Perspective Chapter: Beyond Mobile – How AI Is Expanding the Ways Businesses Can Interact with Their Clientele

Abstract

This chapter will focus on artificial intelligence (AI) and how it can impact businesses’ interactions with their customers. AI is changing the world whether it be improving healthcare provision or improving education provision at all levels from primary school through terminal degrees, AI’s impact is present. This trend is likely to continue as advances in technology have seen AI’s capabilities advance at an extraordinary rate. The more advanced AI becomes, the faster its capabilities expand. This paper will discuss artificial intelligence’s use in customer relationship management. As will be discussed, maintaining current customers requires the fewest resources and provides greater profitability than acquiring new customers. I will conduct a comprehensive literature review to bring together some of the leading research regarding artificial intelligence. The paper will be structured to discuss customer-specific actions, and business improvement actions, and end with a look at potential roadblocks and the need for future research.

1. Introduction

As defined by TechTarget, customer relationship management (CRM) is “the combination of practices, strategies and technologies that companies use to manage and analyze customer interactions and data throughout the customer lifecycle. The goal is to improve customer service relationships and assist in customer retention and drive sales growth.” [1]. Businesses are focused on customer relationship management because it is less expensive and easier to retain customers than it is to attract new ones. Modern customer relationship strategies are centered around Artificial Intelligence. AI allows companies to gather customer data, increase the number of touchpoints between the business and its customers, and provide businesses with a treasure trove of personal information related to customers’ spending habits [1].

This paper will discuss how artificial intelligence is changing the ways in which businesses interact with their customers. AI is the future of the entire inventory life cycle including manufacturing, distribution, sales, customer follow-ups and communications, and customer retention efforts. This paper will focus on the business-client interaction phases. It will go in-depth describing all of the actions businesses take and how customers respond in kind.

To accomplish the stated research objective, I employed a comprehensive literature review to describe current practices of using AI in customer relationship management and to discuss potential future trends in the use of AI for CRM. Finally, I discuss promising areas for future research.

2. AI facilitates businesses’ interactions with their clients and improves customer satisfaction

The past two decades have witnessed sweeping changes in the ways customers address their shopping needs. A major contributor to this change was the onset of the COVID-19 pandemic and the government shutdown of businesses worldwide. In response, many businesses introduced advanced technologies in the form of artificial technology that sought to improve customers’ experiences, satisfaction, and loyalty [2]. Second, artificial intelligence is adept at responding to the fast pace of changing consumer demands and growing sales for businesses [2]. Finally, artificial intelligence has improved the ability of businesses to tailor their marketing campaigns to individual consumers, drastically increasing marketing’s impact [2].

From the consumer’s standpoint, artificial intelligence and other advances in technology have drastically changed people’s lives. AI has aided consumers with finding and purchasing the best product alternatives while decreasing the cost and time associated with searching [2]. These benefits have increased the utility that consumers experience while shopping. Whether it be the advent of streaming in the movie industry, shale oil in the energy industry, or smart devices in the electronics industry, life is almost unrecognizable when compared to 20 years ago. Nowhere has this been more impactful than in the retail sector.

Large businesses such as Amazon and Walmart introduced e-commerce, and overnight, local businesses were able to sell in the international markets and consumers were able to order any product they desired no matter its point of origin. With the advent of artificial intelligence and the strides that have been made in improving the capabilities of AI, businesses and customers are reaping the benefits. This paper will focus on the impact artificial intelligence has had on businesses’ ability to interact with consumers, but it will also touch on other positive impacts on businesses and customers individually.

3. Business improvement actions

3.1 Streamline business operations

Businesses are always looking for ways to streamline their operations. The goal of streamlined business operations is to reduce the time it takes to restock products and to encourage impulse purchasing by consumers [3]. To improve the efficacy of artificial intelligence and the customer experience, computer scientists aim to improve the “cognitive” processes of “learning, reasoning, and self-correction” [4]. In this way, computer scientists anticipate artificial intelligence being able to better predict when products will run out of stock and take the necessary reordering actions to prevent stockouts from occurring, improving customer satisfaction and business profits. This is better known as inventory management.

3.2 Business growth

Artificial intelligence has streamlined the business operations of e-commerce companies allowing them to reach a broader base of customers [4]. Consumers, particularly in rural areas, who once were unable to take advantage of e-commerce offerings are now able to purchase goods such as electronics, fashion items, and home products like consumers located in urban areas [4]. The Indian market stands out as an exemplary case of the impact of artificial intelligence. In 2018, the Indian e-commerce market accounted for approximately $22 billion in sales [4]. The Indian market is expected to produce growth of approximately 96.7% between 2016 and 2027 resulting in total sales of approximately $200 billion [4]. Major contributors to this trend include the COVID-19 pandemic and machine learning algorithms, which have helped e-commerce companies such as Amazon improve their logistics operations by providing information about the best delivery routes to deliver products to consumers [4].

