How Top Retailers are Using AI to Engage their Valuable Customers
Retailers are constantly faced with the challenge of capturing quality traffic across channels while eliminating noise and increasing profits. To address this challenge, many industry leaders invest in AI-powered campaigns that capture bursts of interest from top spenders as they move across touchpoints. How Top Retailers are Using AI to Engage their Valuable Customers
Examples
Two examples of companies successfully implementing AI during the holiday season are Scotch & Soda and Deckers Brands. According to Leon Wharton Hallen, media and advertising director at Scotch & Soda, AI helps identify and reach shoppers willing to purchase rather than browse. Meanwhile, Michelle Hernandez, director of omnichannel digital marketing at Deckers Brands, says they doubled down on AI-driven campaigns to attract high spenders, regardless of where they are.
Research from McKinsey confirms that the bottom-line value gained from AI remains strong and broadly consistent. However, unlocking the full potential of AI requires companies to reimagine their business models and disrupt how work gets done. This challenges retail marketers who are asked to experiment with new ways to drive business value while maintaining stable profitability.
To help break down this challenge into manageable steps, 12 industry leaders were asked to share how they gradually tested AI-powered campaigns to prepare for a successful holiday season. Four distinct phases and critical tips and strategies for success were identified.
Explore and commit to a starting point.
French delivery service Chronopost decided to carefully test AI-driven ads before the holiday season when its B2B customers ship higher volumes of packages, resulting in increased sales revenue and improved profitability. Online retailer Fragrance.com initially hesitated to let AI shape its luxury brands’ appearance across channels because they were already advertising through successful, profitable Standard Shopping campaigns. However, economic headwinds and increased competition made the marketing team realize that AI-powered ads could give them an edge, resulting in increased revenue. North American store chain Michael’s grounded its hypotheses in previous learnings and extracted insights from tried-and-true solutions to attract precious customers in real-time.
Experiment and foster a test-and-learn culture
Scotch & Soda believes that experimenting with innovation is how it can succeed and differentiate in a competitive environment. By testing new approaches in a controlled environment, the company can rapidly learn from failures and double down on what works while focusing on the metrics that matter. Singapore-based beauty brand Coco & Eve started small and optimized their campaigns to ease concerns about diluting profitability, resulting in increased revenue and lower cost per conversion. Bol.com, a popular online marketplace in the Netherlands and Belgium, used Google’s Experiments feature to inform their decision to shift their Standard Shopping campaigns to an AI-powered solution.
Refine and scale up.
North American outdoor retailer REI refined its cross-channel campaigns by analyzing data and insights from the previous holiday season. By understanding what worked and what didn’t, the company was able to refine its targeting and message to attract high spenders-across channels. French beauty retailer Sephora scaled up its AI-powered campaigns by introducing more personalized product recommendations based on customer preferences and past purchases.
Optimize and measure
Australian clothing retailer City Beach used Google’s Smart Bidding to optimize its campaigns and measure success. By setting revenue as the core success metric and using Smart Bidding to adjust bids based on expected conversion value automatically, the company was able to increase revenue while maintaining profitability.
In conclusion, retailers looking to increase profits and capture quality traffic should consider investing in AI-powered campaigns. By committing to a starting point, experimenting, refining, and optimizing their campaigns, retailers can prepare for a successful holiday season and stay competitive in a rapidly changing retail landscape.
