CX disconnect: businesses believe in AI-driven personalisation but consumers aren’t sold

Over 80% of businesses maintain that AI-driven personalisation will improve customer experiences, but fear over how their data will be used is holding consumers back from embracing the technology.

Nine in 10 businesses are using AI-driven personalisation to drive growth with 81% believing new AI tech has the potential to positively impact customer experiences (CX).

Twilio’s annual State of Personalisation Report revealed AI’s ability to provide personalised CX hasn’t gone unnoticed among businesses, but consumers remain sceptical of the technology with less than half (49%) trusting brands to keep their personal data secure and use it responsibly.

Disconnect in AI confidence

Businesses have shown they are unafraid to experiment with AI technology as they try to identify new avenues for growth. However, research has highlighted a startling need for consumer confidence in the technology to increase.

AI allows organisations to harness high volumes of real-time data and power their personalisation efforts to provide more sophisticated CX. According to Twilio’s report, 92% of global businesses have turned to AI-driven personalisation for business growth.

This enthusiasm for the technology is not shared by consumers. Just 36% of European consumers feel comfortable with companies using AI to personalise CX, citing fears these brands won’t keep their personal data secure.

The lack of confidence among consumers presents a challenge for businesses, as without robust data sets, AI-driven personalisation will struggle to improve CX and likely increase consumers’ cynicism surrounding the tech.

AI-driven personalisation: marrying quality and privacy

Half of global companies reported that they struggle to get accurate personalisation data, this has increased by 10% since 2022 and 31% of businesses cited poor quality data as a major obstacle in leveraging AI.

Despite this, organisations are committed to overcoming these challenges, with 97% of those surveyed taking steps to address consumer privacy concerns, demonstrating a desire to use data responsibly. Customer Data Platforms (CDPs) for managing customer data were the most popular technological investment on this front.

Sam Richardson, Customer Engagement Consultant at Twilio believes prioritising first-party data is the key to successfully marrying quality with privacy when it comes to AI-led personalisation.

He said: “AI has the potential to enhance the toolkit of every marketer and CX professional so they can meet growing customer demand for personalisation. However, there is still a lot of work to do for brands to reassure consumers and they must prioritise building trust and transparency. Real-time, first-party data will be key here for brands to maximise the potential of AI thoughtfully and responsibly.”

Start with Gen Z

Data indicates that digital natives Gen Z are both more influenced by and more willing to embrace AI. Almost three quarters (72%) of Gen Z respondents said that personalised experiences have influenced their purchase decisions and a third already expect brands to use AI for their CX.

Notably, only 15% of Gen Z consumers reported being uncomfortable with AI being used for personalisation. This compares to 24% of Millennials, 34% of Gen X and 43% of Boomers.

These higher levels of openness towards the tech suggests marketers should potentially consider Gen Z as the first domino to attempt to knock over in their efforts to improve consumer sentiment towards AI.

Benefits of AI-driven personalisation

Customer retention was considered the top benefit of personalisation among 62% of business leaders surveyed. In such a competitive market, retention is a key component for marketers ongoing success with a brand.

Despite reservations towards the tech, consumers are increasingly affirming the value of personalisation, with over half (51%) of European consumers reporting they will become repeat buyers after a fulfilling personalisation experience.

Richardson said: “There is a big opportunity for brands to build customer loyalty and lifetime value by engaging consumers with tailored experiences. And, ultimately, companies that provide a clear understanding of how customer data is being used will be best equipped to establish a strong foundation for successful personalisation efforts.”