Companies are doubling down on AI to further expand their reach and improve their operations. For example, Amazon has included in its management discussion and analysis section of its financial statements its desire to become an AI-as-a-service provider, while Flipkart is increasing its use of artificial intelligence to provide deeper insights [4]. Flipkart’s stated intention is to analyze the massive amounts of customer data that it has collected to improve its business strategies [4]. To facilitate their desire to incorporate more AI technology, companies are forming partnerships with universities that will provide research into cutting-edge AI technology [4].

3.3 Predicting customer needs and anticipatory delivery

Another improvement that advanced artificial technology has facilitated is the ability to predict customer needs [4]. This is possible via companies’ use of artificial intelligence to collect data on customers and discern trends that allow businesses to ship products to customers prior to customers running low or running out of vital products needed in their households. Another enhancement brought about by artificial intelligence is to predict unforeseen future events, which allows businesses to provide customers with the products they will need prior to customers requesting these products [4]. This is known as anticipatory delivery. Customers always have the right to refuse products that they deem unnecessary.

Another way that AI predicts customer needs is through its ability to target individuals. AI can segment populations by their geographic location, demographics, and social status, making its product predictions more accurate for a specific customer base [3].

3.4 Use of chatbots

Businesses have increasingly turned to chatbots as a form of artificial intelligence that increases the efficiency of businesses’ communications with their customers [5]. Improved communication includes reduced time to answer customer’s questions, resolve their complaints, and attend to their requests [5]. Improving communication with customers is a primary concern of businesses as efficient communication is shown to have a significant impact on customer satisfaction [5]. Businesses compete against their competitors to provide the best customer service possible, and an important piece of this puzzle is improving communication between the business and its customers.

When planning their communication strategies, businesses are focused on all three phases of a sale: pre-purchase, purchase, and post-purchase [5]. Due to the growing utility of chatbots, approximately 80% of businesses utilize chatbots to respond to customers and their problems 24 hours per day [5]. Some of the questions to which chatbots are equipped to respond include “availability and cost of products in stock, products personalized, personalized assistance, and popular products [5].

Businesses face an uphill battle in their quest to implement the use of chatbots as 54% of customers have voiced concerns about the use of chatbots due to the impersonal nature of their interactions [5]. Chatbots have generated such a high percentage of negative opinions due to their failure to satisfy customers in the following criteria: quality, response time, relevance, and performance [5].

Regardless of the uphill battle that businesses face, research has demonstrated the importance of chatbots to retailers’ performance, user satisfaction and commitment [5]. Businesses should not, however, panic at this point in time. Chatbots are a relatively new phenomenon. It is true that they lack personalization of messages, they have inappropriate timing when it comes to their messaging, and they push irrelevant texts to customers in different stages of the purchasing life cycle [5]. The newness of chatbots gives hope that experience will result in the ironing out of the aforementioned issues and turn chatbots into a valuable asset for businesses.

4. Customer-oriented actions

4.1 Improve customer experience

Artificial intelligence has improved customer experience by increasing businesses’ interactions with their customers and improving the efficiency of business operations [4]. Before this improved experience is possible, businesses must gain the trust of their customer base. Customers view artificial intelligence through two lenses that determine whether they support artificial intelligence (or any other technology). These characteristics include perceived usefulness and perceived ease of use [5].

The reality of the contemporary world is that consumers have less time to conduct necessary shopping. This is where artificial intelligence comes into play. The development of various types of technology including artificial intelligence, augmented reality, and virtual reality allows consumers to do their shopping without having to spend significant amounts of time digging through the shelves of brick-and-mortar stores [6].

An important reason for businesses’ success in accomplishing these objectives is their use of AI to focus their e-commerce services on the needs of individual customers [4]. In this manner, customers’ specific needs are addressed in an individualistic manner rather than as a group as was the case before advanced artificial intelligence capabilities.

An AI improvement that is less talked about is the benefits that AI provides to inventory management. AI allows businesses to improve their logistics and supply chain management to ensure products are properly stocked at the right times, so retailers are never devoid of popular products that customers need and desire [4]. Inventory management is critical to businesses because empty shelves can drive customers to competitors and hurt businesses’ profits.

4.2 Ease of use

Artificial intelligence is being utilized to improve the capacity of customers to use their mobile devices to facilitate their shopping needs [3]. One way businesses accomplish this goal is to improve the ease of use of new AI technologies. One example is the use of “margin mirrors, virtual fitting rooms, and different techniques” that assist customers in making purchasing decisions and ultimately improve their experience and level of satisfaction with AI and mobile technologies [3]. Any technology that can speed up the buying process and reduce the stress associated with that process improves overall customer satisfaction.

5. The future of AI, potential roadblocks, and the need for future research

5.1 The future of artificial intelligence

Artificial intelligence will continue to improve in the future via the use of “voice analysis, robot automatic processing systems, text analysis, and natural language processing” [4]. All of these learning tools will allow researchers and businesses to continue to improve the effectiveness and accuracy of artificial intelligence so that better outcomes are made possible. The primary objective of artificial intelligence is to continue to improve its ability to accurately estimate sales and synthesize large amounts of data to develop strategic, tactical, and operational choices [4].

