How generative AI reduces churn and increases conversion rates
Churn and conversion rates will forever be a major concern for businesses, particularly in volatile markets and during times of economic uncertainty. Customers seek the best deals, the best customer service, and the best growth potential.
One of the most powerful tools your organization can use, and one of the most talked-about pieces of technology from the past couple of years, is generative AI. It’s fast becoming an invaluable tool that businesses can use to deliver a solid customer experience. In turn, this helps reduce churn and increase conversion rates.
Generative AI is an artificial intelligence algorithm that creates new content simply by using a prompt. We’ve heard about the likes of ChatGPT and how it can tell stories, write code, and answer complex questions seemingly from nothing. How can that kind of tech be used in sales, customer service, and marketing?
In this post, we’re going to explore how generative AI can improve how your business interacts with customers, including using algorithms to predict future behaviors and helping customers solve problems quickly and effectively to ensure their continued loyalty.
Generative AI can ensure the customer receives a fully personalized experience, generating content specifically tailored to them, their needs, and their previous behaviors. It does this based on how they’ve interacted with your business in the past. So, it’s unlikely that two different customers will have the same experience – but both will still be equally positive.
When customers are presented with a personalized experience, it helps them find the content, products, and services they want much faster. The best part is that the customer doesn’t even realize that what they’re seeing is being generated by an AI.
When you help customers find what they’re looking for more easily, your customers are more inclined to engage, which has a huge impact on customer loyalty.
Generate realistic customer personas
Likely, your business has already put together your ideal customer personas based on your website analytics, survey data, and feedback from your customers. However, generative AI can quickly and accurately create realistic customer personas using large datasets including demographics, behaviors, purchase history, and even social media interactions.
When you have highly accurate customer personas, it will help you:
- Understand customers’ wants and needs
- Tailor how, when, and where you communicate with customers
- Identify emerging trends and behaviors
- Understand your customers’ motivations and values
- Refine your overall marketing strategy
- Influence product and service development
Each of these creates a more personalized experience, which contributes toward reduced churn and higher conversion rates.
Using generative AI for predictive analytics can identify which customers are at risk of churning. By using real-time data related to behaviors, engagement, patterns, and trends, the algorithm can predict which customers are most at risk. It can also generate strategies you can implement to ensure those customers remain loyal, such as offers, rewards, and solutions to pain points.
This approach ensures your company never has to be on the back foot and can proactively nurture customers that are at the highest risk of churning.
Data related to customer sentiment is great for establishing how your customers feel about your brand. This can come from reviews, social media, customer surveys, and more. Generative AI can analyze this data to find the areas that could be improved by identifying pain points, confusion, negative feedback, and frustrations. It can also suggest ways to overcome these. Similarly, it can find what your customers like, appreciate, enjoy, and want more of, so you can continue doing more of what works. You can also analyze competitor data to discover more about what they do well and their customer pain points that your business can solve.
Data can be collated in real time, allowing you to proactively monitor any emerging trends or issues. The faster you can sort problems, the more likely you are to prevent unnecessary churn.
Improve customer service
Generative AI introduces a range of intuitive ways for you to offer improved customer service using new channels and methods. This includes:
- Chatbots that generate real-time and personalized responses. Conversational AI can be hard to distinguish from a human representative.
- 24/7 support.
- Real-time feedback.
- Giving customers the ability to solve problems quickly.
- Personalized support including FAQs.
Your organization shouldn’t strive to replace your customer service team or any existing processes by utilizing AI customer service, but it can be used to complement it. It helps customers get answers to their questions and solutions to their problems quickly and in a personalized way, which enhances the customers’ experience. When customers feel like they’ve had a positive experience, with an empathetic and attentive interaction, they’re more likely to spend their money with you.
What are the challenges of using generative AI?
While generative AI is great for improving the customer journey, there can occasionally be challenges with its implementation.
- Data quality – For generative AI to be accurate, it requires a large amount of up-to-date data. If it doesn’t have the relevant data, the information it generates can be unreliable.
- Complexity – AI models and algorithms are complex, which can make them difficult to learn.
- Context – AI responds to the prompts it has been fed by a user, and can sometimes struggle to interpret them unless the prompt is precise and accurate.
- Biases – AI models can present information that is inadvertently biased, which may lead to unfair outputs.
- Data and privacy – Organizations must ensure data that is fed into AI programs is being stored and used in compliance with data privacy regulations.
- Consistency and control – Content generated from AI can differ between users.
- Resources – AI requires powerful hardware and trained employees to effectively manage the relevant tools.
- Copyright concerns – Because AI-generated content is often influenced by existing information, sources, data, and content, there are questions surrounding ownership and copyright.
While these are challenges to be aware of, the benefits of generative AI and how it can help your organization increase the overall customer experience can more than make up for it.
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