How AI-powered personalization enhances customer experience

Highlights

You’ll learn about why you need AI-enabled personalization:

• Higher customer satisfaction: Personalizes interactions using insights from demographics, behaviors and preferences and reduces frustration by delivering relevant, meaningful experiences
• Increase engagement and conversions: AI drives personalized recommendations that align with customer needs for higher conversion rates
• Achieve scalability: Manages personalization through channels like websites, apps and emails
• Optimize costs: Lower costs with targeted ads and fewer returns from better product recommendations

Imagine walking to a store. Before you go in, the sales team shows you your favorite floral dress. It's in a color you like and a style you enjoy wearing in summer. The sales team's readiness is not due to chance or because they have a good memory of your likes and dislikes but because they prefer personalization. Based on data (past behavior and purchase history) they have personalized your experience. 

With over three-fourths of customers getting frustrated and unhappy about not receiving personalized messages, personalizing interaction makes you different in the clutter. How do you achieve personalization at scale? Can you do it manually? No. For this reason, 92% of companies focus on AI-powered personalization to succeed, and 81% believe that artificial intelligence will impact customer experience.

To personalize using AI, do you have to change your marketing strategy? No. The strategy empowers you to give your shoppers surprising experiences. 

What is AI-powered personalization?

AI-driven personalization uses machine learning, natural language processing (NLP) and advanced AI to analyze customer data. This includes demographic information, behavior data, social media interactions, purchase habits and browsing patterns. Analyzing this information gives you an understanding of your customers' specific needs. AI-driven personalization combines the customer’s data in a centralized platform without violating data privacy laws.

AI platforms can use data insights to predict what users like and send real-time product recommendations.

Let’s understand using an example: 

Millions of daily shoppers visit your online retail store to browse your products. Upon login, customers can view the current clothing items on display and feel that the platform understands them as individual customers. How? The platform uses AI to recommend items based on the customer's history and past purchases. Using personalization, you can send discount messages to customers who enjoy seasonal deals. Each customer receives customized product recommendations, enhancing the customer experience. Customers and retailers enjoy this arrangement because each side receives exceptional value and loyalty.

Key examples in action

• E-commerce: Amazon provides "frequently bought together" suggestions and personalized deals to value its customers.

• Entertainment: Netflix applies machine learning to understand viewer patterns to suggest content specific to each customer's preferences.

• Predictive marketing: AI analyzes customer data patterns to generate predictions about future behavioral patterns in marketing. The technology allows businesses to connect with their target market. For example, travel companies can use AI to find customers who need to book seasonal vacations. They can then use this technology to send personalized flight and hotel deals.

Benefits of AI-powered personalization

Dynamic content personalization

AI-driven personalization enables companies to provide individual customers with tailored content. The technology analyzes customer information to deliver relevant, engaging content that improves customer satisfaction and experience.

Dynamic pricing strategies

AI adjusts your product pricing in real time based on how customers interact and market trends. Dynamic pricing strategies provide maximum profit. They ensure your pricing is always competitive and aligns with the existing market conditions. Such a strategy offers fair and relevant pricing while improving your marketing strategies and ROI. 

Higher conversion rates and customer engagement

Recommendations based on customer requirements result in higher conversion rates. 60% of businesses achieve higher conversion rates and retain more customers through personalized content practices and strategies. Through precise customer segmentation, companies can show their products to customers who are likely to buy, optimizing the shopping experience. Personalized experiences generate customer confidence that encourages them to move from consideration to purchase decision.

Saves cost

AI systems improve customer interactions and reduce expenses. Personalized marketing addresses individual customers through personalized campaigns that drive enhanced conversion performance. Product recommendations based on individual preferences lower product return rates because they show products customers like. These smart, data-driven optimizations save costs while keeping customers happy. 

Provides personalized ad targeting

The average person encounters between 4,000 and 10,000 ads daily, so your promotional content must make an impression. Through automated personalization techniques, AI achieves this success. Like content personalization, AI creates ads by analyzing customers' demographic and behavioral patterns.

How does AI personalization work?

Data collection

The first step to personalized experiences is data collection. You collect the following data types: 

• Demographic data like age, gender and location
• Behavioral data like browsing history, search queries and click patterns
• Transactional data like shopping habits, order frequency and past purchases
• Device and technology data like device type (e.g., mobile, tablet, desktop), operating system or browser and IP address or geolocation
• Engagement and interaction data like social media interactions, time spent on specific pages or in apps and customer feedback and reviews
• Contextual data like current location, time of day and weather

Customer data platforms (CDPs) or analytics systems collect this data from different sources into one clear and usable set. 

