Artificial intelligence (AI). Everyone seems to be at it and it’s hard to avoid reading about the topic. Just look at you now. 

There’s certainly good reason to be interested.

“If the industry fails to grab the full potential of this technology, or adopts it before they fully understand it, we won’t see any real benefit”

Using the latest technology to serve up more personalised experiences, hyper-intelligent chatbots and dynamic websites is hugely exciting.

The opportunity for brands and retailers to revolutionise the customer experience and identify new revenue opportunities is colossal.

In a recent report, research firm IDC forecasts that adoption of cognitive systems and AI across a range of industries will drive global revenues from nearly $8bn in 2016 to more than $47bn in 2020.

The likes of Asos, eBay, Shop Direct and Etsy are clearly aware of the opportunity, and many customers are already experiencing the benefits.

But we need to be careful in deploying AI. Not because we might ‘go too far’, creating a real-life Terminator, but because we might not go far enough.

If the industry fails to grab the full potential of this technology, or adopts it before they fully understand it, we won’t see any real benefit.

Asos September 20 2016

Asos September 20 2016

Asos is among the retailers already using AI

Understand your customer first

Shop Direct reports a Very merry Christmas with sales up 4%

Very.com

Shop Direct uses chatbots for Very

Put simply, retail experiences are set for their biggest overhaul in a decade. Realising the potential of AI, however, relies wholly on first fully understanding your customers.

At the moment too many retailers are only scratching the surface when it comes to understanding their customers’ behaviour or shopping intentions, relying instead on broad-brush demographic data.

They are currently using this to fiddle around with the colour of the website or changing where the ‘buy’ button goes, not to emphasise or connect with customers.

Put this meaningless data into the AI sausage machine and out will come even more meaningless experiences: chatbots won’t be any more clever, and recommendations won’t be any more relevant to that customer.

Retailers need to first bring together the right data on their customers and work out what it is telling them.

Purchase history, live website analytics, in-store behaviour and real-time customer feedback all need to be consolidated and analysed to paint an accurate picture of who the customer is and what they want.

“AI is data-hungry, and the more you can throw at it, the better it will succeed”

AI is data-hungry, and the more you can throw at it, the better it will succeed. The collection and storage of data to create ‘deep context’ for each customer should be a number-one priority before launching into this technology.

Uncovering untapped opportunities

Ibm watson

IBM’s Watson is used by brands including The North Face

The North Face is already using IBM’s AI system Watson to help customers find the right item for them through an app.

We’re also seeing retailers do some exciting things with visual search, offering shoppers items that are similar to those in a picture they like.

For me, though, the most exciting opportunity with AI is uncovering those untapped opportunities that are hidden and then acting on them.

To give an example, machine learning might identify that visitors to a website from Canada who view coats are an underperforming group compared with two other groups of visitors: those from Canada browsing in other categories and those from outside of Canada browsing coats.

The technology is available today to tell you how many untapped sales are currently hidden within this segment, and we have the tools to engage these customers with the right content, using the right ‘nudges’, at the most appropriate times.

“The most exciting opportunity with AI is uncovering those untapped opportunities that are hidden and then acting on them”

This requires the analysis and testing of hundreds of millions of bits of data and traditionally would have taken too long and have been impossible to uncover.

Using AI in this way will only be effective, however, if you know who your customers are and what they are looking for.

To the future

Amazon go store

Amazon go store

Amazon Go could make an impact

We are only scratching the surface when it comes to the opportunities that AI can bring to retail.

I am personally very excited about how technology will revolutionise the in-store customer experience -– your smartphone becoming your intelligent personal shop assistant, and let’s see how Amazon Go’s ‘Just Walk Out’ technology does early next year.

The real opportunity, however, won’t grab any headlines, but is just as exciting. With the right approach, AI will completely change a customer’s digital experience.

“I totally agree with Facebook chief marketing officer Gary Briggs who recently said: ‘There’s too much of a focus on what’s new for the sake of it.’”

It will eliminate meaningless customer experiences forever, and ensure the right products, offers, advice, blogs and website are served up to every customer, all the time, across every channel.

I totally agree with Facebook chief marketing officer Gary Briggs who recently said: “There’s too much of a focus on what’s new for the sake of it.”

AI is exciting, well worth the focus and will revolutionise the retail industry forever. Like all new technology, though, it’s easy to get distracted from the fundamental of how important it is to just know your customers better than your competition.

  • Graham Cooke is chief executive and founder of Qubit