Developing Customer Engagement Through Artificial Intelligence Tools: Roles and Challenges

Introduction

In recent years, the emergence of digital transformation has resulted in a revolutionary shift in the business paradigm. In today's digitized world, the amount of information created by humans and machines far outnumbers human capacity for absorption, interpretation, and complex decision making based on that information (Sujata et al, 2019). AI is critical to the digitalization process because it can process large amounts of data (Bag et al, 2021) and has the potential to transform how businesses interact with their customers.

Every company desires to develop customer engagement through its marketing efforts as it leads to various favourable outcomes for its business. Data gathered from interaction with customers act as customer’s voice. Earlier, it was difficult to collect and aggregate such data but with the introduction of Artificial intelligence it is easier for businesses to analyze customer related data (Perez-Vega et al, 2021). Figure 1 depicts the relationship between artificial intelligence and customer engagement.

Figure 1.

Relationship of artificial intelligence and customer engagement

Literature Review

Kumar et al (2019) explored the role of AI in developing a personalized engagement marketing strategy. AI technology enables firms to utilize customer information to provide tailored products and services. AI technology can facilitate real-time learning and help managers improve customer value proposition over time. Strategy of providing curated products provides increasing value to customers thus leading to customer retention and sustainable competitive advantage.

Schrotenboer (2019) highlighted that AI has capability to improve customer journey and marketers must understand how such advancement impacts customer experience in this dynamic environment. Recommender systems can improve customer personalization and Conversational agents can improve customer engagement. Customer experience along the customer journey can be enhanced by them individually or collectively.

Prentice & Nguyen (2020) demonstrated that both service experience with employees and AI impact customer engagement and loyalty, only few dimensions produce unique variances in the consequent variables. Results revealed that customers prefer employee service, both service experiences have partial mediation effects on customer loyalty and Emotional intelligence has moderation effect on customer engagement.

Prentice et al (2020) investigated the impact of Artificial Intelligence on customer engagement in the context of the hotel industry. Findings show a link between AI service indicators, service quality perceptions, AI satisfaction and customer engagement. AI preference has a moderating impact on information quality and satisfaction.

Kishen et al (2021) determine the impact of artificial intelligence deployment on customer management strategies in the context of the retail industry. This research looks at personalized engagement marketing, agility in the supply chain (Robotics), and customer management practices using AI tools. Lack of knowledge about AI tools, ethics and privacy concerns are major impediments for the growth of artificial intelligence deployment in retail.

Sung et al (2021) demonstrated that the quality of AI (i.e., speech recognition and synthesis via machine learning) associated with an augmented object increases MR immersion associated with spatial immersion, MR enjoyment, and consumers’ perceptions of novel experiences. Collectively, these increase consumer engagement, and improve behavioral responses like purchase intentions and intentions to share experiences with social groups. Findings also revealed that interactive AI and MR technology create additional opportunities to improve consumer engagement.