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AI-powered personalization: the key to unlocking e-commerce growth

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The e-commerce scene has evolved. All other businesses are advancing online and trying to reap profits through the internet.

While some enterprise tools can help digital-focused businesses, increasing competition means it’s not enough for brands to succeed in e-commerce. They need to up their marketing game and reinvent the way they do business with their customers. Modern businesses must anticipate their customers’ needs and be proactive with solutions. They need to adapt their messages to be relevant.

Luckily, technology hasn’t left them to do all of this alone.

Artificial intelligence, better known as AI, is helping businesses revolutionize the way they interact with their customers and enabling them to carve out a slice of online success. This breakthrough technology allows brands to step up their game by delivering what customers demand: personalization.

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Introducing AI-Driven Personalization

AI developed long ago beyond the brains of fantasy writers and sci-fi movies. Yet many brands still fail to tap into its true potential, limiting their growth.

We don’t just live in the age of AI. The world has successfully entered the era of advanced AI.

Today, brands are using artificial intelligence to adapt their offers, personalize experiences and increase their revenue. With the rapid adoption of AI-driven personalization, many e-commerce businesses are eager to shape a brighter and more prosperous online future.

AI-driven personalization uses machine learning, deep learning, natural language processing, and more. to personalize a brand’s marketing messages, content, products and services. This technology is reshaping the way brands interact with their customers and preparing them for more profitable customer journeys.

Personalization, of all kinds, is inherently rooted in data.

The point where AI hits home is its ability to extract, read and draw conclusions from huge volumes of data. Brands with deeper access to data can personalize more precisely. And in doing so, they can deliver optimal customer experiences, at the heart of all modern business-customer interactions.

How AI-Driven Personalization Helps Ecommerce Businesses

AI-based personalization has multiple use cases in the e-commerce industry. And when used to its full potential, it leads to many benefits which we will discuss below.

Target marketing: reduced marketing spend, increased revenue

Forty percent of customers prefer targeted ads aligned with what they are looking for to facilitate the purchase process. This may be the reason why behavior-targeted ads are twice as efficient as non-targeted ads. AI helps marketers run more targeted brand campaigns, which ultimately helps them reduce marketing spend and increase revenue.

How does targeting increase revenue? With AI working behind the scenes, your ad reaches the people most likely to take action somewhere down the line. This makes ad impressions worth the money spent to acquire them.

AI digs into large volumes of data and provides better customer segmentation. It also helps create more impactful ads based on previous ad performance. With these findings, marketers can reduce their ad spend by deliberately avoiding ads that are nothing but exhaustion pits. Additionally, AI helps create and deliver tailored marketing content, like blogs, ad posts, CTAs, videos, and more.

There are plenty of AI-powered reporting tools that collect, sort, and derive valuable insights from audience data, helping you better understand your customer.

Once you know your audience is more receptive and responsive to a certain type of content — say, video tutorials over written blogs — you’ll spend to create the former and avoid having your marketing dollars spent on the latter.

A SaaS startup deployed AI to personalize its marketing messages. The company personalized the images emailed to its subscribers, and as a result, the CTR of their opened emails increased four times.

This is why personalization is important.

Despite all the benefits of targeted marketing, 76% of marketers do not use behavioral data to run targeted advertising campaigns. This statistic indicates the opportunity for brands to embrace AI-powered ad personalization and gain a competitive edge.

Personalized product recommendations increase order value

When you’re an eCommerce merchant, you want your existing customers to keep buying from you because we know that upselling existing customers is more profitable than acquiring new customers.

AI-powered personalized product recommendation helps you do just that. When your customers visit your website, the AI ​​algorithm collects their buying behavior, previous transactions, demographics, interests, and other similar data. Using this information, the website presents relevant and unique suggestions to the visitor, increasing their chances of buying more than they came for.

Put yourself in your customers’ shoes to grasp this concept.

Suppose you are looking for new clothes and finally find some shirts you like in an online clothing store. When you consider one of these shirts, the webpage starts recommending some nice pants to go with them. You suddenly feel like these pants are a good match for the shirts you like. This whole process brings the convenience of ordering both items from the same store, and thus you end up adding the pants to your cart. This is how personalized product recommendations increase order value, which ultimately translates into your revenue.

A London shoe retailer experienced a 8.6% increased add-to-cart rate after serving personalized recommendations that appeared when a customer added an item to their cart.

Personal touch: Excellent customer service via chatbots

Personalization is only part of creating a great customer experience. Providing excellent customer service is the other side of the coin.

The modern customer is spoiled. seventy-five percent of customers expect to be serviced within five minutes.

AI-powered chatbots come to the rescue here. And before you dismiss that, saying robotic, monotonous responses are a thing of the past, know that the chatbots we’re talking about today run on advanced AI. These chatbots are programmed to mimic humans as much as possible and are not limited to generic, scripted, rule-based conversations.

Modern AI chatbots deploy NLP, sentiment analysis, and other AI techniques to understand not just the meaning, but also the context, emotion, and nuance behind every query. By doing so, they can have a more resounding and contextual conversation with the customer and resolve their issues.

When a chatbot offers a personalized response for every single query, that chatbot becomes enough to compensate for an army of customer support reps. In addition to providing a pleasant user experience, these chatbots also allow customers to enjoy the “self-service” they prefer. This solves their problems without making them wait for human reps and can increase lead generations and conversions.

A public transport company which serves thousands of customers every day increased its bookings by 25% and saved $1 million in customer service in the year after deploying a chatbot designed to be its customer service representative.

Optimized search leads to a better customer experience

Optimized Search learns from customer buying behavior and previous searches to personalize search results in real time.

Optimized Search also deploys NLP to understand the nuances of human language and display accurate results. For example, it understands that “running shoes” and “runner’s shoes” both mean the same thing and would therefore show similar results. When customers experience the results they want to see; they are more likely to be satisfied with your service. And that’s the customer experience we’re looking for, isn’t it?

Last words

Nowadays, customers change their loyalty depending on the experiences offered by brands. AI-driven personalization helps you deliver tailored services, deliver relevant content to customers, and enjoy more profitable business relationships. But with all of its benefits, advanced AI adoption has its complexities. This can be expensive and require training.

However, these complexities might be worth the results you are likely to enjoy after successfully deploying AI.

Atul Jindal is a web design and marketing specialist.

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