Loyalty in retail: balancing AI and empathy for lasting customer connections
By Carrie Ramskill, chief operating officer at HGS UK
Over the years, the retail industry has faced an array of challenges. From shifting consumer behaviours and economic downturns to the rise of e-commerce, each wave has provided a different and unique test for the sector’s resilience. Now, a new pressure has emerged, in the form of the retail landscape shrinking. As an ever-growing number of retailers enter the market, competition intensifies and the room businesses have for manoeuvre narrows.
To stand out in such a crowded space, retailers must find ways to differentiate themselves, emphasising what makes them unique. Penetration pricing, the implementation of low prices to attract a large customer base, is an increasingly popular method to do this – the cheap prices attract customers to the door, dragging them away from potential competitors.
However, pricing strategies are a short-term fix for building competitiveness – once a rival retailer promotes a cheaper price, the original organisation is left not only with low prices, but also low demand. Consequently, retail businesses must devise strategies to build sustainable, long-term customer loyalty, rather than attempt to purchase short-term allegiance.
Subscribe to TRBAutomation is changing the face of customer loyalty
With poor customer service enough to cost a retailer its competitiveness, any strategy that can boost customer satisfaction needs careful consideration. Technology, such as artificial intelligence (AI), is revolutionising the customer experience (CX) space.
Generative AI, when utilised correctly, can play a crucial role in building customer loyalty – it helps retail firms to significantly reduce wait times, provide data analysis, and offer boutique-like personalised experiences for each individual customer. For example, chatbots can automate easy-to-resolve queries, increasing the quantity of customers a retailer interacts with. These benefits have not gone unnoticed – chatbot adoption among the top 25 UK retail businesses has risen by 71 per cent since 2022, with nearly half of these using the technology to support customer service
By utilising technology like AI-powered chatbots, customers receive personalised interactions and tailored recommendations designed specifically for their individual needs. This assures consumers that their needs are a priority at every interaction. What’s more, as this technology continues to evolve, these processes will adopt further autonomous features, transforming the time it takes to resolve a customer query.
The limitations of a limitless tool
Undoubtedly, an efficient and well-informed customer service will generate brand loyalty. However, without the right levels of empathy, retailers lose their face, become cold and robotic, and damage loyalty. As such, it is critical for firms to strike a balance between technology and empathy – without this, they will lose their competitiveness.
At a time in which many in the retail industry are intensely discussing AI implementation, it is imperative to not ignore the importance of the human touch. Customers want to speak with other people, interact with different personalities, and relate to character traits. When their needs are deescalated to a machine rather than a human agent, many consumers feel undervalued or dismissed. In fact, 78 per cent of UK consumers report frustration with automated customer service systems. This is enough to push a loyal customer towards a competitor.
By offering an enabled human agent that takes on feedback, converses in a welcoming way, builds bonds, and, most importantly, provides empathy, retailers can build an unshakable relationship with their customers. Recent research indicates as much, with customer loyalty rising by 79 per cent when a brand delivers an empathetic experience.
By building a strong relationship, retailers can ensure external influences won’t ravage their key differentiators. For instance, in light of the recent flurry of customer data breaches in the retail space, establishing customer loyalty is crucial in mitigating the damage caused. Attacks like these create uncertainty and distrust towards retail businesses from consumers. However, strong customer loyalty helps brands preserve trust and reduce customer churn in the event of a data breach. Therefore, any strategy to reshape this narrative needs unwavering attention.
Tech and humans – a Yin and Yang approach to loyalty
In an ideal world, every customer would have access to a human agent to solve every complex query. However, there are not enough hours in a day for an agent to do this. Simply put, technology must play a role in building loyalty too. Consequenly, retailers must find a way to balance the two disciplines.
However, many retail firms treat technology and employees as opposing sides in a tug of war, where aspects of each are sacrificed while the other dominates the CX. To maximise efficiency and empathy, retailers need to treat both sides as Yin and Yang, where together they can create a balanced customer relationship.
If utilised correctly, Generative AI can rapidly enhance the efficiency of an agent in handling customer queries, streamlining how they handle workloads. These tools screen for easy-to-solve queries and reduce the average handling time of each customer call by providing agents with real-time assistance and the correct solutions. For instance, sentiment analysis and agent assist can help ensure that the agent delivers an on-brand experience by suggesting responses that show understanding and deliver resolution. Simultaneously, such solutions also generate session summary notes for each customer interaction, reducing after-call work (ACW).
Through this collaboration, agents can resolve minor customer queries in a matter of minutes, allowing them to dedicate more of their time to a more serious issue – enhancing the CX for all.
Loyalty is the strongest differentiator
Automating aspects of the CX undoubtedly presents an array of benefits, including improved efficiency and lower costs. However, this is not a sustainable way to achieve long-term competitiveness – technology alone can only go so far in enhancing the CX. For example, it cannot create an empathetic customer engagement, with human interaction still a key element in delivering a connected, empathetic experience.
Retailers that deliver an empathetic and efficient experience – built on a balanced investment in both human labour and technology – will find their customers are significantly more loyal than those of their competitors.
Indeed, costs will always play a key role in influencing customer service strategies. However, empathetic customer support agents will always prove an effective means of securing customer loyalty.
