Like other industries, the retail sector is not immune to the pressures of rising cost-of-living, including soaring inflation and sharp interest rate increases. These economic factors have begun to affect consumers and retailers alike. With predictions of a slowdown in spending, consumers are seeking cheaper alternatives and cutting back on discretionary purchases. Consequently, retailers are compelled to explore innovative strategies to attract customers and offset the decline in sales.

In the dynamic realm of retail, adaptability is vital for businesses to thrive. As technology continues to reshape industries, a powerful combination is emerging to redefine the Australian retail landscape: the integration of generative Artificial Intelligence (AI) into the tools retailers use.

At Zendesk, we firmly believe that AI will play a central role in shaping every customer interaction within the next five years. However, it is important to recognise that we are only at the beginning of the AI journey, with much more to come.

While it’s exciting to envision the future, we must also acknowledge the existing limitations of current language models, which may inadvertently hinder the customer experience. To ensure optimal results, companies need to grasp areas where generative AI excels and where it still falls short, allowing them to make informed decisions and provide the best possible customer service.

With that being said, how can retailers get ahead of the new challenges that face their CX teams during this cost of living challenge in Australia? It comes down to working smarter—and that means AI.

Use data and AI to re-pivot strategies

Data forms the foundation of AI’s power and capabilities. It begins with the vast amount of information readily available onboard: customer profiles, their interactions with your company, frequent inquiries, and their preferred engagement methods. By analysing this data, you can gain valuable insights into your customers, allowing you to strategically integrate AI and automation throughout their journey.

Moreover, this data enables you to identify patterns that inform your staffing decisions, both presently and during peak periods. Harnessing the potential of AI begins with leveraging the wealth of data at your disposal, empowering you to understand and serve your customers better.

According to the Zendesk Customer Experience Trends Report 2023, 75% of leaders and managers in Australia agree that their overall customer experience budget would increase during the economic downturn. Now more than ever, providing a great customer experience is crucial for online retailers in an environment where shopping elsewhere is as easy as clicking into a new tab.

Generative AI offers a powerful tool for fostering significant customer connections, which in turn contributes to customer retention, lifetime value, and brand loyalty.

Customer service should feel high-touch for all customers, regardless of their value. While generative AI and LLMs can help, it’s crucial to deploy them strategically and with proper considerations for security, privacy, and governance. At Zendesk, we’re actively exploring these aspects to ensure a seamless customer experience.

The generative power

The buzz around generative AI has unlocked the potential of conversational AI for retailers worldwide. It can be used to improve chatbot engagement, generate interesting product descriptions, provide training content for employees, and detect potential supply chain issues. Its ability to analyse customer intent and sentiment instantaneously gives agents an additional layer of context. For example, a GenAI-powered CX solution could detect an extremely frustrated customer at risk of abandoning cart and route it to an experienced agent with a high priority tag.

When consumers have a problem, they want to be able to find the answers themselves. Eighty-two percent of consumers who have interacted with generative AI believe it will be a central tool for discovering and exploring information. Using generative AI solutions like ChatGPT can provide a conversational reply with accurate information a customer needs instead of surfacing a link to an article where the customer still has to search for the information they seek.

The technology offers a multitude of capabilities, including answering questions, generating perfect replies, and facilitating text translation, among other functions. Nevertheless, generative AI does have its limitations. However, when seamlessly integrated with CX solutions that leverage extensive CX-specific data sets, it has the power to revolutionise the retail industry.

Generative AI certainly isn’t the end for human agents. Instead, consumers see it as a powerful tool for improving their interactions. Together EQ and IQ join forces to ensure that customers reach the right person, issues are escalated when needed, and agents can provide better service with the right information (quickly) in hand.

It’s here – the elimination of manual workloads – where companies will realistically see the biggest gains from generative AI in the short term. Imagine an agent receiving an accurate, customised summary of a customer’s previous issues instead of having to dig up that information on multiple pages or screens. This alone would enable them to solve customer issues much faster and improve this overall experience.

The future

While generative AI currently captures the spotlight and garners attention, it is crucial to prepare for the future. Although a chatbot that resembles a human presents exciting possibilities, the intelligence of AI is limited to its specific training. If AI were a new employee, you wouldn’t immediately expose them to customers on their first day, even if they possess excellent communication skills. They would lack familiarity with your customer support operations.

Now envision AI designed and trained specifically for customer service interactions, fully optimised to excel in that domain. Suddenly, this new employee comprehends the typical challenges faced by customers and understands when to redirect them or escalate a ticket. This is precisely where Zendesk’s current focus lies—leveraging the potential of these advanced technologies in a manner that aligns with the CX use case.

A prudent approach to AI involves identifying immediate opportunities for improvement, such as automating manual tasks and enabling agents to focus on higher-value responsibilities. Simultaneously, it involves exploring, testing, and refining additional intelligent layers to continuously enhance customer and agent experiences. These elements serve as the foundational components of an AI strategy that carefully acknowledges the present while keeping an eye on future advancements.

Cristina Fonseca is head of AI at Zendesk.