Retailers must brace themselves for what could be a tough economic year due to factors such as rising inflation and a looming global recession. The 2023 NRF: Retail’s Big Show highlighted a key theme. Today’s retailers are searching for new ways to navigate ever-changing consumer spending habits. They’re finding new strategies by embracing machine learning marketing technology such as Generative AI to quickly create e-commerce personalization that meets customers where they are—anytime, anywhere and drives an ongoing conversation that builds customer loyalty.
Generative AI is a class of natural language software that can produce texts or images based on simple prompts. In the same way that Gmail will suggest the next likely word in your email copy, Generative AI tools predict the best language based on a small sample of text. In e-commerce, it is enabling enterprise retailers to quickly deliver content across channels. The result is e-commerce personalization. But, to really reach customers, retailers need more than speed and volume. They need content that motivates.
The Persado Motivation AI Platform—a Generative AI platform trained on enterprise data and designed specifically to optimize marketing impact—analyzes large amounts of customer data (i.e. past posts, emails, SMS messages, etc.) to generate optimal new content based on the performance of past content. This results in stronger CTAs, more personalized brand messages, and overall lift across all digital channels.
The Role of Macroeconomic Factors on Consumer Spending
Macroeconomic factors, such as inflation, have historically placed a tight grip on consumer spending. Despite economic uncertainty, however, the long-term view looks promising, especially in e-commerce. While no one knows for sure what bumps retailers will encounter on the road ahead, they may need to prepare for more significant changes in purchasing patterns and messaging rather than a full on crash or catastrophe.
Kantar’s latest data predicts that retail sales will grow at 4.5% annually in the next five years. Kantar isn’t alone in foreseeing retail growth. Forrester also foresees that consumer spending will increase. However, as consumers become more fiscally cautious and selective about their spending, they will seek quality over quantity and demand maximum value from their purchases. Therefore, retailers need to find ways to stay ahead of competition and prepare for the next wave of more discerning demand.
While consumers may actually spend more in the years to come, the insights from Kantar and Forrester suggest that they will also be buying less. Retailers therefore face an even more competitive landscape on the horizon. As spending habits change and consumers become more discriminatory about their discretionary spending, shoppers will take much more time to make purchases.
In order to drive conversions and reduce cart abandonment, retailers must further invest in the shopping experience and continue to blur the lines between digital channels and between shopping online vs purchasing in store. British retailer Marks & Spencer leverages the Persado Motivation AI Platform to deepen connections with customers across digital channels. Using AI-generated content M&S has seen a 20% conversion rate lift and scaled personalization across all channels.
Why Retailers Should Respond with E-commerce Personalization
One major shift in consumer behavior is the increasing desire for personalized customer experiences. According to Mailchimp, emails with personalized subject lines are 50% more likely to be opened.
Retailers can achieve personalization at scale using first-party data to gain a better understanding of each customer and craft more targeted marketing campaigns. However, data alone does not tell the full story. E-commerce retailers who humanize data through personalized messaging, test AI-generated content across various segments, optimize dynamic product recommendations, and create seamless omnichannel shopping experiences are more likely to see increased conversion rates. Moving forward, retailers must be customer-focused and data-driven in order to retain customers.
Retailers Must Dial up Customer Loyalty
Retailers who focus on creating a personalized e-commerce experience are more likely to motivate consumers as they shop online and show consumers the lasting value and satisfaction they are looking to get in this new economic climate. This is especially important as consumers are more likely to shop for lower prices or a better value during a recession. They are also more likely to take longer to think about purchases, so it’s even more important to find ways to motivate behaviors (i.e. turn abandoned carts into conversions, drive email opens, etc.).
Craft store powerhouse Michaels transformed customer loyalty and engagement by placing personalization at the forefront of its SMS, Facebook, and email campaigns. Discover how Michaels executed a truly personalized customer loyalty and engagement strategy in this webinar.
Online Shoppers Aren’t Going Anywhere
While we are witnessing major changes in consumer behavior due to seismic macroeconomic factors, online demand isn’t going anywhere. Consumers will continue to shop online and demand more out of their shopping experience. So it’s important for retailers to embrace e-commerce personalization to drive customer loyalty while creating meaningful customer experiences.
Persado Motivation AI creates original words and phrases using machine learning algorithms to personalize the online shopping journey and motivate shoppers to purchase throughout every stage of the customer journey.
Learn how you can accelerate conversions, reduce cart abandonment, increase personalization, and build lasting connections with customers using our AI language generation platform.