Businesses worldwide are embracing the potential for Artificial Intelligence (AI) to provide personalised customer experiences, but customers remain cynical, according to a recent report from customer engagement platform, Twilio.

Almost two-thirds (62%) of business leaders cite customer retention as a top benefit of personalisation, while nearly 60% say personalisation is an effective strategy for acquiring new customers. Consumers also increasingly confirm the value of personalisation, with more than half (56%) saying they will become repeat buyers after a personalised experience, a 7% lift from last year’s report.

To power more sophisticated real-time customer experiences, the vast majority of businesses are turning to AI to harness high volumes of real-time data and power their personalisation efforts. According to the report, 92% of businesses are now using AI-driven personalisation to drive business growth.

However, a disconnect exists between this enthusiasm and the comfort level of consumers with only 41% of consumers comfortable with companies using AI to personalise their experiences, and only half (51%) of consumers trusting brands to keep their personal data secure and use it responsibly.  

Today’s consumers are savvier than ever, and their demand for real-time, personalised experiences is growing by the day, with customer loyalty hinging on effective personalisation, according to Twilio Segment vice president of marketing, Katrina Wong.

“While our report shows that businesses are racing to implement AI-powered personalisation, and reaping benefits like boosting customer lifetime value as a result, it’s crucial they don’t overlook the importance of trust and transparency,” she said.

“Informed by real-time, first-party data that’s utilised thoughtfully and responsibly, AI has the potential to augment and enhance the toolkit of every marketer and CX professional in the industry, and to usher in a category of next generation, fine-tuned, customer experiences that drive sustainable growth.”

Half of companies report that getting accurate data for personalisation is a struggle, an increase of 10 percentage points compared to 2022, and three in 10 (31%) businesses cite poor quality data as a major obstacle in leveraging AI. Meanwhile, accuracy (47%), speed of real-time data (44%), and customer retention or repeat purchases (44%) were the top metrics of successful AI-driven personalisation. 

Almost all companies surveyed (97%) are taking steps to address consumer privacy concerns, demonstrating a commitment to responsible data use. The most popular step is investing in better technology, such as Customer Data Platforms (CDP), to manage customer data. 

One significant opportunity for AI-driven personalisation is in engaging Gen Z consumers, as they are both more influenced by personalisation and willing to embrace AI. In fact, one-third (34%) of Gen Z consumers already expect AI to be used in their experiences with brands.