Personalize Your Customer’s Shopping Experience with AI

You ordered a new bed from a home furniture website last week. So why, instead of seeing ads for matching furniture, do you continue to see ads for the same bed you just bought?

For the customer, this barrage of poorly targeted ads can be frustrating and off-putting. For the retailer, each ad is a missed opportunity to cross-sell and build customer loyalty.

Experiences that are out of sync with a customer’s needs, preferences, and context are likely to erode rather than build trust. Shoppers get annoyed with ad noise from countless brands trying to make a sale, according to Ad Age.

At the same time, shoppers want to feel like VIPs, and they increasingly expect brands to recognize and understand them. In a recent Deloitte Digital study, 69% of surveyed customers said they were more likely to purchase from a brand that personalizes experiences.

But a disconnect often exists between the personalization that businesses deliver and what customers desire. More than 50% of these surveyed customers said personalization doesn’t meet their needs, interests, or preferences. Communication is often one-way, lacking the necessary feedback loop for businesses to engage customers.

Personalizing Commerce with AI

Artificial intelligence (AI) creates a prime opportunity for personalized commerce—the practice of tailoring shopping experiences to individual customer preferences using real-time data and technology.

“Businesses of all sizes are looking for ways to break through the noise and attract new customers while increasing loyalty with existing ones,” says Frank Keller, executive vice president and general manager of PayPal’s large enterprise and merchant platform group. “Applied in the proper ways, AI can help develop new, trusted personalized experiences that make every customer feel like they are the most important.”

AI uses machine learning to analyze customer preferences and predict in real time what shoppers may want to buy. By creating predictive customer insights from customer demographics—and online and in-store purchase histories and shopping activities—AI can empower businesses to offer more accurately personalized shopping experiences and can help shoppers engage with brands they love both online and in physical stores.

A New Commerce Experience

By analyzing SKU-level purchase data, AI can help businesses deliver hyper-personalized product recommendations and offers—down to a shopper’s size and preferred color. This enables businesses to personalize shopping experiences beyond demographics.

Nearly two-thirds of customers expect to check out online in four minutes or less, according to Capterra. Businesses can use AI-powered customer insights to simplify and speed the checkout process by predicting and autofilling shipping and billing information for returning customers, even those checking out as guests.

Businesses that use data analytics and AI also unlock new opportunities to grow through:

• Improved conversion and increased revenue. Personalization can lift revenue by as much as 15%, according to McKinsey.

• Increased customer loyalty. Sixty-five percent of shoppers say they will remain loyal to companies that offer more personalized experiences, Salesforce recently reported.

• Lowered marketing costs. Being able to intelligently target customers helps businesses better strategize spending on broad marketing campaigns.

A Foundation of Trust

The promise of personalized commerce is enticing, but it can come to fruition only if customers agree to share their data. AI insights are only as good as the data AI can analyze, so customers need to trust that businesses will not misuse their information, improperly share it, or store it insecurely.

Customers are uneasy about their personal data and how it’s used, Pew Research Center reports. To help ease these concerns, businesses must give them an easy way to opt out of sharing their data.

“Gathering, accessing, and analyzing data are critical to creating a truly personalized experience and scaling this broadly—but consumers only want to share this data with brands they trust,” Keller says. “Today’s consumers are wary of just sharing their data blindly without control over what they share, how it can be used, and the ability to control it as they see fit.”

The future of personalized commerce is already underway; 92% of surveyed companies say they use AI-driven personalization to drive growth, according to Twilio Segment.

Those businesses that use AI to personalize commerce and deliver VIP experiences will improve their customer relationships and stand out from their competitors.

Learn more about how PayPal can help businesses attract, convert, and engage shoppers with AI-powered commerce innovations.