Data analysis

Advanced data analysis is the next step. It gives you meaningful insights about your customers and their behavior. AI personalization tools can process large datasets for automatic pattern detection and trend recognition, helping you understand customer behavior. Businesses achieve better marketing strategies. Through predictive analytics and machine learning, you create better marketing strategies, predict customer needs and improve product features. 

You can detect new cross-selling and upselling opportunities by comparing customer buying records with online activities. This knowledge enables you to develop strategic data-backed choices, fulfilling customer requirements ahead of time.

Content personalization 

When content aligns with individual needs, customer relationships flourish, enhancing engagement. Businesses can use data analysis insights to design experiences that meet individual customer needs. Besides addressing customers by name, provide relevant product recommendations and personalized content distribution across different channels. Email campaigns that adjust their content based on purchase records and previous website visits tend to increase customer click-throughs and conversions. Likewise, personalized website experiences add relevance and value, like showing specific promotions or content based on past interactions.

Real-time adaption

AI-powered tools adapt and respond in real time. They get smarter with every interaction because they learn from customer behavior and change their suggestions. For example, if you click on a product link, the AI takes note and adjusts future recommendations to match your interests. As your preferences change over time due to new trends or life circumstances, the system keeps updating. This flexibility creates a personalized, intuitive experience and keeps users engaged, building trust.

Role of CDPs and headless CMS in AI-powered personalization

Customer data platform (CDP)

A Customer Data Platform (CDP) makes AI-powered personalization easier. The data platform acts as a central hub. It collects customer information from websites, apps, social media and email marketing. CDPs like Lytics gather all this information into one unified customer profile to give you a clear, complete picture of your audience. This is what AI needs to deliver more meaningful insights. You can achieve precise audience segmentation and deploy real-time marketing tactics. A CDP organizes, updates and enriches your data in real-time, which AI can use. You can suggest products, send specific messages or change content based on what your customers enjoy. It keeps your data safe and follows rules like GDPR and CCPA.

Real-time personalization with CDPs

AI enables CDPs to track and respond to customer activities in real time. 

Let's understand with an example: 

A customer examines a product page and abandons the website without completing their purchase. AI tools send customized discount emails and display specific social media advertisements to attract customers who abandon their carts. Apart from this, CDPs bring other advantages to businesses. The platform delivers important information and insights. Insights obtained enhance customer behavior analytics, improve retention and develop superior customer experience.

Headless CMS

Contentstack's headless CMS delivers AI-enabled personalization through its flexible content distribution structure. A headless CMS breaks content management or back-end operations from the user interface or the front-end layer. The separation of content management from presentation enables businesses to distribute customized content on websites, mobile applications and Internet of Things devices.

The headless architecture enhances personalization by integrating AI tools and CDPs. The AI system evaluates customer behavior in real time to change how your content looks. It then delivers personalized recommendations, customized landing pages and exclusive offers that target individual customers. The platform makes these changes through its API-first structure, reducing potential delays or performance issues.

Case study: How Assembly used AI and headless CMS to transform its website

The legal case management software provider Assembly changed its entire online operation. It combined three different WordPress sites under a single optimized website using Contentstack. Through its new platform, Assembly's team can generate content more quickly by using reusable templates, speed up publication and increase site performance. Some standout results? Users now publish content twice as fast due to shorter publishing times and A/B testing is simpler while Contentstack AI tools support SEO requirements. The best part? Assembly's staff members can execute content management and maintain brand quality without the support of developers.

After using Contentstack, Jessica Collier, VP of Growth Marketing at Assembly, said: 

“There is a myth that a headless CMS is developer-driven or tech-heavy. For us, it's not. We’ve built our workflows around components and templates, and it's very accessible for non-technical publishers.”

Read the complete case study here. 

FAQs

What is AI-powered personalization?

AI-powered personalization delivers real-time experiences. It uses machine learning algorithms to analyze customer behavior and preferences.

What is hyper-personalization AI?

AI-driven hyper-personalization takes customer data in real-time and predictive analytics for a greater level of customization.

What does AI-powered mean?

AI-powered means tools or processes that use artificial intelligence for efficient and data-driven outcomes.

Is AI good or bad for business?

AI systems deliver better efficiency, enhanced customer engagement and superior customer experiences. Proper implementation and ethical considerations remain essential for achieving positive results.

Learn more

The future of customer engagement lies in more personalized experiences influenced by AI. Implementing a winning personalization strategy starts with choosing the right platform, like Contentstack’s AI. It builds personalized suggestions and experiences to surpass customer expectations. Are you looking to increase your conversion and improve customer engagement? Talk to us to learn how Contentstack drives AI-powered personalization.