Todd Marks is the award-winning Founder and CEO of Mindgrub Technologies, the cutting-edge digital experiences agency.
The world of retail has always been at the forefront of innovative tech adoption. Few industries have such measurable feedback when it comes to the user experience. Retail has done a good job recording and analyzing user data that gives insight into the success of new products, including technology adoption like AI. With nine out of 10 of e-commerce businesses using AI in their current operations, we’re at an inflection point where users likely expect some form of interaction with AI throughout their journeys. In other words: In retail, AI is the new normal.
However, with every innovation comes the risk of overreach. While AI has already cornered the market on chatbots for reliable 24/7 customer service—resulting in $11bn annual cost savings for the retail industry in 2023 alone—its more varied applications have many wondering where to draw the line.
Algorithms have been known to analyze user data, browsing and preferences to serve relevant content and ads to deepen online engagement or boost sales. On its face, this is a simple and tacitly endorsed part of interacting online. An app or website may be free to browse—as long as you don’t mind a few ads aimed your way. In fact, 76% of consumers feel frustrated when branded communication is not personalized, and faster-growing companies experience 40% more revenue due to personalization implementation. So, it’s a win-win. Right?
While AI personalization is something of an expected reality to many users, it also presents an ethical quandary—when does personalization become manipulation? Can you be sure you’re buying because of need or because an AI has deemed it so?
How AI personalization gets it right—most of the time
Users want a personalized experience. They want companies that understand or anticipate their needs, relieving them of the responsibility of digging for products or services that work best for them. Finding the right user for the right product is more than half the battle, and with AI integrations, you’re more likely to gain qualified leads and create more targeted marketing campaigns, without the risk of overexposure or wasted resources.
When applied to various marketing efforts, AI personalization benefits both consumers and companies. Personalization means that online retailers can serve up products individual consumers are more likely to purchase based on their history or interests, leading to higher conversion rates and customer satisfaction. Email marketing and online ads can also integrate AI personalization so communication doesn’t feel stale or generic, leading to more engagement and sales.
For businesses, the investment in integrating AI personalization into marketing efforts can lead not only to greater efficiency but an increase in customer loyalty. Many consumers feel that personalization demonstrates that a business cares about the whole relationship, not just individual transactions.
Overall, AI personalization—when applied with a deft hand—has the potential to boost conversions, strengthen brands and anticipate customers’ needs, all while saving businesses their bottom lines.
How AI personalization gets it wrong—some of the time
With every technological advancement comes the appropriate (if challenging) ethical questions. AI personalization, like any AI endeavor, can come with pitfalls. Specifically, when does personalization become manipulation?
An AI capable of analyzing behavior to anticipate needs can also optimize for psychological weaknesses, moments of emotional turmoil and deepening insecurities. It’s the difference between a site like JHUP serving personalized book recommendations based on your interests and algorithms serving up content meant to provoke a strong reaction.
In the wrong hands, marketing combined with sophisticated AI can result in “dark pattern” manipulation tactics, such as false urgency (timers meant to set off anxiety), targeted ads for cognitive bias, trick wording (in which vague phrasing encourages an action) and more. These methods are considered predatory, and without guardrails and oversight, along with proper integration, AI personalization can exacerbate users’ worst instincts.
Another concern is that for AI personalization to function effectively, vast amounts of data are needed. While the privacy of user data has been a hot topic for many years, with the rights of individuals and the rights of specific platforms in a constant back-and-forth, we know this much is true: A transparent business and an informed user are the most desired states of being. Adhering to privacy guidelines does more than protect businesses, it provides users with the power to choose when and where their behaviors are tracked.
The bottom line, AI personalization can help businesses meet their audience where they are, but it also has the potential to push them where they don’t care to venture. The key to towing that ethical line is proper integration. Applying AI in a transparent and user-focused way allows for personalization that boosts benefits for both companies and audiences. Be wary of partners that promise quick engagement numbers, and partner with knowledgeable AI specialists who can navigate these moral boundaries.
So, is integrating AI personalization worth it?
AI personalization isn’t going anywhere, but this doesn’t mean it’s finished evolving. Meeting the moment means approaching new AI technology with enthusiasm and a skeptical eye—because while personalization can boost engagement and enhance user experiences, it will only build trust if it is used ethically and transparently.
The long and short of this worthwhile debate is that a company’s AI implementation needs to be done by experienced and compliant technical agencies. Out-of-the-box solutions often don’t take into account individual business needs or implications for users, and harnessing the power of AI means doing so with your eyes wide open. Embrace technology, but keep humans in focus.
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