More money than ever is being poured into artificial intelligence and customer experience—and in most cases, it appears to be paying off.
AI is the cornerstone of a new wave of personalization and customer experience. Getting personalized service and recommendations is incredibly important to today’s customers, and in many cases that starts with big data and AI. A recent survey by PointSource found that 49% of customers are willing to shop more often when AI is present. Thirty-four percent of customers will spend more money, and 38% will share their experiences with friends and family. Essentially, AI makes people shop more, spend more and share more.
In order to use these powerful AI technologies, companies need to spend money. Many companies already are, as investments in AI have seen huge jumps in recent years. Forrester Research estimates that cognitive computing technologies, or platforms based on AI, will be worth $1.2 trillion as a whole by 2020. In that same time, investments in AI will triple.
Over the next year, retailers are expected to increase their AI and machine learning budgets by 7%. In an industry that has the largest growth potential for AI applications, most of the money will go towards building back-end systems and streamlining fulfillment and warehousing.
AI covers a number of areas that can help increase customer experience, but a few areas have been the main focus for most industries.
What used to be a scary proposition for customers is now widely accepted. The vast majority (83%) of consumers now say they are fine shopping with a company that uses chatbots. Instead of spending money on staffing a human contact center, chatbots give companies freedom to offer personalized service at any time. Chatbots lead to new growth and a better customer experience. For example, Sephora’s chatbot led to an 11% increase in makeover appointments, and Asos increased its orders by 300% when it started using a messenger chatbot.
The majority of companies say they use chatbots or plan to use them in the near future. The global chatbot market is expected to reach $1.25 billion by 2025, with an annual growth rate of nearly 25%. But investing in chatbot development is actually cost-saving in the long run and is expected to cut global business costs by $8 billion in 2022.
Internet of Things and Big Data
Connected devices are everywhere and provide brands a unique opportunity to stay in touch with customers. New research from IDC predicts that the global IOT market will be $1.7 trillion in 2020, up from $655 billion in 2014. The top industries for IOT spending are predicted to be manufacturing, transportation and logistics and utilities, with expected spending of $40 billion per industry. Increasingly we will see consumer products made “smart” and talking to other products to create an immersive technology experience for the customer.
We can’t talk about IOT without talking about big data. IDC also reports that worldwide revenues for big data and business analytics will grow from $130 billion in 2016 to more than $203 billion in 2020. With popularity rising with smartwatches and smart home gear, we are only seeing the beginning of this explosive market come to life.
One example of increased data spending comes from United Concordia Dental, which has budgeted $45 million over the next three years to build a new database management system to improve customer scheduling and billing. Streamlining the process will not only help the company operate more efficiently but will ease two of the largest customer pain points.
Augmented and Virtual Reality
Augmented reality provides an even more immersive experience for customers and offers a new way to improve customer experience. Statista predicts that the augmented and virtual reality market will be worth $215 billion dollars by 2021.
Growth is coming quickly—AR and VR spending will total an estimated $17.8 billion in 2018, which is a staggering 95% increase from 2017. The biggest spender will be the consumer industry, at $6.8 billion. Augmented reality is perhaps the most untapped AI technology and the one that has the greatest potential. Many experts predict that it could see the biggest spending increase in future years.
AI is a pivotal part of the modern customer experience, and its impact will continue to grow. From these numbers it seems many companies agree that investing heavily in AI can lead to strong customer growth in the future.
Blake Morgan is a customer experience futurist, author of More Is More, and keynote speaker. Sign up for her weekly newsletter here. Go farther and create knock your socks-off customer experiences in your organization by enrolling in her new Customer Experience Schoo