companies can stand out in a crowded marketplace and build strong customer relationships.

Harnessing the Power of Predictive Analytics

Predictive analytics is a powerful tool enabled by AI that allows businesses to anticipate customer behaviour and needs. By analysing historical data and patterns, organisations can proactively engage with customers, offering timely recommendations and resolving issues before they arise. Predictive analytics also helps businesses optimise their operations, reduce costs, and identify new revenue streams. By understanding customer preferences and trends, companies can make data-driven decisions that drive profitability and enhance the customer experience.

Truly embracing Omnichannel Engagement

Omnichannel is a term used too often for multi-channel. Omnichannel engagement has evolved beyond simply connecting with customers across multiple channels. In the era of AI-driven customer experience, meeting customers where they are becomes more dynamic and seamless. Companies can leverage smart authentication and CRM tools to track customer interactions across various touchpoints, ensuring a consistent channel of communication. Customers no longer find it acceptable to repeat their stories to different representatives. By embracing omnichannel engagement, businesses can provide a frictionless experience and build stronger customer relationships.

The Rise of Generative AI in Customer Experience

There you go. had to use the G word. In reality, Generative AI holds immense potential in transforming customer experiences, but it will still take some time to. move beyond supporting marketing and ecommerce operations to truly automate and personalise various aspects of the customer journey. In time generative AI will be used to generate dynamic marketing campaigns, personalised user guides, and streamlined customer service interactions. However, maintaining transparency and ethical use of generative AI will be crucial in building and retaining customer trust. Organisations must ensure that AI is used to enhance customer experiences rather than replace human interactions.

Incorporating Sustainability into Customer Experience

Sustainability is increasingly becoming a priority for customers. Businesses that can demonstrate their commitment to sustainability through their customer experience initiatives gain a competitive advantage. In 2024, it will become more common to see companies providing information about their environmental footprint and initiatives to offset or mitigate damage. By incorporating sustainability into the customer journey, organisations can appeal to environmentally conscious customers and build a positive brand image.

According to Red Badger, responsible AI can be the answer to the growing consumer demand for personalised, immediate, and ethical service. It enables us to develop digital products that meet these demands while ensuring we stay within the ethical boundaries necessary for the technology's sustainability

Evolving Chatbots: Enabling Rather Than Annoying

Chatbots have become an integral part of customer service, but not all chatbot experiences are positive. Businesses must strive to improve chatbot interactions by leveraging generative AI and natural language processing. By enabling chatbots to answer questions quickly and accurately, businesses can enhance customer satisfaction and streamline support processes. The goal is to create chatbot experiences that are helpful, efficient, and personalised, leaving customers with a positive impression.

Immersive Experiences: Captivating Customer Attention

Creating immersive experiences is increasingly providing memorable customer experiences. Applying AI to cutting-edge technologies like virtual reality (VR) and augmented reality (AR) can help engage customers in new and exciting ways. By immersing customers in unique 'learned' experiences, businesses can leave a lasting impression and build stronger brand affinity. Immersive experiences have the power to differentiate companies and create a buzz around their products or services.

Sentiment-Driven Customer Experience

Understanding and reacting to customer sentiment is crucial in delivering exceptional customer experiences. NLP-driven sentiment analytics allows businesses to track and analyse the emotional state of customers at each stage of their journey. By leveraging sentiment analytics, organisations can make informed decisions about when to engage with customers and how to personalise interactions. This deeper understanding of customer sentiment enables businesses to build stronger and longer-lasting relationships.

Identifying, quantifying, and shaping ROI opportunities for AI in Customer Experience

To fully harness the power of AI, businesses need to integrate it into their strategies effectively. This involves several key steps:

Identifying Key Performance Indicators (KPIs)

Defining the KPIs that align with customer experience initiatives at each stage of the customer journey is a critical first step. These could include metrics like Journey Conversion Rates, projected Customer Lifetime Value (CLV), Net Promoter Score (NPS), Customer Satisfaction (CSAT), Customer Effort Score (CES), and customer churn rate.

Establishing a Baseline

Before implementing customer experience improvements, it's important to establish a baseline for the chosen KPIs. This provides a reference point to measure the impact of improvements and track progress over time.

Prioritising Value Creation Initiatives

Creating a long list of value creation initiatives, modeling impact against the baselines, and then prioritising by value and ease of realization is crucial. Organisations must focus on initiatives that deliver the most significant customer value and align with their strategic objectives. Importantly how does AI support the realisation of these value creation initiatives

Defining Investments

Identifying the specific investments made in customer experience enhancements is crucial. This could include investments in technology, training, personnel, or process improvements. It obviously ialso ncludes AI, specifically. Organisations should allocate resources strategically to maximise the impact of their investments.

Calculating ROJI & ROI

The Net Benefits (Total benefits - Cost of Investment) can then be calculated to determine the Return on Journey Investment (ROJI) for each journey stage and the overall ROI. It's important to consider the long-term impact on customer loyalty, brand reputation, and customer lifetime value when assessing the ROI of customer experience initiatives.

Creating a Prioritised Customer Value Creation Roadmap

Once the potential ROI of customer experience initiatives is calculated, the next step is to develop a roadmap that groups initiatives into programs based on synergies for execution. This ensures a pragmatic approach to driving growth and aligning commercial and operational viewpoints.

Conclusion

The integration of AI into customer experience strategies ican transform the way businesses deliver value to their customers. By leveraging data, analytics, and automation, companies can personalise experiences, predict customer behavior, and drive innovation.

AI-powered customer experience initiatives enhance customer satisfaction, loyalty, and profitability. As businesses embrace AI-driven customer experiences, they gain a competitive edge and position themselves for long-term success in the dynamic business landscape. By driving value through AI in customer experience, businesses can create customers for life and establish themselves as industry leaders.

But, Keep it simple. Focus on value creation first and then work out if/how AI supports each initiative. Don't fall foul of trying to shoehorn AI in, just because!