In 2024, everyone already understands that AI is an integral part of the future of marketing and sales, but the latest Salesforce report illustrated just how much when it pointed to unprecedented growth rates in the industry. I sat down with Rob Garf to talk about the increasing dominance of solutions AI in the world of retail and the prominent trends in the field for 2024.
Rob came to Salesforce through a company it acquired about eight years ago, which has now become the company's Commerce Cloud product. Since then, he and his team handle everything related to the company's insights and advise its retail and consumer customers about their strategies so that they can stay up-to-date with the consumer and provide him with an amazing shopping experience. He says that all the data that flows through the platform goes through his department, which allows him a bird's-eye view of what is really happening in the industry.
In a recent study you stated that 17% of sales in the 2023 shopping season were influenced by AI.
What does this mean in practical terms?
Rob Garf./Salesforce
"The 17% represents the holiday season, which is November and December," says Rob.
"This means that consumers are engaging with AI throughout their shopping experience, whether it's used for prediction or content creation. According to our research, consumers interact with nine different touch points throughout the shopping journey. Obviously, it's a little less when you're talking about going to the grocery store, but it's Much more so when you're buying a TV or sofa, because it's a big purchase that requires more consideration. What our research and modeling shows is that 17% of purchases were a direct result of using AI, whether the consumer knows it or not."
He is of course talking about the interaction that customers have with AI throughout the buying journey, from the first moment when they show mixed signals with the marketing moves until the end of the purchase.
According to him, "In many cases it starts with an email or a marketing post generated by AI. Then, when consumers shop on the site, it is likely that the product recommendations presented to them were generated by AI. And finally, if they have a question like 'Where is my order,' or 'I Want to replace a product', in many cases, artificial intelligence helps create the answers to these questions."
He adds that "17% sounds interesting, but actually the numbers around it are even more amazing. During the holiday season, which is November and December, $199 billion of online sales were affected by AI. In Cyber Week alone, seven days of online sales, $51 billion worldwide Created by or influenced by AI."
Rob points out that this is a 14% increase from the previous year - a very healthy increase from year to year.
The big difference is that while the vast majority of sales in previous years were driven by predictive AI, a technology that's been around for over a decade, this year was the first year we saw Gen AI star.
"One customer recently told me that AI is the new user interface. Our research shows that the vast majority of consumers have knowingly engaged with AI over the past year and are using it as a way to get inspiration, whether it's for a product they want to buy for themselves or a product they want to give to someone as a gift During the holiday season," he adds.
Looking back at another Salesforce report from May, only one in 10 employees used AI in their work, while in the current report only 3% of businesses have no AI strategy.
How do you explain this gap?
"Artificial intelligence has been the fastest-growing consumer application of all time and it's made its way into business as well. Some retailers are looking for bottom-line improvement; others are looking for top-line growth; we had exactly that discussion at the last meeting of our advisory board, which I chair. What at the end of What everyone agreed on is that Gen AI needs to impact the customer and employee experience, so it's critical to put the customer and employee at the center, then work backwards to understand what problems AI can solve, and then be very specific and incisive about solving those problems. Our ongoing research on the topic This over the past 12 months at Salesforce has shown a spike in usage. We say every retailer should have an AI strategy and I've had hundreds of conversations with retail managers on this topic. Of course each one is at a different stage, some are walking, others are still crawling and some are really running," says majority.
What are the basics needed to build an AI strategy?
"That said, after talking to hundreds of retail executives last year, I connected the dots and identified five recurring themes in terms of strategy. The first is a focus on the customer experience and the employee experience. While some claim it's an improvement in the bottom line, others see it as growth in the top line, at the end of the day We all need to focus on the customer experience and understand what problems we can solve.
The other aspect is that an AI strategy is
a data strategy
, so we think about data as the foundation. What's most interesting is that while the big language models are designed to consume data from all over the web, the most important, reliable and relevant information lies within the four walls of the retailer. It's the information they have about the consumer, their product and how it's used that ultimately differentiates inspiration from purchase. It's important to note that the data in Salesforce is not our product. The data belongs to our customers, so this is an important distinction, given that Trust is the number one value for us.
The third aspect is that
AI must be embedded in the workflow
. Retailers are no longer looking for a user interface for their front-line or front-office staff to do their work. Our research at Salesforce shows that, on average, in-store sales reps need to to 12 different systems on a daily basis.
From an execution and customer engagement perspective this is anything but efficient.
So we are not looking to create another interface but instead, to be embedded in the existing workflow.
The AI should focus not only on the checkout process but also on the check-in.
Embedding AI into the workflow means empowering employees to engage the consumer at the point of entry rather than the point of exit.
It will really help to provide excellent service.
The fourth element is thinking about how
to bring humans into the loop.
There has been a lot of talk about how AI will take jobs but that is not the case.
Those who do not understand how to adopt AI may be at risk.
