It’s no secret that the e-commerce revolution has had devastating consequences for many physical stores and, despite some success stories for huge brands like Walmart and Apple, the average retailer is suffering. In a consumer climate where expectations are focused around convenience and speed, it’s nearly impossible to keep up with monoliths like Amazon.
Many brick-and-mortars respond to this tough competition with the knee-jerk reaction of posting huge “sale” signs in their windows to entice shoppers and drive foot traffic, but counterintuitively, this tactic is, in most cases, unhelpful to long-term growth. Much like slathering aloe vera on a sunburn, it’s too little too late and simply about treating symptoms rather than the deeper problem: a lack of differentiation and poor customer experience.
Instead of going the old-school route of slashing prices, brands should consider pivoting toward embracing the sales power of artificial intelligence (AI). According to Adobe’s Digital Trends 2019 report, 50% of organizations “plan to increase CX-related spend in 2019, with AI and real-time experiences as key investment areas.” By leveraging data to create tailored customer experiences, AI can become the much-needed antidote to the discount addiction that makes companies seem more like struggling shops than premium brands.
Here are some ways your brand can use AI to rejuvenate your strategy and usher in a retail renaissance:
1. Prioritize relevancy.
Everyone enjoys getting special treatment, regardless of whether it’s a free order of fries at your favorite diner or full-on VIP treatment at your Friday night haunt. By leveraging data, brands can make more personalized recommendations that are relevant to the shopper’s needs, creating a unique, personalized experience.
Companies shouldn’t just be looking to meet the needs of their clients — they should try to anticipate them. When customers are treated like a top priority, they won’t be batting an eye at that discount sign. After all, would you expect brands like Apple, Louis Vuitton or Tesla to hook you with a limited-time offer, or with their top-of-the-line reputation?
uses AI (in combination with human stylists) to prioritize relevancy and to propel its business. The brand uses AI to:
• Increase the personalization of clothing and accessories
• Improve satisfaction rate and lower return rate
• Develop new styles
• Know the client
• Streamline operations
• Improve inventory management
In the end, the goal should be to think like a top-tier brand and become so relevant to customers, thanks to the tailored service you provide, that you become their only go-to in your category. The VIP treatment should no longer only be a feature of luxury brands. Remember: Great service is no longer a luxury; it’s a necessity for a business’s success. With customer expectations higher than ever, failure to deliver can lead you straight to the discount bin. However, managing to set yourself apart means you can free yourself from the whole zero-sum pricing war.
2. Foster intimacy.
There’s no substitute for a good old-fashioned conversation. Think about how merchants in the past got to know you over time, asked you about yourself and maybe even knew what you were going to ask before you opened your mouth. Building loyalty is a long-term strategy, while discounts are a short-term tactic that often leads to customers choosing your brand only because you’re cheaper, which probably isn’t the message you want to send. Discounting might help you snag a customer once, but it won’t provide a sustainable competitive advantage, unless price-chopping is baked into your business model, like Costco or Walmart.
If you can’t compete on price, you have to set yourself apart by making purchases more emotional than rational. Price is rational, but experience is emotional, and creating stellar experiences on e-commerce platforms that are inherently impersonal has always been challenging. However, that’s all changing.
By leveraging technologies like live chat and conversational AI (full disclosure: I’m a co-founder of a conversational AI platform), brands can bring back the old-fashioned conversations that customers used to have with sales reps in-store and infuse the shopping experience with personalization and intimacy. The more you get to know your customers, show them you care and make them feel heard, the more you relegate price to the background.
For example, our clients, Make Up For Ever (LVMH), uses a Facebook Messenger chatbot to get to know its customers on a personal level (e.g., skin type, complexion, etc.) and recommend products based on their personal preferences.
Brands that focus on personalization can free themselves from the downward spiral of discounts, and instead compete on brand preference, not price. Like with real-life connections and relationships, they grow stronger over time as each savvy recommendation becomes a step in creating brand loyalty and increasing a customer’s lifetime value.
3. Unlock efficiency.
In our ultra fast-paced society, time is a more valuable commodity than ever, meaning that efficiency is a golden asset. Customers are fully aware of how precious their time is and are willing to pay a 16% premium to brands helping them save it. The discount sign posted in your window feels pretty far away at this point, doesn’t it?
AI and chatbots can help businesses create a seamless online shopping experience that removes friction at every step of the customer journey and delivers value almost instantly. In the “same day shipping world” pioneered by Amazon, speed and convenience are cornerstones to crafting a superior customer experience.
Personalization: The Antidote To Discounts
When looking to build a sustainable business, focus on lifetime value rather than discounts. We’ve seen how slashing prices is a tempting go-to solution when sales are plummeting, but it’s a short-sighted strategy that can backfire, hurting your brand and customer perception.
So, put away that discount sign in your window. By switching your entire organizational focus toward creating a superior customer experience, you’re taking a long-term approach in which maximizing customer happiness and lifetime value wins over generating quick revenue that barely moves the needle. If you’re aiming to last, happiness sells more than inexpensiveness. After all, maybe that’s why we call it retail therapy.