How AI is Helping Retailers Manage the Customer Experience

- Updated Apr 18, 2024
Illustration: © AI For All
The retail industry is traversing a period characterized by "guarded positivity", as defined by the National Retail Federation indicating that uncertainty continues to persist across the sector. Once assured revenue-generating seasons have become moving targets ensnared with unpredictability. 
This shift has driven retailers to adjust their strategies in an effort to regain control of the consumer selling cycle. A critical part of this has involved a focused effort to enhance customer service experiences, aiming to meet and surpass the expectations of contemporary consumers.
Enter the contact center – a pivotal arena for a reimagined customer service experience and the vehicle for retailers to bolster long-term consumer loyalty and return business. As these centers serve as the front line of managing the unpredictable waves of customer demands, retailers are increasingly leveraging technological advancements like Artificial Intelligence (AI) to achieve fast, seamless, and accurate customer experiences that create positive brand association, build long-term value, and smooth out the ebbs and flows in demand to uplift the overall customer experience.
Bridging the Peaks and Troughs In Retail With AI
Traditionally, retailers have braced themselves for the annual peaks and troughs of customer interactions, particularly during the high demand holiday seasons. However, contrary to common belief, the post-holiday period, especially January, often sees an even higher surge in customer interactions, challenging the conventional wisdom that November and December are the zenith of retail activity. In fact, sales and merchandise returns each January have been skyrocketing to new heights year after year. 
According to the US Department of Commerce, retail sales in January 2023 jumped by 3 percent, marking the biggest gain in nearly two years. Furthermore, recent data from Adobe Analytics highlights that online holiday sales grew by 4.9 percent, setting new records for e-commerce activity.
This shift underscores the unpredictable nature of retail demand and illustrates that it is no longer confined to traditional peak seasons. In fact, unexpected spikes can arise from various factors beyond the predictable holiday shopping behaviors—such as fluctuations in gas prices, strange weather patterns, and geopolitical conflicts—all of which can impact consumer confidence and as a result, behavior and purchasing decisions. 
Retailers can count on the unpredictable to in fact be the predictable norm, and a flexible and scalable customer service infrastructure is essential to manage the inevitable peaks, troughs and surges in demand, in whatever form they present themselves.
In this new reality AI emerges as a vital ally for retailers, offering a buffer against the unpredictable shifts by enabling more adaptive and responsive customer service frameworks. With advancements in technology and the new promises that AI holds, traditional customer service tools have evolved significantly. 
The chatbots of yesterday have been replaced by conversational AI and advanced voice biometrics that are more intuitive, secure, and powerful than ever before, enhancing the customer experience by not only reducing fraud but also resolving issues more quickly and seamlessly – with superhuman accuracy.
By leveraging data analytics and predictive algorithms, AI can help retailers not only anticipate customer needs but also adjust their service capacity dynamically for the unexpected spikes, ensuring a smoother customer experience regardless of the season. This progression in AI technology gives retailers the ability to seamlessly automate more calls and reduce service costs while taking the pressure off call center agents by handling the more routine customer requests.
Enhancing Customer Service With Conversational AI
The heart of modern retail customer service is increasingly powered by AI. These platforms go beyond the scripted responses of yesterday's chatbots, offering more nuanced and context-aware interactions that reflect non-linear, more human experiences. By increasingly humanizing the technology to understand and respond to customer queries, conversational AI is quickly resolve common issues and create a more positive overall customer experience, while improving efficiency.
Instead of the dreaded customer service ‘loop,’ [Press 1 to check your current bill, Press 2 to check your current order, Press 3…Press 4…Press 5…. and so on] customers receive instant, accurate responses to their inquiries, reducing wait times and frustration. Meanwhile, service agents are presented with more manageable workloads, allowing them to focus on higher value activities, such as providing personalized and empathetic support where it's most needed.
