In today’s retail world (and in every previous retail world, really), customer loyalty is king. Loyal shoppers means less spending on expensive marketing, higher average order values, and a strong brand that can weather the storm of a tumultuous economy. In fact, Bain & Company reported that a 5% increase in customer retention (a proxy for loyalty) produces more than a 25% increase in profit.
And while there are many ways to strengthen the loyalty of your brand’s audience, perhaps the largest needle-mover comes down to just one thing: superior customer service. A plethora of studies have underlined the direct nexus between customer satisfaction and a brand's triumph. For instance, a report from American Express found that 7 in 10 Americans are willing to spend more with companies they perceive to provide excellent customer service. Moreover, a survey conducted by PwC revealed that 73% of all individuals regard customer experience as a pivotal factor influencing their purchasing decisions.
73% of shoppers regard customer experience as a pivotal factor in influencing their purchasing decisions.
As we've mentioned before, offering great service to customers has always been the key to retention. Yet today, there are a few factors as to why it’s harder than ever to provide that elevated level of service.
1. Less staff = less service
First of all, the retail sector has seen significant attrition in customer service representatives. While turnover has always been high for customer service staff, some reports show that they are at record highs in the last year with SQM reporting a turnover rate of 38%. Much of this is due to more workers opting to find work from home jobs that have become more coveted since the pandemic.
2. Customers expect more
Second, customer expectations are increasing. This may be due to younger adults having come of age with “instant” information, and research out of Experience Dynamic (via Forbes) has shown that “Gen Z is notably less satisfied with current customer experiences, with just 50% satisfaction compared to 71-72% for previous generations.” And since Gen Z is quickly becoming the driving force of the economy, that’s a big problem.
3. Cusumers are getting cranky (seriously)
And third, customers are… just more ornery. The 2023 National Customer Rage Survey (yes, that’s a real thing) showed an uptick of unhappy customers since 2020, as well as stating that 17% of those surveyed admitted to behaving “uncivilly” toward a company “due to a perceived difference of values or beliefs, such as religion, politics, and gender issues or vaccination and mask mandates.” - (via The Hill) We’re living through a polarizing time, and it’s causing real issues between customers and brands.
So we know why it’s difficult to provide customer service that fosters loyalty today in retail. But don’t we also know the answer? Why, AI of course! Artificial intelligence is poised to supercharge customer service.
Or will it?
Why AI Won't Ever Fully Replace Retail Customer Service
The hypothesis that AI, with its allure of swift, personalized, and ceaseless service, could come to the rescue has been fluttering around for a while now. A pantheon of AI tools have been clamoring to be that quick fix that can drastically ameliorate retail customer service for your brand. And yes, the promise is tantalizing: an eternally vigilant virtual representative adept at juggling all customer queries, sans any hints of human fatigue or impatience.
But in practice, customers are reportedly finding interactions with AI less gratifying, often exacerbating their issues rather than fixing them. In some surveys, the majority of customers say that they find today’s customer service chatbots, well, annoying. And the linked study also found that 45% of users abandon the chatbot service after encountering just one error.
The reason that chatbots are not the ultimate solution for customer service is that they are just not human enough. They are missing the human touch, a nuanced grasp of emotions, and the capability to empathize—qualities that are innately human and also the qualities that make for the best customer service representatives. It’s also why a human sales rep on your show floor will make more sales than the always-on kiosk that can “do the same thing.” (It can’t.)
ChatGPT and akin AI tools, despite their rapid evolution, still falter in navigating the labyrinth of human emotions and behaviors. Consider a scenario where a customer, already upset due to a defective product, reaches out for assistance. The soothing and understanding demeanor of a human representative can serve as a balm; and just knowing that they are communicating with another human on the other end of the line can also increase empathy in the customer as well. In stark contrast, even today’s most sophisticated AI might come across as sterile and unempathetic, potentially fueling the customer's frustration further.
AI + Humans = A Dream Duo for Clienteling
So AI alone isn’t the solution. Neither is eschewing AI altogether. Rather, the consensus among industry mavens is gradually tilting towards a hybrid model, where AI operates as an auxiliary to human representatives rather than as their replacement. This marriage of machine and human will be what drives the next generation of retail clienteling.
AI tools can field routine inquiries, thereby liberating human agents to tackle more nuanced, sensitive issues. This approach serves a dual objective; it shrinks the workload on your human staff, enabling them to concentrate on delivering a superior quality of service, while ensuring that customers experience a satisfactory, empathetic interaction when grappling with serious concerns. As long as the hand-off from chatbot to human rep is handled smoothly, it’s a win-win for both sides.
Furthermore, the integration of AI can equip customer service representatives with a treasure trove of data and insights. This information can be instrumental in deciphering customer behavior and predilections, thus tailoring the service to resonate with and exceed customer expectations.
This is the idea behind Endear’s own SalesChat, an AI-powered live chat that works hand-in-hand with sales reps to deliver an elevated shopping experience to online shoppers in real time. For example, if a customer spends longer than a minute on a product page, SalesChat can popup to help, and automatically initiate a text conversation with a live rep to assist the shopper.
↑ Click to watch and learn more about SalesChat
Retail brands will continue to see AI technology forging ahead, but they will also see that the human element remains indispensable. The true focal point that will drive both loyalty and sales should be on seamlessly melding the efficiency and capabilities of AI with the warmth, comprehension, and emotional intelligence of human beings. The best of both worlds, if you will.
The bedrock of stellar clienteling lies in a collaborative ethos, where AI and humans synergize, each amplifying the strengths of the other, to deliver a customer experience that transcends mere satisfaction into the realm of delight. This hybrid model doesn’t merely herald better customer service; it signifies a new epoch of retail customer engagement that could redefine the gold standard for the industry.
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