9 minute read
The power of AI: How predictive analytics boost conversion rates
Updated on May 24, 2021 by Vincent Sevilla
The concept of using AI for business isn't new—but can it improve conversion rates in ways you might never have expected.
For various aspects of business operations, AI usage has been taking the market by storm, appearing in nearly every field. Most people may not realize it, but they may have already benefited from AI in their daily lives.
The business world, in particular, has made great strides in utilizing AI in many ways. AI-based applications are used in:
- Spam filters
- Smart emails
- Voice-to-text utilities
- Process automation
- Sales and business forecasting
E-commerce companies have also used AI to improve conversion rates through price optimization and product recommendations. In marketing, AI is also used for content curation and personalizing a user's feeds. Moreover, AI can be leveraged to recognize patterns and digest unstructured data.
You may have noticed a recurring theme here: analytics. AI has proven itself as the most efficient analytics method in just about all aspects of the sales funnel. And for business processes, AI analytics can consume the data gathered and spot patterns, make predictions, and provide in-depth insight into what customers want and need.
Therefore, it comes as no surprise that AI-based analytics is being touted as the surefire way to transform a business, improve companies’ conversion rate, and improve overall reputation.
- AI and its impact on predictive analytics
- What is digital transformation?
- The big handshake: AI and digital transformation
- The road to AI excellence
- How do you get value from digitization and artificial intelligence?
- AI FAQs
AI and its impact on predictive analytics
Artificial Intelligence and machine learning have been considered as one of the big game-changers in analytics. As markets have become more competitive than ever, the demand for efficient, accurate, and effective analytics increases.
And when it comes to predictive analytics, these qualities are even more crucial as businesses scramble to determine upcoming market trends and customer demands. The trends change so quickly, especially in the digital age, and the normalization of "viral" spikes in interest has become such a regular occurrence that if a company wants to improve its conversion rate, it has to determine what is coming as quickly and accurately possible.
Predictive analytics uses data mining, statistics, customer data, and modeling to make careful predictions about what trends are on the rise. The best tools and applications for predictive analytics emphasize prediction, ease of use, and rapid analysis (in a matter of hours, and sometimes days for more complex algorithms).
All of these things can be done by AI. When utilized with the right computational power, AI can even use the large amount of data gathered from customers to create personalized results.
AI's strength is that it doesn't rely on the human side of decision-making. It makes use of facts and data to get its results. They are, essentially, high-powered prediction machines that use the massive amount of user-related data now at business' fingertips and analyze them to determine where the next big trend is coming from.
According to SAS:
"Predictive analytics are used to determine customer responses or purchases, as well as promote cross-selling opportunities. Predictive models help businesses attract, retain and grow their most profitable customers."
What is digital transformation?
Where does digital transformation fit into the discussion of AI-based analytics?
Companies have already been making the shift towards more digital operations for years. Still, the pace has been markedly hastened by the pandemic that has forced the world indoors, relying primarily on digital communications. There has also been a significant increase in online and digital commerce, where a large swath of people make their purchases and orders through digital channels.
This results in a virtual mother lode of customer information now available, digitally, to businesses. As such, the time is ripe to get as much valuable data as possible to determine precisely what your customers want and what the next big thing is about to be.
It's a great way to gain the edge that a business needs over the competition as they are now able to provide better service and predict customer needs before they even happen. The more in touch you are with your customers, the more likely they will speak highly of your reputation and recommend you to friends, either by word of mouth or online reviews.
And in a world marked by sudden changes thanks to a rapidly changing environment, it pays to know some of the opportunities that may be coming your way.
The big handshake: AI and digital transformation
If businesses want to improve their conversion rate, they need to combine this new adaptation of digital processes and services, the data gathered therein, and AI-based analytics.
Ultimately, combining the data-gathering capability of digital transformation with AI and machine-learning speed and efficiency results in more productivity and better overall operations. AI-based utilities allow businesses to bring their company to greater heights.
The numbers don't lie:
- A study performed by Infosys revealed that 98% of respondents who used AI-based systems during their digital transformation could generate more revenue for their companies.
- AI also helped improve a company’s conversion rate by minimizing errors, reducing time spent on daily processes, and improved decision making. At least 71% of respondents in a Forrester study reported that business efficiency on this end markedly improved through AI.
- 56% of consumers and 65% of business buyers can tell if the vendor doesn't understand their needs and won't hesitate to switch brands in this case. Everything from customer support to providing them with the user experience they're looking for comes into play.
- For many businesses, the biggest challenge is data gathering, and 53% of study respondents agree, adding that the struggle is also linked to integrating all this data. 52% of the businesses have problems building a predictive analytics platform, which AI could solve quickly.