But take for example Gucci, a large iconic luxury brand, which was our first customer to take advantage of Einstein's capabilities in the Service Cloud.
They use it in their service center called Gucci Nine.
They have service advisors editing everything that comes out of the AI, and what they've found is that it's great at scaling, because it allows their service advisors to get more work volume, and it's great at consistency, because it allows everyone to speak in the voice of the customer and the brand.
In addition, what they found is that by using AI they essentially turned each of their advisors into a digital concierge and they were able to provide more help to customers in finding what they wanted.
The final element is that retailers must
focus on practical use cases
.
The idea is to sit down and find what can be solved today and focus on that.
In many cases this will be related to helping with service delivery as in the case of Gucci, or in marketing, as in the case of another US client of ours, a shoe retailer, who saw a dramatic reduction in their email production time by using AI with Salesforce. And of course there are the topic of trade where the main question is how can we connect consumers with the products they want in a more efficient way?"
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Why is it important to have an AI strategy?
Can't you just experiment and see what works?
"We're all about experimenting and learning. The retailers I talk to are doing just that. It's important to understand what sticks in the end and what makes the most impact. The challenge that makes an AI strategy so important is that half of consumers don't trust Gen AI, so it's critical that retailers stay authentic and true to their brands. Without a strategy, retailers risk delusions, biases and toxicity in the responses they receive from AI tools and what they ultimately generate for different parts of the execution, whether it's a marketing service or commerce."
He pauses for a moment and then adds: "The business model behind the big language models is to learn from the data that people put into their prompts, and that helps accelerate the big language models and their sophistication. So retailers have to be really careful not to feed sensitive or private information into these models, which could end up of anything to disclose it. It's critical that you have a strategy to continue to instill trust in consumers and relationships. People worry when they hear the word governance, so let's use the word guardrails. There should be guardrails around the way companies are using AI so that retailers can maintain the trust of their loyal consumer audience."
You mentioned in your report that embedded commerce is one of the most effective channels for driving sales. What can you tell us about that?
"It's one of my favorite topics and it's a bit controversial. People have very strong opinions one way or another about integrated commerce. If we take a step back for a moment, retail, from the beginning of time, was about drawing consumers into their four walls, which were, literally, stores . Shopping at that time was very linear in nature.
What we're seeing now is retailers pushing their brand to where consumers are, and that's because shopping today is really fragmented. It's embedded in what everybody does. What I mean by that is people now wake up in the morning and often turn on their phone, where they are distracted or inspired by something they see in their email or social feed, and in many cases this is what initiates the buying process.
So it's no longer just a matter of entering the store, but the store reaches the consumer and that's because the consumer is more connected than ever and he is also is more influential than ever and has far more choice. Integrated commerce speaks to the fact that shopping happens where consumers hang out. Once it was in the mall, now it's on the consumer's phone. Whether it's messaging apps, social media, gaming consoles or travel booking platforms, commerce Embedded in all of them because there is a lot of traffic in these places and this is also what allows those platforms to profit from their actions.
The idea of integrated commerce is that along with embedding payments, it breaks down the friction between inspiration and purchase.
We have seen in our research that growth in this area has accelerated over the past few years, with more and more consumers being on the go and engaging not only in inspiration but also in purchasing through these digital commerce destinations," says Rob.
Does this mean that websites and online stores are no longer as important as they used to be?
"We found in our research that websites are still important, but they're only one part of the nine different touchpoints to think about, whether it's Tik Tok, Facebook or Instagram or even Uber, where you see more and more commerce efforts. Websites, like physical stores, Not going anywhere, but retailers need to pay close attention to these emerging destinations because they are becoming this generation's mall."
What are your predictions for 2024?
"So we talked about integrated commerce and this is definitely one of the trends that we expect to strengthen. Service is once again one of the key aspects of the customer experience. The vast majority of consumers will leave a brand after three negative experiences, and most of the time it will be because of poor customer service. Retailers are going to double down on their customer service and leverage AI to scale, but also to enable personalization to the needs of the customer. They are going to enable their store employees to provide customer service, even if the customers are not within the four walls of the store. The
third thing is loyalty programs in apps, where the app on the phone becomes the loyalty card in effect Gives a glimpse into how people shop. So people will enter their app, fill in their profile information, their shopping history, their preferences, their payment type, etc., and the app together with customer loyalty will become a kind of remote control for the brand experience."
How would you summarize this whole topic?
"We talk a lot about AI. The AI revolution is a data revolution, no less. It's a trust revolution. It's a skills revolution. And most importantly for retail, it's a customer experience revolution. So looking at AI in a vacuum, without understanding these elements, will not lead for loyalty or an increase in profitable relationships. Many people think that everything will become much easier with AI and this is not necessarily the case. It is not a matter of solving everything at the click of a button. The main challenge is to understand the customer and see where artificial intelligence can be used to help the customer experience," he concludes majority.
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