Title Image Title Image
Home  >  PERSPECTIVES  >  How AI Is Underscoring the Importance of Customer Retention



How AI Is Underscoring the Importance of Customer Retention

In today’s competitive DTC and B2B landscape, personalized customer retention has become a top priority for companies across industries. With 44% of businesses struggling to measure customer retention effectively, organizations are searching for innovative solutions to address this challenge. By harnessing AI-powered chatbots, businesses can personalize customer experiences based on their brand and sector, ultimately achieving tangible results in customer retention.

According to a recent HubSpot study, an alarming 44% of businesses struggle to effectively measure their customer retention rate. This statistic sheds light on a critical challenge faced by organizations across various industries. Interestingly, when we examine specific sectors, we find that the insurance industry boasts an impressive 84% retention rate, followed by banking at 75%, retail at 63% and fintech at 37%.

“An alarming 44% of businesses struggle to effectively measure their customer retention rate.”

To address this issue, many companies are adopting a multifaceted approach to customer retention. For example, they are leveraging mobile apps, with 44% of businesses incorporating this technology into their strategy. In addition, email marketing play a significant role, with 52% of organizations utilizing these channels to engage and retain customers effectively.

While price undoubtedly influences purchasing decisions, retail and e-commerce brands have discovered the power of loyalty rewards programs in cultivating customer loyalty. By participating in such programs, on average 32% of customers tend to shop more frequently and are willing to spend more to accumulate points and reap the associated benefits.

“By participating in such programs, on average 32% of customers tend to shop more frequently and are willing to spend more to accumulate points and reap the associated benefits.”

This data underscores the importance of understanding and personalizing the customer experience, as well as where chatbots can be deployed to enhance customer retention strategies.

Harnessing the Personalization Power of Chatbots

When it comes to crafting a customer retention program, it’s essential to begin by asking a series of crucial questions—e.g., Where can we elevate the customer experience? How can it be personalized in order to foster a relationship and trust with customers?—all while gathering feedback, leveraging first-party data insights and having the capability to take real-time action.

When evaluating the customer experience, start by examining how your website can be optimized to deliver a more seamless interaction. This may involve streamlining processes, simplifying user interactions, or providing proactive and personalized support. One powerful tool that can aid in this endeavor is chatbots, which offer numerous benefits to both customers and businesses. As highlighted in recent studies, the adoption of AI chatbots is rapidly increasing, and for good reason:

1) The chatbot market is forecast to reach $1.25 billion by 2025, a significant increase from the market size in 2016, which stood at $190.8 million;

2) 26% of B2B marketers using chatbots in their marketing programs gained between 10% and 20% more lead-generation volumes;

3) Chatbot transactions in e-commerce are expected to reach $112B by 2023;

4) Chatbots added to websites, social media and messenger impact e-commerce revenue by 7%-25%; and

5) An additional 43% of American marketers stated that chatbots helped educate prospects.

Using AI Chatbots to Learn, Iterate and Optimize

As a customer service tool, AI tools are available 24/7 and can save time by automating basic tasks and/or by quickly addressing basic questions and requests that would normally have to be addressed by a call center representative. In fact, “Those who use chatbots to respond to customer service requests save an average of two hours and 20 minutes per day.”

“Those who use chatbots to respond to customer service requests save an average of two hours and 20 minutes per day.”

Besides providing customer support, chatbots are also being used to welcome back returning customers and provide them with recommendations based on their viewing or shopping history. Furthermore, these bots refer customers to online documentation, instructional videos or relevant blog posts that can help address their queries.

Personalization Is Key to Building Strong Customer Relationships.

How can you tailor your offerings, communications and experiences to cater to individual customer preferences and needs? By demonstrating a deep understanding of your customers and catering to their unique requirements, you can establish a stronger emotional connection and foster loyalty.

Trust Is the Bedrock of Any Successful Customer Relationship.

How can you build trust and credibility with your customers? This can be achieved through greater transparency, consistently delivering on promises, and by prioritizing data privacy and security.

Gathering Feedback Is Vital.

In order to retain your customer and reduce churn, gathering their feedback is vital. Actively seek input from your customers through surveys, feedback forms or customer service interactions. By listening to their opinions and acting on their suggestions, you demonstrate that their voices are heard and valued.

Leverage First-Party Data Insights.

Leveraging first-party data insights is another crucial component. By analyzing customer data, you can uncover patterns, preferences and behaviors that can inform your retention efforts. This data-driven approach allows you to make informed decisions and tailor your strategies accordingly.

Gain the Ability to Take Real-Time Action.

Lastly, the ability to take real-time action is crucial. In today’s fast-paced business landscape, customer needs and expectations can change rapidly. Being agile and responsive allows you to address customer concerns promptly and adapt your approach to meet their evolving requirements. An example of this is escalating a customer from the chatbot to a call center or by asking the customer if they would like to have a rep call them.

Support Lead Qualification and Nurture Marketing and Sales Teams Efforts.

By leveraging chatbot technology, businesses can efficiently collect and analyze visitor site data, enabling B2B teams to tailor their interactions and offerings to better meet the needs and preferences of their prospects.

Companies Using AI Chatbots to Support Growth

By incorporating all of these elements into your customer retention program, you can create a framework that not only fosters loyalty, but also drives sustainable business growth. So, let’s explore further and discover the actionable steps you can take to build an effective customer retention strategy. As shared here, below are several DTC and B2B brands benefiting from AI chatbots:


  • Starbucks introduced its chatbot on the official Starbucks Barista app in early 2017, enabling customers to avoid long queues and wait times at the store.
  • The company’s loyalty program rewards customers with incentives that can be redeemed for retail purchases, highlighting the convenience of Starbucks for busy customers.


  • Sephora introduced a digital personal assistant that offers product reviews and ratings, aiding customers in making informed choices when purchasing cosmetics in stores.
  • Sephora’s digital marketing AI is integrated with platforms like Facebook and Kik, offering services such as makeover appointment scheduling, emojis, quizzes, reviews, how-to videos and makeup suggestions to enhance the customer experience.


  • Amtrak utilizes a chatbot to assist customers in finding the most efficient routes to their desired destinations, as well as to gather information such as their preferred action (e.g., booking a ticket), journey type (e.g., one-way or roundtrip) and departure date.
  • Since implementing the chatbot, Amtrak has seen a 25% increase in booking rates and a notable 50% rise in user engagement and customer service, as reported by this publication.


  • HubSpot is one of many B2B companies that are using their chatbot to educate visitors and generate qualified sales leads.
  • The company’s ChatSpot is a conversational CRM bot designed to enhance the productivity of sales, marketing and service professionals by integrating with HubSpot.
  • The bot can be instructed to send follow-up emails, generate reports, create new segments and perform other functions, simplifying workflow and boosting productivity.

The importance of customer retention cannot be overstated in today’s competitive DTC and B2B landscape. With businesses facing challenges in effectively measuring customer retention, the adoption of AI-powered chatbots is emerging as a cost-effective solution to personalize customer experiences in order to enhance customer engagement, streamline processes and boost productivity.

By leveraging chatbots, businesses can automate tasks, provide personalized support, gather feedback, analyze data insights and take real-time actions to optimize customer retention strategies. With the market for AI chatbots growing rapidly, businesses that embrace this technology can stay ahead of the curve and create stronger customer relationships for long term-sustainable growth.

Questions? Feel free to email me here. As always, thank you for reading.

Photo by Google DeepMind on Unsplash