Businesses are using artificial intelligence (AI) to power more personalised, intelligent interactions with customers, but face challenges around transparency and lack of customer data, according to new research from customer engagement platform, Twilio.
The report uncovered that Australia has the widest customer experience gap – 86% of businesses say they provide ‘good’ or ‘excellent’ customer engagement, yet only 54% of consumers agree.
Australia has the widest brand perception gap of all APAC countries, showing a 45% difference between a brand’s perceived understanding of customers, and what consumers actually think (compared to 27% in Singapore and 15% in Malaysia). Globally, only five countries – France, UK, Spain, Brazil and Italy – show larger perception gaps.
The main reason brands are struggling to understand customer perceptions is due to poorly connected data, with half (51%) of Australian brands saying that connecting customer data across channels, sources and platforms is their biggest challenge, and close to half (46%) indicating they struggle with turning data into customer insights.
Globally the report found AI is helping businesses close their perception gaps and improve their customer engagement. For example, seven in 10 companies already leverage AI to personalise content and marketing. As a result, these forward-thinking brands are realising a number of benefits, including higher customer satisfaction scores (45% of companies), better data-driven decision-making (41%) and improved market segmentation and targeting (41%).
In Australia, however, 85% of brands believe AI will improve customer engagement, but only 22% of consumers agree. Again, indicators point to poor activation of data as a reason for the disconnect, and this struggle is felt globally. While more businesses are embracing AI, only 16% of brands globally strongly agree that they have the data they need to understand their customers, and just 19% of businesses strongly agree they have a comprehensive profile of their customers.
Customers today expect personalised experiences, but Australian consumers are notoriously sceptical, according to Twilio Segment area vice president of sales – APAC, Liz Adeniji.
“Here we are seeing a lot of brands pouring resources into creating these experiences and deploying AI initiatives, but they are still not properly collecting and unifying the data they need to execute them properly, and consumers can tell,” she said.
“Brands need to invest in more foundational work around their use of data and consider other measures like improved data security to instil greater trust and ensure their AI and personalisation attempts aren’t missing the mark.”
The report found that six in 10 consumers say protecting their data is the top way for brands to earn their trust. Almost half (49%) say they would trust a brand more if it disclosed how customer data is used in AI-powered interactions.
Four in 10 businesses surveyed report that finding a balance between security and customer experience is one of their most pressing challenges this year. One area of focus is reducing friction during the account signup process, while keeping customer data safe. In 2024, 40% of brands say they’re prioritising simplifying the signup and login process to improve customer engagement.
“It’s imperative for brands to be clear about how they use AI, ensuring that they balance how they deploy it with equally robust measures to protect customer privacy. Transparency is not optional — it’s a critical component of building and maintaining customer trust and loyalty,” Adeniji added.
When AI-powered personalisation is deployed effectively, global consumers reward them by spending an average of 54% more with them compared to brands that do not. Additionally, 55% of respondents globally are willing to spend more money for a customised experience, while 48% say they’ve made a repeat purchase from a company based on the level of personalisation.
Close to two-thirds (64%) of consumers surveyed would quit a brand if their experiences aren’t personalised, while almost one-third (31%) say it’s pushed them to purchase from a different brand.