Can AI help brands deliver exceptional customer experiences in 2024?

AI is the buzzword everyone’s talking about. But how will it be used to improve the customer experience (CX) in 2024? Tate Olinghouse, chief revenue officer at Acxiom, outlines three AI-powered marketing capabilities that will improve CX over the next 12 months and why.

The rapid rise of generative AI (genAI) ensured artificial intelligence was the hot topic of 2023. And that’s unlikely to change as we look forward into the new year. But what is the reality of how brands are actually using AI for marketing and what are they realistically hoping to achieve this year?

No marketer’s objective should ever be to simply “use more AI.” It might, however, be to reach the right audiences with meaningful experiences that help to acquire and grow strong customer relationships. And when AI-powered capabilities help them to achieve this type of objective, then AI serves its intended purpose.

To really understand how brand marketers and their customers are experiencing AI-driven marketing, we surveyed both consumers and businesses across the US and UK. Acxiom's recent research, Where Marketing and AI Collide, revealed AI is opening up a world of opportunity for brands that are prepared to take advantage of the latest tech advances when those advances are in service of creating better consumer experiences.

Here are three ways AI-based technologies will be used to power exceptional customer experiences in 2024.

1. Predictive personalization

Consumers expect to have personalized interactions with their brands. Whether that’s in-store, on the website, in-app, or through marketing communications, consumers want customized experiences. Around half (51%) the consumers we surveyed like it when brands recommend products that are tailored to their personal preferences. And almost the same number (47%) say they’re more likely to click on an ad or email if it contains personalized content.

Brands have the information and data to execute personalized CX strategies.The challenge is many brands have too much data, and it’s hard to wrangle, analyze, and make meaningful conclusions on a consumer-by-consumer basis.This is where AI shines.AI helps brands efficiently survey the data and develop predictive analytics to anticipate customers’ needs and create customized experiences at unprecedented scale and precision. While the majority of brands are aware of predictive personalization strategies – like smart product recommendations or tailored content in advertising – only 13% currently use it, so we expect to see adoption escalate in 2024.

2. Healthy acquisition and retention

Fierce competition, market saturation, inflation, and evolving privacy regulations all mean customer acquisition is harder and more costly than ever before. The competition for a consumer’s dollar has never been higher. Brands must focus on acquiring, growing, and retaining relationships with their ideal, high-value customers. The good news is, even in a fickle market where consumers are switching brands to get the best deal, 73% say they are willing to stay loyal to brands that deliver a great customer experience.

Only 12% of brands are currently using AI for loyalty and retention tactics. This is set to change over the coming year as brands seek to super-serve their existing customers. As we all know, the first step to growth is to retain your current customers. With the personalized experiences I mentioned earlier – perhaps highly customized loyalty and rewards programs – brands can better serve their existing customers. We also expect brands to use AI to supercharge existing models that predict who their most valuable prospects are and inform decisions around acquisition spend.

3. Proactive customer service

Automated customer service allows brands to offer always-on support, via the channels their customers want to use, while simultaneously cutting costs. And there’s a growing recognition that automation can be blended with human support to deliver frictionless experiences. In 2024, we’ll see a shift from reactive to proactive customer service, where brands use AI-powered chatbots to solve problems before customers even know they exist, or to make proactive suggestions to prevent potential issues.

Consumers are quickly getting comfortable with chatbots. Around half (51%) say they’ve had a chatbot interaction that felt like a human conversation. And 45% of 35- to 54-year-olds actually prefer messaging with a chatbot to a human agent. Brands are aware of the potential of AI, with 86% saying it helps them better understand customer issues and complaints. But with only 15% currently using AI-powered chatbots, there’s a big opportunity waiting to be realized.

AI is no silver bullet

Investment in these capabilities will accelerate in the coming months and brands must consider how they harness AI’s power, alongside human expertise, to build experiences around their customers’ needs and generate real long-term value. To be blunt, those companies that have not started are behind.

However, there are no silver bullets to solve every marketing challenge overnight – this includes AI. Getting real value from AI means having the right infrastructure and expertise in place to manage it and requires – above all else – a strong, accurate data foundation. Having the newest and most sophisticated AI tools and tech sitting on top of a weak and inaccurate data foundation is folly. Here are the characteristics of a strong data foundation:

• The data that matters: A brand’s first-party customer data, enhanced by high-quality third-party datasets, will tell brands what they really need to know about their customers.
• Clean and accurate information: Data needs to be complete to help AI tools make the best decisions. This can be achieved by regularly cleansing and standardizing data.
• A single source of truth: Breaking down silos and bringing together data from across the business into a real-time view means all AI tools are working from the same information.
• A robust testing regime: Marketing AI is still in its infancy, so models should be rigorously tested, and outputs regularly sense checked to avoid risk of hallucinations.
• Industry expertise: Leaning on industry partners with the necessary expertise provides a quicker route for customers to get the personalized CX they deserve much sooner.

The art of the possible

Over the next 12 months brands will use AI to supercharge their marketing capabilities. It will allow them to create meaningful, personalized experiences that meet their customers’ individual needs.

Brands with a strong foundation of clean, complete, accurate data for AI tools to draw from will position themselves to drive real value through the next generation of AI-powered CX in 2024.