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How To Leverage AI To Reduce Churn and Improve Customer Loyalty In eCommerce?

W Lawrence
VP Sales and Business Development
eCommerce personalization


There is no business out there that has never lost a customer for any reason whatsoever. According to PwC, 32% of customers stopped doing business with brands they previously liked, after just one negative experience. 

Smaller churn figures have grown to become acceptable but, of late, numerous eCommerce businesses have been dealing with a rather high churn rate. The way most of these businesses tackle this issue is by replacing the old customers with new ones.

While this remains a standard, businesses can’t go about without analyzing the cause behind the churn. And while that goes on, we might have a spectacular solution to the customer retention problem in terms of AI.

eCommerce customer loyalty
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Artificial Intelligence is playing a leading role in eCommerce as it drives the development of newer, more innovative solutions that enhance both sales and customer experiences. Some of the leading areas where we can find its direct applications include recommender AI apps, chatbots, and solutions for inventory analysis and management.

In this article, we’ll dive deeper into the issue of customer churn and identify the common reasons why that happens and explore the different ways AI-powered applications like recommendation engines and chatbots can help. But before that, let’s take a look at what we have been able to accomplish with the help of AI.

The Current State of AI

Until quite recently, artificial intelligence was thought of as a futuristic technology that will put humans out of their jobs for good. Now, in 2021, when the smoke has cleared, we enjoy AI’s multifaceted benefits in almost every industry with a workforce steadily burning out from all the redundant tasks.

In terms of eCommerce, AI has shown great promise in driving customer loyalty. With the power of machine learning (ML) and data analytics, modern recommendation engines are now able to personalize user experiences by deriving insights from customer data and making near-accurate predictions.

Then there’s also natural language processing (NLP) which helps automate customer service and computer vision that drastically improves the buying experience.

So, on multiple fronts, companies that leverage AI for the smoother conduction of their business, can anticipate customer needs based on their preferences and the context and generate content that’s relevant to them. And over time, it’s only going to get smarter.

Why Do Customers Leave?

Your business wants to simplify eCommerce for good, and your initial customers loved your services and left good reviews. But all of a sudden, it seems as if customers are no longer returning for purchases. So, what changed? 

Assuming your product is top-of-the-line and you haven’t shied away from branding, there are two main reasons why your customers may be jumping ship:

Either it’s because they don’t need your products anymore, or they believe your competitors can do a better job with the customer experience part of the spectrum.

customer churn rate
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But as we dive deeper, the number of reasons that can prompt customers to leave is huge. Let’s take a look:

Your Product Descriptions Aren’t Oriented For Sales

For any eCommerce business with hundreds and thousands of products, a product description is not optional. If at all, it is the single most important thing that makes the product you’re selling unique.

Every customer looks for the product description to understand what is made of or what it looks like realistically, and how it is used. If the essential information is omitted, the customer starts looking at other places with detailed information. Secondly, a detailed product description optimized for search engines adds to the product’s visibility and boosts sales.

Your Checkout Process Is Complicated

Customers want their online shopping to be swift and with no extra frills. So, if you don’t have a streamlined buying process, it might be a major reason why your customers are quitting on you and going for a competitor with a quicker and simpler checkout procedure.

To tackle this, keep the steps in between checkout and payment minimal. The payment options, too, should be wide, to cater to a large and diverse audience.

eCommerce checkout process
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You Don’t Offer Guarantees

Most customers won’t buy a product if it has poor reviews or no reviews at all. Even ratings with no minimal detail in textual reviews can appear dicey to some users. In fact, consumer reviews are 12x more trusted than boilerplate manufacturer descriptions.

As an ecommerce business, you can offer money-back guarantees as a means to tackle the lack of detailed reviews for your products. This gesture will prevent customers from drifting and make them feel more confident about your offerings.

On the same note, offer a wide array of payment options and use their logos as trust symbols for your business. And it should go without saying, ensure that your website is secure and uses the HTTPS protocol. Seemingly minor elements like that go a long way in building trust with customers.

Your Search Engine Lacks Scope

Until not too long ago 70% of the top 50 eCommerce websites in the US needed visitors to search for jargon that had exact matches with the products. The websites’ search engines were not able to recognize similarities between terms that used different words but meant the same thing. In 2021, with all the fierce competition, this would be an absolute no-no.

Now, in order to meet the expectation of your customers, you need to provide a wide range of filters from gender to colour and size and ensure that the search box offers autocomplete suggestions and is built to ignore typos.

You Have Low Reach With Your Target Customers

You can’t sell everything to everyone, and one of the reasons why your customers might not be returning is that you’ve been marketing to the wrong segment of your audience. This is one of the many areas where AI can take charge and help segregate your traffic and create a more specific audience based on the product categories.

Your eCommerce Site Lacks Personalization

Consumers today are attracted to businesses that are willing to offer them personalized, 1:1 experiences. According to a report, 80% of shoppers are more likely to make a purchase from an eCommerce site that offers personalized services. To cater to that, the systems that once represented traditional retail on the internet are now expected to predict future needs, and some of the major eCommerce businesses had seen it coming. 

