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2 ways artificial intelligence is changing customer engagement

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Artificial Intelligence, or AI, has made a lot of news recently. While much of that talk involves predictions of gloom and doom, thats not my focus here. When it comes to e-commerce, and really commerce in general, AI is poised to begin disrupting the entire industry. Its already started. An interesting convergence is taking place; one that will have massive implications in the way merchants sell their products and services and the way consumers buy them.

We are setting the stage for an era where transactions will take place with no human interaction at all. Are you ready for this very real future of commerce?

Only the Beginning

Did you do a search that turned up this article? An AI likely served up the results set. If you drive a car that helps you parallel park, use a site that aggregates data to find the lowest airfare, or ask your smartphone about the founder of modern artificial intelligence (Dr. Alan Turing), an AI is helping you achieve the desired result.

The concept of artificial intelligence has been around since antiquity and in practice to some degree since World War II, but the technology is still in its infancy. The systems currently in use are incredibly smart and fast, but each has a very limited focus. A mapping AI knows how to provide directions. Ask it to do anything else and youre out of luck. This narrow intelligence is powerful. Its also limiting in the range of things any single AI can accomplish. Over time, this will change.

What has taken the field of AI 7 decades to achieve so far will be surpassed in the next 7 months. Such is the pace of innovation. As each successive generation of AIs builds on the last, advances are larger and come more quickly. Imagine what the 10th generation of Siri will be able to do.

Its Business and Its Personal

For merchants, personalization has become key to connecting with customers. Getting the right message/offer to the right person at the right time is increasingly becoming an essential component of driving conversion.

To do this at scale, the industry has turned to technology to analyze what consumers have done and anticipate what they are going to do. This has led to the proliferation of cognitive computing and machine learning systems (both of which are subsets of AI), which employ sophisticated self-learning algorithms that parse Big Data to produce hyper-targeted experiences.

From using predictive analytics to serve up content to advanced merchandising tools that present curated product lists, much of what powers the underlying e-commerce experience is being automated.

The technology is still far from perfect, and is costly to develop and implement effectively…for now. If I research diamond earrings for an anniversary gift, Im destined to be followed around the web for weeks with remarketing ads.

Worse, Im likely to be presented with unrelated offers normally targeted to demographic groups who more regularly browse for jewelry. Soon, however, the underlying AIs will work in a coordinated way, or converge into one, to better understand and act upon user context. So, my search for earrings will result in no discernable change in the content Im presented with, until a few weeks before my next anniversary, when the timing is more appropriate.

Your Own Personal AI

Who will be your Virtual Personal Assistant? On the consumer side, there is no shortage of contenders. Siri, Alexa (Amazon), Cortana (Microsoft), Google Now, and Facebooks M are just a few of the AIs vying to become an indispensable part of your life…and drawing you deeply into their technology ecosystems in the process.

At present, these AIs are pretty good at serving up the local weather or a recipe, setting alarms and reminders, or finding the closest taco joint, but this is just scratching the surface of whats coming.

Its just a matter of timethree years, maybe fivebefore these AIs evolve from passive information retrievers to proactive personal household assistants. Theyll do this by learning your preferences, your dislikes, your behavior patterns, even your physical characteristics (and your familys), and then processing that data to make recommendations and potentially act on your behalf. Getting there will all come down to what has always been the the foundation of successful e-commerce: trust.

You can already set an alert to be notified when an airfare drops. But, airfare prices change frequently and unpredictably. What if your AI could detect a low fare, verify the flights dont conflict with your calendar, and make the purchase for you? Instead of an alert, youd be sent a ticketing confirmation, with the assurance that you were getting the best possible price. As long as you had trust in your AI, there would be few reasons not to take advantage of the convenience and savings.

Once we reach this point, this functionality/behavior will quickly extend across a range of shopping scenarios. As dynamic pricing systems become the norm (in some categories, Amazon reprices over half their products at least once per day), having the ability to strike fast can be the difference between getting a deal and paying full retail.

So, if your AI detects a price drop on a designer handbag it knows youve been eyeing, giving it authorization to buy it for you might make sense. You can always return it, right?

This will lead to the very real future where human interaction in ecommerce becomes optional. In response, merchants will have to adapt their own AIs to respond to this new era of customer engagement.

Will people really turn over control of their shopping experiences to artificial intelligence? It may seem a bit absurd, but in a separate area of artificial intelligence, some of the worlds largest companies are betting billions that youll be willing to ride in a car with no steering wheel. If that can happen, then anything is possible.

Randy Kohl
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February 18, 2016
Randy Kohl

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