New technologies are revolutionising the way customers interact with brands. Virtual assistants, chatbots, speech processing, personalized offer in real time are just some of the possible uses of Artificial Intelligence that change the quality of customer experience. However, many companies are afraid of the costs associated with the implementation of new technologies, and these fears are reinforced by the possibility of failure or lack of interest in the novelties on the part of customers.
Customer Experiences in the Age of Artificial Intelligence researcher
A novel approach to understanding how the integration of AI-based services can impact the customer experience is described in the article “Customer Experiences in the Age of Artificial Intelligence”. Researchers from Royal Holloway, University of London decided to break apart the customer experience into its constituent parts. The study used an analysis of nearly 450 customers of one beauty company. The beauty company provided its customers with technology that allowed them to select cosmetics based on the customer’s beauty type. This was the first step towards the current trend of technological revolution. The virtual assistant compares the customer’s selfie with a database of clinically evaluated photos and accurately classifies the signs of skin aging, selects the color of foundation or the most suitable shade of lipstick – and does so with up to 95% efficiency. The resulting customer experience data was validated using structural equation modeling. Based on trust and commitment theory, they measured how AI service quality, including convenience and personalization, affects customer experience, highlighting the importance of trust, commitment, and some customer churn as mediating elements.
Measuring the impact of AI on customer experience
The key to success in AI business is to understand the mechanisms in the minds of customers and design the buying process according to their preferences. Within a single brand, even individual customer segments can differ significantly from each other. The same service based on AI will be perceived differently by young consumers and differently by the 60+ segment. Therefore, the starting point should be the customer and their needs. Once customers have their first experience with a brand, their commitment to maintain an ongoing relationship has a positive impact on the quality of the experience. However, it is not enough to implement AI to generate additional profits. So the question is, how to do it effectively?
The proposed model illustrates the relationships between the components of Customer Experience – it shows how the individual factors influence each other, highlighting the role of trust and the necessary cancellations of customers (sacrifices). The results of the study show that trust plays a key role in AI-enabled experiences.
From a consumer perspective, earning trust is a major challenge in AI-based services. Consequently, a higher level of trust in the brand and their technology improves the customer experience. It is important for vendors to clearly communicate their achievements and subsequent security certifications to customers. The more convinced the customer is, the more willing they are to commit to a long-term relationship with the brand. Because of the sensitivity of handling customer data, the relationship between brand trust and customer experience is particularly prevalent just in the context of digital experiences.
Trust in a brand, the technologies and processes it uses, and the purpose for which it collects and analyzes customer data increases when the service is more convenient in terms of time and location and offers better quality in terms of interface design, customer service reliability, and security. In this case, the convenience of the service indicates time and effort savings. An additional convenience is its ubiquitous availability from anywhere on earth. These advantages can prove to be significant to encourage customers to use the service. Convenience has been identified as a key advantage of AI-based solutions. It is important, however, for vendors to understand that increased convenience alone is not enough to overcome the sacrifices that customers must make to use the service.
Retail for the third decade of the 21st century must include the customer in the creative process. Customers expect this because the result is personalized service and a more relevant product. Personalization is important in building a positive customer experience. In the context of the customer experience with a personalized service, consumers may feel less sensitive about what they are giving up (sacrificing), plus they are more likely to engage in interactions with the brand. The relationship engagement achieved through personalized experiences leads customers to believe that there are no alternative brands that provide similar benefits.
However, solutions based on Artificial Intelligence involve a high degree of automation in the customer service process. For the customer, this means no contact with a real consultant, which can prove to be a big obstacle, especially for customers who have not used new technologies so far. Retailers should strive for a balanced approach to human interaction, for example through carefully personalized experiences accompanied by a well-trained customer service team. This will increase engagement with the customer, which the study found has a significant impact on how consumers view their AI experience. Additionally, the number of steps a customer must go through during their shopping journey is determined by the requirements of the technology, not the needs of the user – this comes with some imposed limitations. In order to make a purchase, the customer gives up something else to use the service (sacrifices something), such as having to share more data about themselves, feeling a loss of control, loss of privacy, or lack of human interaction. Each subsequent opt-out or limitation on the part of the consumer, can result in a weaker experience.
Customer experience is recognized as a way to differentiate a company from its competitors. Unlike price, quality or product availability, which are increasingly undifferentiated in the marketplace, customer experience creates strong, lasting relationships. The ability to diagnose the key parameters influencing the purchase experience and then understand and skillfully leverage them contributes to maximizing company profits.
The study demonstrates an innovative perspective on customer experience. It contributes to a better understanding of customer behavior related to AI. Taking trust and other modifiers into account, through the above analysis, a beauty brand could assess which metrics it should improve to optimize the customer experience by as much as a few to several percent.