Implementing eCommerce personalization on your site lets you have a 360-degree view of your buyers in a bid to enhance the customer journey. It also lets you mould your eCommerce business to become more targeted and increase your conversion rates.

As for customers, this concept is both innovative and convenient and keeps them coming back to your online storefront, and you can achieve all of it simply with the help of an eCommerce personalization system.

All said, eCommerce businesses need to build their platform to become more end-user-oriented and change the way their customers think about their brand. There’s the need to keep the customer happy with your services and maintain a sense of urgency to keep them coming back.

How Can AI Boost Customer Loyalty In eCommerce?

The solution for reducing customer churn usually isn’t always straightforward, and often involves you working on your product and making it more innovative. But all that revamping might take several months, if not years. With that in mind, here are a few proactive ways in which AI can boost customer loyalty in eCommerce

Predict And Analyze Level of Churn

The first step when it comes to boosting customer loyalty is analyzing all aspects of why a customer no longer wants to do business with your brand. Utilizing machine learning, you can sift through huge amounts of data and identify clusters of users and rank them in order of likelihood to churn. 

You can further uncover various user profile attributes like income, sex, age, the campaign of origin, etc., and AI will be able to predict the kind of customers that will stick around and which won’t.

The AI applications today can analyze customer data from multiple touchpoints and channels like email campaigns and websites and offer a detailed overview of how the users are interacting with your application at large.

Diagnose And Segment Users

Machine learning is your greatest asset when it comes to analyzing data and segmenting users. Through AI-powered behavioral analytics, you can segment your customers based on any attribute, including their browsing and spending patterns, and use it to make personalized product suggestions using a recommendation system.

Personalized product recommendations
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AI can also conduct predictive analysis to help you acquire the most lucrative customers and with the help of a good recommender system, you will be able to fine-tune your product recommendations for these customers.

Intervene In Customer Life Cycle

The customer’s profile elements don’t always form the basis for the churn. eCommerce businesses can also predict it from the channels from where they were acquired (say, content marketing, Google Adwords, social media, etc).

Now, apart from analyzing your customer base and main reasons for churn in your eCommerce business, AI can intervene in the customer lifecycle and trigger alerts to both the customers and your team, so you can take actionable steps to address any issues.

A major application of artificial intelligence in eCommerce is personalized product recommendations. According to reports, implementing this alone can improve your conversion rates by 915% and shoot the order values up by 3%.

With the help of big data, AI in eCommerce is proactively impacting customer decisions by taking into account their previous purchases, browsing habits, and so on. Not only does this help improve the number of returning customers for your eCommerce business, but it also personalizes the user experience for the customer, making their shopping experience more pleasant.

Improve User Experience

Although not apparent, all aspects of a user experience, including color palette and ease of navigation, contribute to a customer’s decision-making process.

A smart chatbot, a simple application of AI, can do wonders when it comes to improving customer experience by solving the issue of slow customer service. More than that, a far better use-case of AI is a SaaS recommendation engine which not only deals with the issue of cart abandonment but also improves user engagement and increases revenue.

As far as personalization goes, there is a lot that businesses can do to improve their UX. For instance, for existing customers, you can start with personalized homepages. It may include offers for products that might interest that particular customer and time-sensitive promotions on products based on previous purchases with the help of a recommendation engine. You can also have a section that recently viewed items by that user.

Recently viewed recommendation
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Without a doubt, modern consumers share numerous interactions with brands on their journey to conversion and across several devices and touchpoints. And just as each conversion channel differs from the other, there’s the need to make every customer journey personalized to the user and unique.

Does Your eCommerce Business Need The Power of AI?

All in all, relentless development in the field of AI has made it possible for businesses in all sectors to better interact with their customers, improve their experience, and in turn, drive customer loyalty. Did you know that 27% of businesses aren’t sure how much of their data is accurate?

With AI in your armory, you can listen to your customers whenever they’re dissatisfied with your services, make improvements in your platform through data collection, and drastically improve self-service.

Having said that, Argoid’s eCommerce recommendation engine is one of the best tools that you can have at your disposal to solve the customer churn problem. Its no-code solution can help you achieve the best conversion rates and substantially improve your retention charts. So, what are you waiting for? 

Here’s how it can help in reducing the churn of your eCommerce store: 

  • It can create personalized product recommendations based on customer data to convert customers in the very first scroll 
  • Create personalized collections for each customer to reduce their time on never-ending product searches 
  • Embed personalized recommendations within emails for quick cart recovery and cross-sell/up-sell opportunities 

Want to know more? Get in touch with us!

FAQs

What is churn rate?

Churn rate is the rate at which customers leave your eCommerce store or stop purchasing from you. For eCommerce stores, ideall churn rate should be as low as possible.

What is customer loyalty?

Customer loyalty is described as an emotional bond between an eCommerce store and its customers. Higher the customer loyalty, better are the chances of repeat purchase from your store.

Why do customer chrun rate and customer loyalty matterfor eCommerce stores?

Customer churn is an essential metric for eCommerce stores to depict whether more customers are leaving your store. Alternatively, customer loyalty ensures how deeply the customers are influenced by your products. These are essential factors that help you understand whether the shoppers are likely to purchase from your eCommerce store or not.


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