What: HBR reviews how AI could be best used by retailers.

Why it is important: More than using AI to cut on costs as we advocate, they believe that it will give an edge to retailers eager to create connections with customers.

The rise of generative AI is sparking both innovative consumer experiences and concerns, especially regarding data privacy and reduced human interaction in sectors like banking and healthcare. While every new technology brings apprehensions, many companies are prioritizing ethical data use and accuracy in their AI strategies. However, there's a potential risk of businesses leaning too heavily on short-term, profit-driven AI models, leading to diminished customer experiences.

In this AI era, the focus should remain on the customer. While metrics to gauge customer sentiment might evolve, the essence remains: every interaction shapes a customer's brand perception. Prioritizing enriching experiences can help businesses navigate an AI-driven future, with studies already showing the benefits of AI tools in enhancing productivity and customer satisfaction.

A pivotal aspect of the AI revolution is personalization. Traditional algorithms might focus on instantaneous returns, but AI promises deeper, more insightful interactions, as shown by banking surveys and examples like the Royal Bank of Canada's digital assistant, NOMI. Furthermore, AI tools not only benefit customers but also empower employees to build stronger client relationships, with large language models now enabling more tailored interactions based on unique customer patterns.

To integrate generative AI effectively, businesses should first adopt tools that augment human capabilities, like AI-driven suggestions for customer interactions. As AI's role grows, we can expect more deeply embedded applications, from predictive call routing to real-time interaction suggestions. Yet, it's crucial that businesses view AI not just as a cost-saving measure but as a means to enhance customer experiences. In the end, companies that prioritize their customers will thrive in the AI age.

Harvard Business Review on using AI to emotionally connect with customers