Customer retention is an asset for your business. You want to nurture your old and loyal customers and build beautiful relationships.
Because you already know that acquiring a new customer can cost 5x more than retaining an existing one.
In fact, increasing customer retention by 5% can boost profits by 25-95%. And selling to existing customers has a 60-70% success rate whereas selling to new customers has a 5-20% success rate.
Ok — customer retention is crucial for your business. But how do you retain customers?
By offering loyalty programs or rewards? They don’t work anymore.
What will work for sure is AI (artificial intelligence). Let me explain.
Why you Need AI for Customer Retention
In today’s hyper-connected, always-online world, more than the products, customers want to feel connected with the brand.
They want to avoid the overwhelm of getting bombarded with ads all the time. Too many ads about too many product options!
All they want is personalized attention to stay with you. And if you miss out, your competitors are waiting for you, and they will quickly steal your customers.
This is where traditional marketing methods fall short and Artificial Intelligence shines.
AI helps businesses to provide personalized customer experiences through real-time decisions based on actionable insight. Massive amounts of historical and current customer data are analyzed to extract these insights.
Moreover, AI helps you understand your customers, increase social media engagements and overcome other marketing challenges. All of this helps you achieve your customer retention goals.
Ways in Which AI Improves your Customer Retention
Customer retention can be expensive and time-consuming, but it’s more efficient than constantly acquiring new ones. That’s why you need to invest in Artificial Intelligence.
With AI, businesses can now track their customers’ actions and behaviors in real-time. With this information, companies can personalize marketing efforts, deliver better customer experiences and improve retention rates.
AI allows for more efficient use of data and analytics to offer improved customer services. The technology can generate insights from data at scale and in real-time to optimize the customer journey and promote customer loyalty.
With that, here are 5 ways to up your customer retention game using AI.
1. Chatbot Engagement That Works
Artificial intelligence (AI) chatbots have been around for a while now, but their use is growing. That’s because advances in machine learning and natural language processing are making them more intelligent and human-like.
AI-powered chatbots are becoming critical tools for organizations that want to deliver exceptional customer experiences.
By providing instant answers to common questions, bots help reduce the burden on call centers and create more efficient, scalable customer service operations.
Chatbots can update customers in addition to resolving customer issues. This includes informing them about new products and offers, as well as events and other activities.
Therefore, it’s simple math: the more positive experience the customers get, the more loyal they become.
2. AI-powered Customer Loyalty Programs
Yes, I already mentioned that loyalty programs don’t work anymore. But it’s a totally different situation when it comes to AI-based loyalty programs.
So, a deep algorithm tracks every action you take, whether it’s viewing a product or purchasing it. After analyzing this data, a client profile is created based on age, interests, and other factors.
Because no two customers are the same, customer personalities can be used to tailor loyalty programs and rewards.
With AI and predictive analytics, customer loyalty programs can provide a seamless experience across all channels.
This not only improves the brand’s credibility but also increases the customer’s willingness to pay more. And this also means that you can ensure that your customers stay loyal to you and your business.
3. Personalized Recommendations
As a consumer, you might have noticed that websites are displaying products and content which is more relevant and personalized to you.
These are not mere coincidences but are informed by the power of technologies such as machine learning, deep learning & AI.
AI-based systems can deliver better user engagement through recommendations and automated content curation.
This is achieved by taking into account the previous behavior of the users, their demographic profile, and the consumption context. And implicit feedback signals such as how long does a user spend on a page or a product.
The logic is simple: provide customers with what they want and they will likely buy from you.
Therefore, better user experiences lead to higher engagement and conversion rates. In addition to this, it also leads to better customer retention rates. Companies like Google, Netflix, and Amazon owe their success to this strategy.
4. Excellent Product Innovation
Product innovation allows businesses to build on the strength of their current offerings, while also providing additional benefits to customers who may be interested in the new products.
This helps with customer retention because it keeps customers engaged with your brand and more likely to remain loyal in the future.
And one of the best implementations of AI is helping with product development & business innovation. AI allows businesses to understand their customers — hence using this knowledge to power the product development process.
No doubt, good product innovation helps in improving customer satisfaction because it shows that you value customer feedback and are committed to providing them with new products that meet their needs.
Product innovation can also help you retain your customers for longer periods of time by helping them see how much value they will get from your products.
The good news is, you can use AI to learn about the trends and create products that your customers would love.
5. Predictive Analytics
Predictive analytics is a form of advanced analytics that uses both new and historical data to forecast activity, behavior, and trends.
It’s a process that utilizes data mining, machine learning, and statistical techniques to extract information from data sets to determine patterns. And trends and predict future outcomes based on those findings.
It’s considered a form of advanced or prescriptive analytics because it goes beyond simple data gathering and analysis. As It analyzes current data along with historical big data to make predictions about future events
The technology has transformed the way marketing works. You can now gain access to data that will help you improve your campaign strategies.
You’ll understand which products your customers prefer and how to improve their customer experiences. Therefore you’ll have a higher customer retention rate and brand loyalty as a result.
Summing Up
If you listen to the news and especially if you are a business owner, it can seem like Artificial Intelligence is the buzzword that is never fully explained.
But, the truth is AI is already creating user experience and customer retention benefits for many businesses.
Businesses that optimize their experience with AI tools see an increase in customer loyalty. And customers who have had a positive experience with a company are more likely to purchase from them and recommend them to friends and colleagues.
Therefore, if you want to see your business grow — you need to leverage AI for customer retention.
