Predicting Customer Behaviour with Artificial Intelligence
In this decade, the domination of Artificial Intelligence (AI) in nearly every industry is indisputable. Besides revamping the business processes by eliminating redundant tasks, AI is facilitating businesses to accurately predict customer behavior. It is pertinent to comprehend the needs and expectations of customers, to stay ahead of the competition. Contrary to the common belief that AI will have the most noteworthy impact on the manufacturing industry, the new research depicts that it will also have a substantial influence on customers buying decisions in the retail industry. This research is an eye-opener for the businesses and marketers alike. For businesses, it is high time to make data-driven decisions or lag in the business world, while for marketers, it is critical to understand that the success of their marketing campaigns will rely heavily on accurately predicting customer behavior. Many marketers are already employing deep learning, a subfunction of AI, to study trends in consumer attitudes. Deep learning imitates the human brain and uses deep neural networks to process the data and solve intricate challenges better than humans.
How AI is Helping to Predict Customer Behavior
Let us see how businesses are leveraging AI to predict customer behavior.
1. Predicting the Trends in Customer Buying Behavior
Any product or service, no matter how good it is in terms of quality, if not aligned with the customer’s needs and desires, is a fiasco. Not only geographic location, but also culture, religion, nationality, and environment influence customer behavior. AI tools mine data from social media and news to past sales and reviews to tell what the customers are expecting or on which goods they are ready to spend the extra bucks. These tools also account for the economic conditions and spending power of the customers. The best thing about these tools is that they are dependable as it is proven that they predict the future demand and supply with the highest accuracy level. The companies can capitalize on these valuable insights to offer personalized goods and services to the targeted regions.
2. Helping in Devising Effective Marketing Campaigns
Besides accurately predicting customer behavior, AI tools are also beneficial in devising efficacious marketing strategies. The online data in the form of past reviews, online searches, and the number of views is gold for marketers. It is unthinkable for any business that wants to remain competitive in the business world, to not leverage the powers of AI for devising its marketing strategy. With the help of AI, marketers can determine which mode of marketing received more engagement from the customers. Based on this, marketers can choose that medium for future advertisements to generate more sales.
3. Content Marketing
AI has entirely transformed content marketing by changing the way the content appears on the top results of search engines like Google. In the past, Google relied on keywords to rank the content, however after the boom of AI, it no longer depends on them. The primary weakness of the keyword strategy was that a lot of copied and fake content ended up ranking on the top beside the genuine one. With AI coming into a picture, Google is also transforming its content ranking strategy. The machine learning algorithms used by Google automatically mine through the data and identify the best and original content on the specific topic and rank it accordingly. The creation of the actionable content that targets the right audience is fundamental to the success of businesses. Companies are leveraging AI to produce the content automatically, communicate with customers using chatbots, and create personalized content for the customers. Marketers can also gain valuable insights into the top-ranking content by using AI tools. Moreover, they can get recommendations on how to enhance their existing content and which channel will lead to more sales.
4. Reshaping Customer Experience Through Enhanced Communication
Email marketing has proven to generate more sales for some products than other mediums. Email, Facebook Messenger and Whatsapp have removed the communication barriers between the customers and the businesses. Customers immediately contact the companies to register their complaints or to express their satisfaction from the business offerings. Responding to every message is unrealistic because these messages may be in thousands. Here, a chatbot powered by AI saves the companies from this nuisance by sending the text messages to the customers in human language. It also responds to their common queries, thus leading to higher customer satisfaction.
5. Assisting in Customer Sentiment Analysis
Social media is the greatest tool to analyze customers' sentiments regarding goods and services. Sentiment analysis uses text analysis techniques to decipher customers' emotions (positive, negative, and neutral) towards specific goods and services. For example, AI tools can analyze 10,000+ online reviews about your product to help you determine if customers are happy with the quality and price of your product or not. Interpreting people's emotions is essential for the success of the business. No business can survive without learning from unhappy customers. As the founder of Microsoft Bill Gates said, “Your most unhappy customers are your greatest source of learning”. Customers not only post reviews but discuss each aspect of the products and services, from quality to price and customer service, on social media. AI tools can analyze this content from social media to divulge customers' sentiments about your goods and services. Besides this, these tools also help to determine the customer's expectations from the business. Based on these actionable insights’ businesses can take imperative decisions to improve their quality, affordability, and customer service in the future.
6. Customer Churn Prediction
Customer churn, also known as customer turnover, refers to a percentage of customers who have stopped doing business with a company. For any company, customer churn is quite a frightening experience. The companies want to retain their existing customer base at all costs because they know that acquiring a new one will not be an easy task. Therefore, predicting customer churn and identifying the root cause is critical for the companies because in this way they can take proactive steps to save their businesses. Companies can use Machine Learning algorithms to not only predict which customers will stop using their product but also unlock the reasons behind this behavior. Machine learning algorithms are used to create systems that utilize customer historical data to reveal helpful insights about customer behavior. Through these insights, the companies can understand the behavioral patterns of the customers that result in quitting.
How AI will Influence Customer Behavior
In this section, we will discuss how AI is likely to influence customer behavior in the future.
1. Customers’ Spending will Increase
We know that businesses thrive on customer spending. Whether you physically visit a local market or do online research, you will find products for every age and income group. Predictive analytics reveal that consumer spending will increase manifolds in the future because of the integration of AI with business operations. AI tools unveil the customer needs and expectations from the business, thus helping businesses to reshape the customer experience by improving their business operations. It also helps to create targeted marketing campaigns for the customers, thus significantly influencing their buying decisions.
2. Customers Loyalty will Increase
Loyal customers are the most valuable assets for any business. This is because businesses have not achieved this loyalty overnight, instead they have worked diligently for years to meet or exceed the customers' expectations. When customers start to trust your brand, their loyalty increases, and they are most likely to become passionate marketers of your goods in their social circle. AI tools reveal exciting insights about the customers' sentiments, needs, desires, and expectations. Businesses take actions based on this information to enhance the quality and pricing structure of their goods, according to the customers’ requirements. In this way, they can not only stay ahead of the competitors but also win many loyal customers, which is a dream of every company.
3. Customers’ expectations will Increase
There is only one way to win in the business world and that is to address the customers' expectations. Every business is thriving to gain customer attention. Businesses in every industry are using AI tools to accurately predict customer expectations. Consequently, businesses are experiencing fierce competition in the market because multiple brands are targeting the same customers and there is a little difference in the price and quality of the goods too. While this situation may seem unfavorable for the businesses, the customers are saved from the monopoly, as they can choose from the wide range of alternatives.
There are many success stories of the businesses that used AI to accurately predict the customer behavior towards their products and boosted their sales. One such example is Starbucks, a coffee giant, that uses AI to determine the best locations for new stores, create personalized marketing campaigns, and expand its product line. A significant percentage of Netflix's success is attributed to the use of AI to accurately predict the consumers' views. From these success stories, we can conclude that by leveraging AI, companies can use real-time data to predict customer behavior accurately. Predicting customer behavior accurately is critical for devising effective marketing campaigns, reducing customer churn, and maximizing customer satisfaction. Moreover, AI-driven systems also offer insights into the future trends in the market which will reshape customer behavior. Thus, based on these insights, companies can proactively make informed decisions about their businesses, which will eventually lead to more profits in the future.