Driving customer loyalty with analytics and AI

Microsoft’s Naveen Tadepalli outlines how these technologies can help retailers to deliver unique personalised omnichannel experiences that will convert customers into brand advocates

Rebecca Gibson
Rebecca Gibson
By Rebecca Gibson on 14 July 2021
Driving customer loyalty with analytics and AI

Winning and retaining customers has always been challenging for retailers. However, it has become increasingly difficult over the past few years with the explosion of online retail and multiple new brands entering the market, giving customers more choice than ever before.

According to multiple research studies and industry experts, the secret to success is for retailers to deliver fast, convenient and enjoyable experiences that will delight customers and drive loyalty. Microsoft’s 2020 Global State of Customer Service report, for example, found that 90 per cent of consumers consider customer service as a very important factor when choosing a brand, and more than 88 per cent view it as important when making purchasing decisions. And, with 55 per cent of consumers saying they have higher expectations for customer service than one year ago and nearly two-thirds admitting they would sever a relationship with a business following poor service, now is the time for retailers to invest in developing unique experiences that set them apart from the competition.

“Recently, retailers have been trying to create more engaging shopping experiences, but it’s become even more critical for them to do so in the wake of the Covid-19 pandemic as it has significantly changed the way people want to shop for products and interact with brands,” says Naveen Tadepalli, director of data and artificial intelligence (AI) strategy, retail and consumer goods at Microsoft. “All the Covid-related restrictions forced retailers to close their physical stores or at least limit their capacity, which meant they had to quickly develop e-commerce capabilities and introduce new services such as kerbside pick-up to continue serving customers.

“Meanwhile, retailers that previously had e-commerce platforms have seen demand surge and they’ve been experimenting with new techniques to improve the quality of their digital content and marketing collateral to differentiate it from the competition. For instance, some are trying live streams or using influencers to promote and endorse their products via social media.”

According to Tadepalli, the most effective way to attract and retain customers in the post-pandemic world will be to deliver personalised experiences that allow individuals to choose how, when and where they shop.

“Some people will only shop in physical stores, others prefer to purchase products online, and most like to switch between channels throughout the shopping journey depending on what is most convenient for them at the time,” he explains. “The speed, ease and convenience of online shopping has led to the significant growth of e-commerce over the past few years and its ever-increasing popularity during the pandemic has confirmed that it’s certainly here to stay, but physical stores still have an essential role in the shopping journey for many customers. Hence, retailers must offer both physical and virtual shopping experiences – and deliver a seamless and consistent experience across each channel – to ensure they can cater to the needs of all their customers.”

To develop the types of services and experiences that will delight consumers and foster loyalty, retailers must first gain a full overview of every individual customer. This can be achieved by implementing a customer data platform (CDP) with built-in analytics, AI and machine learning capabilities, such as Microsoft Dynamics 365 Customer Insights.

“Retailers already collect vast amounts of data across multiple customer touchpoints, but it is often trapped in siloed systems, so it’s largely underutilised,” explains Tadepalli. “Dynamics 365 Customer Insights enables them to aggregate data from both their internal systems and other external sources in one unified platform, then use AI and machine learning to derive actionable insights and build accurate 360-degree profiles for every customer.

“Once they have a full understanding of everything from their customers’ product preferences to their shopping behaviour, retailers can easily personalise advertising campaigns, communications, product recommendations and more for every individual across every channel in real time. Sales associates can also identify new upsell and cross-sell opportunities to increase customer lifetime value, retention and loyalty.”

US-based gift retailer Edible Arrangements, for example, has rolled out a CDP built on Dynamics 365 Customer Insights, Azure Synapse Analytics and Power BI to help broaden its brand appeal across multiple demographics, double purchase frequency and expand its product range to include everyday fresh produce, as well as gifts. The company, which delivers thousands of gifts every month via its online and physical stores, now has a centralised view of customer, inventory, supply chain and merchandising data. “Edible Arrangements has simplified decision-making and can predict customer purchase behaviour and automatically tailor communications and promotions to individuals,” says Tadepalli. “It plans to extend the capabilities of its CDP to other areas of the business and also use it to develop more personalised browsing experiences on its e-commerce site.”

Microsoft collaborates with an extensive network of partners to help retailers build on its technology to create end-to-end solutions that enable them to provide omnichannel personalisation at scale. For instance, it worked with PwC to help Dubai-based conglomerate Al-Futtaim Group build a CDP using Microsoft Azure Databricks, Azure Data Factory and Azure Synapse Analytics. The group relies on the AI-based CDP to capture data from more than 40 data sources and customer touchpoints across the 120 brands it serves in the retail sector and other industries in the Middle East and Africa.

“Al-Futtaim Group is the ‘poster child’ for a successful CDP implementation because the platform has transformed the way it understands and interacts with customers on a massive scale,” says Tadepalli. “The CDP links together all the group’s physical and digital channels, empowering it to harness previously inaccessible data and real-time insights to better predict individual or collective purchase behaviours and identify new sales opportunities.

“It also enables the group to deliver consistent personalised experiences for all customers, ensuring they are presented with the right products, recommendations, offers and assistance via the right channel at the right time. This will accelerate customer acquisition, prevent churn, boost loyalty and drive profits.”

Once they have developed a strong customer base, retailers must also introduce ways to reward individuals for their loyalty.

“Customers want to feel valued, and research indicates that they’re much more likely to shop with retailers that offer exclusive discounts, cash back, the chance to attend VIP events, and other special perks and incentives as a way of thanking them for their loyalty” says Tadepalli. “Studies also show that loyalty programmes not only drive customer retention and repeat purchases, but they also encourage people to purchase more expensive items and recommend the brand to friends and family. 

“By offering loyalty programmes that span all their channels, combined with unique personalised experiences that are tailored to consumers’ individual needs, retailers can easily turn customers into brand advocates and retain their business for many years to come.” 

Partner perspectives
We asked several Microsoft partners how they are helping retailers to create the types of physical and virtual shopping experiences that will drive customer loyalty. Below are extracts from their responses, which you can read in full from page 147 of the digital edition of the Summer 2021 issue of The Record

Michael Klein, director of industry strategy and marketing at Adobe, said: “The Adobe Experience Platform, which is built on the Microsoft Azure cloud, enables retailers to pull together data from all their Microsoft Dynamics 365 and other systems into a central customer data platform so they can create a unified profile of every customer.” 

Mike Menkes, senior vice president at Analytic Partners, said: “Holistic, multidimensional measurement and technology allows for a winning retail strategy that is forward-looking and adaptive in the face of disruption.”

Barry Padgett, chief operating officer of Amperity, said: “Amperity and Microsoft are dedicated to bringing customer data solutions to enterprise consumer brands that provide unmatched personalisation, flexibility and speed.”

Navjit Bhasin, founder and CEO of Newmine, said: “Newmine’s AI-powered Chief Returns Officer is built on Microsoft Azure and is the first solution to address the returns problem at the source.”

David Clements, global head of retail sector at dunnhumby, said: “dunnhumby’s partnership with Microsoft helps retailers to bring data to life and make insights accessible, allowing quicker decisions to enhance the customer experience and create commercial value.”

Assaf Haski, head of partnership at ciValue, said: “ciValue leverages big data, AI and machine learning technologies to extend the customer experience across all channels, helping retailers to get omnichannel insights, hyper-personalised offers at scale, and better collaboration with their brands.” 

This article was originally published in the Summer 2021 issue of The Record. To get future issues delivered directly to your inbox, sign up for a free subscription.

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