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Innovation

“It’s professional laziness not to understand your customers”

Online retailers are regularly presented with an array of tools and solutions all promising to drive sales, unlock customer insights and make the business run more efficiently. It almost sounds too good to be true. And in fact, some of them probably are.

Artificial intelligence (AI) is one of those technologies that some experts believe will revolutionise retail, while others say current AI applications are just gimmicks and the big benefits are still a long way off.

Internet Retailing editor, Heather McIlvaine, recently spoke with AI expert Robert Wickham, vice president of innovation and digital transformation Asia-Pacific for Salesforce, to learn the truth about AI in retail.

The state of AI today

“The reality is that AI is already working its way into our day-to-day personal life. When we interact with Facebook, it’s in the facial recognition that automatically tags our pictures. With Siri, it’s voice recognition. But the average user doesn’t know the complexity of the algorithms running in the background. I think what you’re seeing in broad terms are companies in general, but more specifically retailers, using technology – particularly intelligence – to do three things.

“The first is capturing data. There’s a wealth of data out there that fundamentally takes two forms – data from within your organisation and external sources. Now you can bring all the data from across the organisation to have a 360-degree view and enrich that data with what customers are creating on social channels, etc. This creates a reservoir across which you can run algorithms to come up with personalised offers, which is the second thing. The third and most important step is being able to act. If you come up with an offer and can present it in the moment of truth when the person is in a buying frame of mind, that’s when the magic happens.”

Other areas retailers should be investing in

“We recently did a study where we interviewed about 650 shoppers in Australia and looked at millions of data online to figure out what shoppers care about. The biggest insight is that mobile is the new battleground. It’s not new, but we’re seeing a surge in mobile traffic. Retail baskets on mobile surged in the last year by 70 per cent, while other channels like desktop and tablet only increased by three to five per cent. It’s not just transacting. The mobile device has become the primary gateway to commerce. You check in-store inventory, request customer service. One of our recommendations to customers is to really think about the mobile strategy and really make that a fundamental piece. There’s a lot of concern right now about Amazon coming to Australia and how retailers can respond. We think the best way to respond is to focus on personalised experiences and customer experience.”

The future of personalisation

“Ultimately you want to get personalisation to one-to-one. Historically, that’s been challenging. I like to talk about it as the coffee shop experience. One of the magical parts of being in a coffee shop is they know who you are, they have your coffee before you even get to the front of the line, and if you forgot your wallet, they say don’t worry about it, you’ll get it next time. The question is how do you scale it to potentially millions of customers? It’s hard.

“AI has been around for 50 years, but it’s in a spring right now. Why? Three things have happened recently. One is that the maths and algorithm have gotten dramatically better than they were a generation ago. We’ve gone from explicit systems to learning systems. Explicit systems are if you want a machine to play chess, you interview a chess master and write that in the instructions. Learning systems are where you try to replicate how the mind works with neural networks. Those algorithms feed on data and we have an unprecedented amount of data in the market today, with the ability to analyse down to an individual if we want to. This takes a lot of grunt processing power, which cloud computing and Moore’s Law [have helped]. Those three things have come together and the possibilities today of delivering services down to an individual are there should retailers want to go the distance.”

Competing through personalisation

“The Australian market is hyper-competitive now. The only way you’re going to drive growth is to take share from the competition, and the only way you’re going to take share is by providing a compelling reason for change. That requires having strong empathy with your customers. Given the capabilities available today, it’s professional laziness not to understand your customers. Going back to that coffee shop example…if they asked you what name was every day, when you’d been having in-depth conversations with them, you would get frustrated. We’ve seen the data from customers that say they’re looking for personalised experiences.”

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