How to Enhance the Retail Customer Experience via AI-Powered Price Optimization

How to Enhance the Retail Customer Experience via AI-Powered Price Optimization

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It is no secret that the customer experience should be your main priority. Therefore, in order to give customers what they want, make sure that you offer the best prices at the right time. As a result, they will purchase more as well as be more loyal to your brand.

In order to create a successful shopping path, you need a solid pricing process. In fact, based on a study by PWC, customers will shop at specific retailers based on the price; the item of interest being in stock, the amount of trust in the company, as well as a solid location only come after. Now, maintaining the right prices is best accomplished via artificial intelligence. A good way to understand it is by looking at it from a dating perspective; the price of a product is comparable to that of the first impression of someone that you like. Therefore, due to the price, a shopper should become more interested in the product while also continue to find the price to be justified even after they have bought it. The latter is especially crucial as that is what the customer looks back on in order to figure out whether the entire relationship or the customer experience, was beneficial to them.

Typically, customers end up going with retailers that have the most optimal prices rather than the lowest ones. Therefore, in addition to setting the most optimal price, it is important to persuade shoppers that you boast prices with the best bargain within the market. Take, for example, Amazon; they are really smart in terms of creating the proper price perception by taking into consideration a number of variables such as customer behavior, company objectives, market information, and the weather, among many others. The thing is, though, a lot of the time, retail managers don’t have enough time, nor do they have all of the skills necessary to process as well as utilize all of the data needed in order to set the best prices. In fact, Bogdan Nesterenko, the Head of Cross-border Projects at Northern European omnichannel electronics retailer RD Electronics, claims that “If your product managers say they would rather use their experience to set the prices, do not believe them. Human managers cannot work better than a machine.” They probably, shouldn’t though, which is something that a lot of mature retailers have realized. Instead, they’ve understood that both their managers and their agents are better off putting their energy into direct communication with their customers or into focusing on a more balanced pricing strategy. Indeed, technology amplifies their proficiency in dealing with routine jobs and evaluating huge collections of information, while also offering both market and customer insights. Since decisions are made by machines, managers can instead focus on making more high-level decisions that way they can make sure that their customers are made the main priority in each project that the retailer is working on. As a result, companies are taking advantage of AI-powered price optimization. For instance, Amazon makes over 35% of its revenue through AI price management. When you think about it, they took over almost half of the American ecommerce market in 2018 or, in other terms, $258.22 billion, proving how remarkable their AI-driven earnings are. So, why is price optimization so efficient?

Why Price Optimization is So Efficient

AI in ecommerce considers an unlimited amount of information whenever it is calculating prices, regardless of the number of pricing and non-pricing parameters so that it can both forecast demand as well as suggest the best prices in actual time, which is simply impossible for managers. In addition, it is able to offer the best way to create the proper price perception for either a certain item or a selection of items that way you can persuade your shoppers into believing that you have the most optimal prices in the market. On top of that, AI predicts demand, allowing retailers to try out their pricing strategies to see if they are really customer-oriented. Through it, they are able to gain the attention of way more customers while also making sure that the first stage of the customer journey is rewarded.

As you’ve learned, the customer experience is turning into the main business priority for a lot of retail companies with the price playing the biggest rule in rewarding the customer journey. As a result, retailers are taking advantage of innovative technologies in order to make sure that their prices gain the attention of shoppers. Indeed, a lot of companies have begun utilizing AI-powered price optimization in order to be able to take into consideration a large number of variables when calculating pricing, allowing managers to pay more attention on customer interactions as well as on making customer-oriented pricing strategies.

 

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