Unleashing the power of AI to enhance customer experience. Balancing personalization and privacy. Tailoring strategies and offerings, in an interview with Gianluca Diegoli.
Personalizing services and offerings has become a key element for companies that wish to stand out in a competitive market.
In an era where Artificial Intelligence (AI) is revolutionizing every sector, tailored strategies can be developed to offer personalized experiences while maintaining a balance between data analysis and privacy.
AI has opened new frontiers in understanding and meeting consumer needs. How?
Today we’re surfing with Gianluca Diegoli, Professor and Digital Marketing expert.
How is AI impacting digital marketing, and what are its main applications and benefits for businesses?
I firmly believe that Artificial Intelligence (AI) is set to revolutionize strategic marketing by enhancing the ability to identify target segments in real-time. Thanks to Machine Learning algorithms, this technology will leverage diverse data sources, uncovering subtle and non-obvious correlations between “fertile” audiences and demographic, psychographic, and behavioral insights, which are currently beyond the intuitive grasp of marketing managers.
Furthermore, closely linked to this advancement are the “AI-generated” activations of these identified segments. The evolution of personalization represents another fundamental pillar of AI in digital marketing. AI can process corporate content “reservoirs”, adapting them to create personalized experiences for each user. The ability to generate personalized content—whether it be emails, web content, or product recommendations—increases user engagement and satisfaction. Generative AI technology is emerging as a key innovation, enabling the autonomous creation of images, texts, and videos tailored to specific audience segments, thus achieving true one-to-one personalization.
In parallel, AI offers advanced predictive analytics tools, allowing for the anticipation of customer behaviors and preferences. This not only facilitates the identification of potentially most profitable customers but also enables the crafting of tailored marketing strategies, significantly improving ROI.
How has the evolution of digital marketing influenced the way companies relate to their customers and how is AI changing this landscape?
AI facilitates a notable enhancement in the efficiency of “low empathy” functional interactions, enabling brands to dedicate their efforts to experiences where the interaction is perceived as truly valuable. For instance, by automating 99% of customer support inquiries, it frees up resources for the crucial 1% that are handled by human agents. This selective engagement not only elevates the customer experience but also reinforces the brand’s positioning in meaningful and impactful ways.
An additional benefit of AI is evident in the improvement of customer service and interaction. AI-powered chatbots and virtual assistants, available 24/7, provide instant support to customers, assisting throughout the purchasing process, answering customer queries and solving problems, effectively handling routine inquiries and enhancing the overall experience. AI’s ability to analyze sentiment on social media and other online platforms allows companies to proactively respond to customer needs, continuously refining their services.
Nowadays, consumers are using vocal assistant applications such as Google Assistant, Amazon’s Alexa, and Apple’s Siri within standalone messaging platforms. This is expected to significantly boost the demand for standalone chatbots. Markets and Markets reports that the chatbot market, valued at $4.7 billion in 2022, is projected to grow to $15.5 billion by 2028, with a growth rate of 23.3%. The adoption of generative models and the integration of sentiment analysis are among the key factors driving this growth. These figures highlight how chatbots are becoming essential tools for improving customer service efficiency, reducing operational costs, and increasing customer engagement through various channels, including social media and messaging apps.
Many e-commerce platforms use AI to personalize user experiences and make product recommendations. What are the benefits of this choice and what are the challenges in balancing personalization with privacy and security of user data?
Online personalization is far from a novel concept, having been a topic of discussion for many years. In my view, it isn’t solely reliant on AI. However, AI undoubtedly enhances the scope by enabling the creation of numerous tailored journeys and generating content at an exponential rate within e-commerce platforms and corporate CRMs. This innovation offers teams a level of time efficiency previously unimaginable. Initially, the significant human effort required to deploy these systems was a substantial barrier to their full adoption and effective use.
Personalized experience and effective customer service are the primary criteria for brand selection for 73% of consumers. Customers actively influence companies, pushing them to offer what they find useful or valuable. As a result, building personalized and long-lasting relationships becomes crucial for gaining a competitive edge. The challenge for companies lies in making a technological leap by managing Big Data through analytics and CRM tools based on automation and Artificial Intelligence. These tools allow for the unification of all user data and contact channels, creating a constant dialogue. Automated systems enable structured management of user requests from various channels, consolidating them in one place, quickly analyzing them, and formulating a timely response. This increases customer satisfaction externally, as they receive precise solutions to their requests, and internally optimizes resources and reduces processing times. The work done can be measured using analytical tools, guiding business decisions based on the collected data.
According to a market report, integrating AI-based technologies into e-commerce platforms has increased revenue and retention by 10-15%.
AI is enhancing the efficiency of warehouse and logistics operations. By using automated management systems and advanced robotics, companies can optimize stock management, reduce delivery times, and minimize errors. According to a report by Grand View Research, the global warehouse robotics market is expected to grow at an annual rate of 14.6% until 2027, reflecting the increasing importance of these technologies for the industry.
What are the key skills people should acquire to capitalize on the evolution of AI in digital and retail?
There’s a growing necessity to pivot towards enhanced strategy and go-to-market skills, given that AI is set to replace many of the more routine tasks. This transformation is already visible in content marketing, but it is expected to soon sweep across all facets of operational marketing, creativity included.