The Fight Against Fraud: AI as the New Guardian
One of the more pressing challenges for retailers during peak periods is the elevated risk of fraud. It is a time when exhausted agents and overwhelmed systems can become prime targets for fraudsters since the bustling activity can often mask nefarious activities, putting retailers and customers at risk. Here, AI steps in as a vigilant guardian, bolstering the security framework of retail operations.
By integrating AI-driven authentication methods, such as voice biometrics, retailers can significantly enhance their defense against fraud. These systems quickly verify a customer's identity, reducing the risk of impersonation or fraudulent activities. Furthermore, AI can monitor transaction patterns in real-time, flagging suspicious activities before they escalate. By securing the identity verification process, AI enables customer service agents to focus on what truly matters: resolving the customer's request securely and efficiently.
This proactive approach to security does not just protect the retailer's assets but also builds customer trust and therein bolsters long-term loyalty. Knowing that their interactions and transactions are being handled securely, customers can engage with retailers with greater confidence, reinforcing their loyalty and overall satisfaction.
The Necessity of Strategic Implementation and Preparation
While the benefits of AI in retail are very clear, its deployment must be strategic and deliberate. Rushing to implement AI solutions without proper planning can lead to inadequate results and missed opportunities. Retailers need to consider the unique dynamics of their operations, the specific challenges they face, and the expectations of their customers.
In navigating these considerations, it is crucial for retailers to critically evaluate potential AI vendors to ensure alignment with their strategic needs. Important factors include assessing the AI platform's reliance on third-party integrations—minimizing dependencies can reduce security risks and operational complexity. 
Retailers should also verify a vendor's experience with global brands, particularly in regulated industries, as this is a strong indicator of their capability and reliability. Additionally, understanding how a vendor secures their platform and data is essential to protect both the retailer's and consumers' information from breaches.
A thoughtful AI implementation strategy needs to involve a comprehensive analysis of current processes, identification of potential AI applications, and meticulous planning of the rollout. This strategic approach ensures that AI tools are seamlessly integrated into existing systems, enhancing rather than disrupting operations. 
What’s more, it's crucial for retail leaders to start or refine their AI strategies sooner rather than later, ensuring that it is well-planned and implemented in a timely manner, ideally before the next unexpected demand spike hits. This strategic foresight allows for customer service to remain swift, efficient, and responsive across all seasons, solidifying AI's role as a transformative tool in the retail industry.
Moreover, the preparation phase is crucial. Training and upskilling staff to work alongside AI, understanding the nuances of AI-assisted interactions, and adjusting workflows to accommodate new technologies are all vital steps. By investing time and resources into preparation, retailers can ensure that their AI initiatives are successful, leading to more effective customer service and improved operational efficiency.
The Road Ahead: Embracing AI for Future Success
As retailers navigate the complexities of the modern retail landscape, the role of AI in managing demand fluctuations and enhancing customer experiences cannot be overstated. The integration of AI into retail operations is no longer a futuristic concept but a present-day necessity.
Retailers who embrace AI can look forward to not only smoother operations during peak periods but also stronger connections with their customers. By leveraging AI to understand and predict customer needs, personalize interactions, and ensure security, retailers can build a foundation for lasting customer loyalty and sustained business growth.
Conversational AI
Customer Experience (CX)
Omilia is a global conversational AI solution and a provider of automatic speech recognition solutions to companies across sectors in North America, Canada, and Europe. For over 20 years, their growing global footprint and innovative approach have helped industries, such as financial services, food service, insurance, retail, utilities, and travel and hospitality, with a large volume of customer service interactions become smarter, quicker, and better at serving and responding to their customers.
Omilia is a global conversational AI solution and a provider of automatic speech recognition solutions to companies across sectors in North America, Canada, and Europe. For over 20 years, their growing global footprint and innovative approach have helped industries, such as financial services, food service, insurance, retail, utilities, and travel and hospitality, with a large volume of customer service interactions become smarter, quicker, and better at serving and responding to their customers.