- AI can further improve the conversion rate of a company by reducing costs. According to the Boston Consulting Group, companies' conversion costs that used AI were decreased by 20%. There was a further 70% reduction in manufacturing costs when coupled with better productivity from the workforce. The lead times shorten, and the flexibility of the company's turnaround time on different products or services gets better. As a result, the conversion rate benefits as more products are brought to meet customer demand.
These are just some of the significant points that highlight the value of AI to business. So how is it brought on board?
The road to AI excellence
Implementation is the next logical step following a keen understanding of digital transformation and how much your company can benefit from AI. To improve your conversion rate, you need to start getting the basics first: data.
If your company is making a significant investment in digital transformation and AI-based analytics, you need to ensure that you have adequate data to support it. Importing and storing data correctly may take a little investment, as some companies that went digital may have discovered. Still, there are cost-saving solutions, such as cloud storage and cloud computing, that you can make use of. The challenge these days isn't to find data but to store it and make use of it.
Following a good acquisition of data, it's time to invest in Artificial Intelligence itself.
The whole process of finally integrating data and AI, then using it to improve your conversion rate, requires some preparation. Consider these necessary steps:
- Data collection: As mentioned earlier, this is the first and most integral step to utilizing AI and optimizing your business processes. AI is incredibly dependent on the data that you gather as it will use the information as factors for its computations. The data could come from customer databases, company spreadsheets, markup files, and more. Remember: the more data you provide, the better and more accurate the prediction will be.
- Storage preparation: This is the next logical step. Such a substantial amount of data (and space for computing and analyzing it) requires good storage. You will also need to figure out structuring and a way to integrate that information for exploration analysis. You need to research ETL tools (which Extract, Transform, and Load the data). Then, you can prepare for exploration.
- Exploration: The exploration step then begins a descriptive analysis. It's the process of trawling through the mass of data with data mart tools like online analytical processing, business intelligence, and analysis panels. This is the process of looking at all the data you have and carefully cataloging and sorting through them so that specialists can have a better birds-eye-view of what is going on. It also aids businesses in interpreting the information.
- Real-time operation and extraction: Before you improve the conversion rate through AI, you first need to integrate the data with the tools. Assuming the company is now adequately prepared with the knowledge of handling and integrating the data, it's time to use it with your tools.
- Prediction and optimization stage: Now that you have the data stored, sorted, and extracted into more efficient formats for analysis, then the prediction and optimization part can begin. AI can now learn all of this information and come up with models and scenarios with excellent accuracy. It can provide your company with trends, numbers, and statistics that facilitate sound business decisions.
AI can also help provide insight into the company's processes and find out where there are weaknesses that analysts can improve. High-level algorithms are even capable of going as far as recognizing voices and images, giving more precise recommendations, and even learning from patterns.
How do you get value from digitization and artificial intelligence?
So how does digitization and AI improve conversion rates? What kind of value can you expect from this major shift?
Because of how deeply entrenched lives and enterprises have become to the digital world, digital transformation and leveraging it aren't just an "edge." Soon, these things will become essential. Everyone will need to hop onto the digitization train to keep up with the rest of the field. The new edge is through AI. It's helpful in nearly all industries and utilized by the largest corporations to maintain their upward trajectory. AI adds value by identifying crucial information that helps better the lives of professionals and highlights a more successful user experience.
Furthermore, it eliminates human limitations in the art of analysis. Part of what is needed to improve businesses’ conversion rates is to remove pitfalls and weaknesses and determine whether they can be better or faster for both consumers and other companies. While there are still data analysts and experts available, AI and machine learning make everything faster and more efficient.
By now, nearly every company is thinking about digital transformation. AI is the next logical phase, and it allows you to stay one step ahead of the rest of the pack. Using AI to improve conversion rates throughout the business maintains your advantage, and it applies to many fields. AI techniques, applications, and tools are expected to generate up to $3.5-$5.8 trillion annually.
It's predicted to hit various industries, from marketing and sales to supply chains and manufacturing. In the fields of customer service and travel, values go up even higher. The incredible performance that AI delivers to assist these industries is critical to businesses planning to innovate and continue speedily providing services. Companies can continue to fine-tune their products and services to customer needs even more accurately, improving both your online reputation and your conversion rate.
The power of AI FAQs
How does AI improve conversion rates?
AI analytics can consume the data gathered and spot patterns, make predictions, and provide in-depth insight into what customers want and need.
How does AI improve online reputation?
AI is a great way to gain a business edge over competitors by providing better service and predicting customer needs before they even happen. The more in touch you are with your customers, the more likely they will speak highly of your reputation and recommend you to friends, either by word of mouth or online reviews.
How do you implement an AI strategy?
Consider these steps to implement an AI strategy. Collect data. Prepare storage. Conduct a descriptive analysis. Integrate data with established tools. Optimize data and form predictions for trends, numbers, and statistics to facilitate decision-making.
Has your business undergone digital transformation? Has it considered utilizing AI for your processes? Why or why not? Let us know in the comments below.