To capitalize on the evolution of AI in the digital and retail sectors, it’s essential to acquire a range of key skills that span from technical abilities to strategic and creative capacities. This transformation requires a mix of advanced technological knowledge, data analysis skills, and a deep understanding of new market dynamics. Gartner states that 91% of IT leaders in the retail sector are prioritizing AI implementation by 2026. AI and ML technologies are seen as fundamental investments to improve operational efficiency and offer personalized customer experiences. Big data and advanced data analytics become indispensable tools for making informed and strategic decisions.
The adoption of generative AI is revolutionizing the field of creativity, enabling marketing professionals to generate high-quality content at accelerated rates. Gartner predicts that by 2026, 80% of creative professionals will use generative AI in their daily work. To take full advantage of this evolution, companies need to invest in training programs for their creative staff to fully leverage generative AI tools.
Understanding market dynamics and new digital platforms is essential. This includes adopting new social platforms that ensure content authenticity and reliability, in response to growing concerns about AI-generated misinformation.
How does AI-driven automation in marketing support companies in achieving their goals?
In data analysis, the focus is shifting from merely creating visualizations to a deeper interpretation of data. Predictive analytics tools allow companies to anticipate customer behaviors and develop highly targeted marketing campaigns with unprecedented precision. The current practice of spending time inputting data into PowerPoint graphs, without the chance to thoroughly analyze or interpret it, represents a significant inefficiency. Moving forward, I envision us requesting insights and graphical representations directly from command lines or prompts. Nonetheless, the importance of deeply understanding data generation, its interpretation, and deriving insights will become increasingly crucial.
Artificial intelligence is also revolutionizing marketing and advertising strategies. In a survey, Hub Spot reveals that 64% of marketing professionals use AI-based tools in their work, specifically for data analysis, market research, and content creation.
Another interesting way to use AI in marketing is through media buying. Adtech platforms leverage AI to determine the most effective ad and media placements, ensuring they reach the target audience and optimize ROI. If you use Google Ads, you’ve likely experienced how AI enhances the auction process to boost ad performance.
Time is certainly the element that can benefit most from the use of advanced technologies. It is possible to significantly reduce the time needed for content production, data analysis, response formulation, go-to-market strategies, and many other activities. This time saved can then be reinvested in other initiatives to improve the company.
What are the main advantages and potential problems of using AI in customer service, and how do you see its role evolving in the next 5 to 10 years?
To be honest, I see not so much problems as opportunities ahead. Currently, customer care often fails to meet people’s expectations. I believe that embracing multi-modality—shifting seamlessly between text, audio, and video—can separate the format from the content or message. This approach can more effectively meet customer needs by aligning with their preferred mode of interaction and optimizing our internal management processes for greater efficiency.
Looking to the future, and especially considering the remarkable growth rates already seen in this sector, we will witness an increase in the adoption of more sophisticated and integrated AI tools. Companies will continue to invest in technologies that enhance virtual assistants with better natural language understanding and emotion recognition capabilities. We can envision a landscape where AI not only supports but also closely collaborates with human operators. Human work will be enriched by technology, rather than replaced by it.
In your opinion, can companies effectively balance user experience personalization via AI and growing concerns about privacy and data security?
Personalization is often misconceived as requiring an almost intimate knowledge of the customer; however, this isn’t necessarily true. Many forms of context-based personalization, which significantly simplify user experiences, can be implemented without infringing on customer privacy. For instance, why should I be prompted to subscribe to a newsletter I’m already subscribed to? Or be offered subscriptions for products I already possess? Privacy remains a deeply personal issue, and we are moving towards a future where we’ll need to navigate numerous layers of privacy settings—a sort of meta-personalization.
As we know, the EU has already acted on this issue by enacting the GDPR, and the US has followed with the CCPA. These regulations require companies to be transparent about how they use user data and ensure that users have control over their information. Companies can adopt various strategies to comply with these regulations while still offering personalized experiences. One such strategy is data anonymization, which allows the use of user information without identifying individuals. Additionally, implementing data minimization techniques, by collecting only the information strictly necessary to provide the service, can reduce the risks associated with data breaches.
What are the ethical implications of implementing AI in the technological innovation process?
As companies delegate processes through outsourcing—which is often the case with AI—they must be vigilant to ensure that such delegation does not perpetuate biases or ethical discrimination against customers. Take, for example, a bank that opts to use AI for preliminary screenings of loan and mortgage applications. This situation demands stringent monitoring, particularly in the beginning, and a thorough understanding of risk thresholds, including acceptable levels of “false positives” and “false negatives.” This precaution is essential, as the public tends to not distinguish between human errors and errors made by AI. Ultimately, the brand’s reputation hinges on maintaining consistent and fair practices.
Gianluca Diegoli is one of Italy’s most renowned marketing experts. A graduate of Bocconi University, he transitioned from a long corporate career to becoming an independent consultant specializing in digital transformation, e-commerce, and omnichannel strategies for brands and retailers. He also teaches at IULM University and in Executive Master programs.
He authored the book “Svuota Il Carrello” as well as several guides on e-commerce, mobile, and social media marketing. Since 2004, he has written the weekly newsletter for minimarketing.it. Additionally, he is the co-founder of Digital Update, a corporate training company.