To facilitate these improvements, AI studies client remarks, client recommendations, client demands, and client desires [4]. A significant improvement that facilitates businesses’ ability to better service customers is the advent of virtual shopping where AI creates a virtual shopping mall where customers can navigate a virtual mall using their cellphones and select products without stepping foot in a brick-and-mortar shopping center [4]. Artificial intelligence can identify the products that customers view through virtual shopping centers and add those products to a customer’s cart to be processed and shipped to the customer [4].

5.2 Hurdles for artificial intelligence

Artificial intelligence does not come without potential roadblocks. The fast pace of development of artificial intelligence has left lawmakers scrambling to develop necessary regulations [3]. The uncertainty surrounding regulations has forced businesses to proceed with caution as they adopt ever more sophisticated uses of artificial intelligence. One example of businesses’ hesitance to move too far ahead of a common regulatory agenda is the use of artificial intelligence in mobile technology. Incorporating AI into mobile technology introduces potential ethical concerns about user privacy [3]. Unfortunately, AI will continue to be adopted by businesses due to its many benefits, but the full benefit of artificial intelligence will not be felt until the slow-moving public sector catches up with the fast-paced advances in technology.

A second challenge to the continued advancement of artificial intelligence is a disconnect between businesses’ efforts to protect consumers and consumers’ trust in the safety of artificial intelligence [3]. Artificial intelligence, as alluded to earlier, does collect the personal data of consumers to better tailor the products and services that businesses provide to their consumers. Customers are aware of this practice, and trust is a primary issue contributing to the reluctance of customers to fully support artificial intelligence regardless of the many benefits that come along with it [2].

A third challenge is the need for businesses to work to develop mechanisms to encrypt customer data and identify potential risks that trigger automatic actions to prevent the loss of customer data [3]. AI can provide safety features as evidenced by the security sector’s increasing employment of artificial intelligence. It’s a matter of businesses investing in the development of AI safety measures for their operations.

Fourth, over the past couple of decades, the amount of data that businesses can access has increased beyond their capacity to develop an intimate familiarity with the data. The amount of data creates a major problem: how do businesses ensure its validity [7]? Businesses and regulators need to develop safeguards that ensure unintentional bias does not creep into the data [7]. Businesses need to develop protocols that limit the use of data to those processes where it is necessary [7]. The way to accomplish this goal is through a robust command and control process that allows businesses to discern potential biases and respond before biased data affects the results of studies and other data-based projects [7].

Fifth, an issue that is already creating much friction between companies and sovereign states is the “legal and ethical dilemmas” that arise as AI innovation advances [7]. Businesses and consumers benefit from advances in AI, including improved accuracy and greater speed; however, these same factors contribute to increased concerns about consumer safety and regulatory compliance [7].

The collision between performance and safety measures has come to a boiling point in Europe and California. In Europe, the European Union has adopted the General Data Protection Regulation, which, according to GDPR.EU, “is the toughest privacy and security law in the world. Though it was drafted and passed by the European Union (EU), it imposes obligations onto organizations anywhere, so long as they target or collect data related to people in the EU…The GDPR will levy harsh fines against those who violate its privacy and security standards, with penalties reaching into the tens of millions of euros.” [8]. California has a similar statute known as the California Consumer Privacy Act (CCPA).

Another, perhaps more important hurdle, for the widespread adoption of artificial intelligence is the cost of its adoption [3]. Businesses are likely to proceed slowly with their adoption of artificial intelligence as a way of providing evidence to senior management of the benefits of artificial intelligence. This will help middle-level managers make a business case for its full-scale adoption [3].

Finally, artificial intelligence is most effective when it is utilized to manipulate big data. Big data is very expensive and requires a level of funding that many smaller businesses cannot afford [2].

5.3 Recommendations for future research

The idea of artificial intelligence has existed for decades, but its implementation into the business world to facilitate customer interactions and ultimately a better customer experience is new and quickly changing with the pace of innovation. The rapidly changing AI landscape begs the question of what changes are becoming a reality as more businesses implement different aspects of AI. Additional research that addresses AI’s effect on job creation, consumer demand, product and service quality, power and infrastructure needs, and costs would complement this paper and provide answers to practical and valuable questions that all businesses considering AI technology are asking.

6. Conclusion

Artificial intelligence is changing the way society attends to its shopping needs. Hajdu and Nagy [2] sum up artificial intelligence as “systems that that operate automatically and analyze big data in real time to interpret and shape consumer behavioral patterns to offer products and services in a personalized way, thus enhancing the shopping experience [2]. Advancements in technologies are being made at a faster pace than at any time in the past, and there is no end in sight as to the potential of artificial intelligence. Whether it be ease of use, efficiency, predictive shopping, or one of the other benefits outlined in this paper of artificial intelligence, it has expanded access to good to populations who have until the advent of AI been left out of the market for many goods. Artificial intelligence has also made life more efficient and easier than at any time in the recent past. While there are hurdles yet to be overcome such as the creation of a solid and sustainable regulatory regime for artificial intelligence, AI promises to continue its growth trajectory and even speed up its growth trajectory into the foreseeable future.