How Retailers Like Starbucks Use AI to Improve the Customer Experience
Artificial intelligence (AI) is at the core of many consumer facing technologies including voice assistants, facial recognition and search engines. According to an eMarketer survey the most popular use of AI by retailers in North America and the UK is for search (37% of retailers) followed by recommendation engines for products/content (33%) and then data science (26%). While use of AI within the retail sector is still developing here are a few retailers that are using AI to provide better customer service and an enhanced customer experience.
1. Starbucks
Starbucks may not be the first company that comes to mind when one thinks about AI. But Starbucks is starting to look more like a technology company that sells coffee. Starbucks’ popular mobile app features My Starbucks Barista which allows customers to place and pay for their orders by having a conversation with a virtual barista. Then customers can pick up their order at a nearby Starbucks. The feature is so popular that some Starbucks stores have lost business from walk-in customers that do not want to wait in long line ups caused by virtual orders.
The app also provides customers with personalized recommendations for additional products they may want to purchase based on their purchase history. According to Starbucks' Chief Technology Officer they use “a data-driven AI algorithm based on your own preferences, your own behavior as well as behaviors that [Starbucks is] trying to drive”. Starbucks has said that its personalization initiative “is the single biggest driver” of improved spend per customer it has seen.
If you had to guess the name of Starbuck’s artificial intelligence program you would be right if you thought it had a link to the bread and butter of its business. Deep Brew is the name of Starbucks’ artificial intelligence program and in Starbucks’ words it is focused on “nurturing humanity”. That’s a step away from what we often think about when we think about artificial intelligence, but Starbucks may be on to something. The focus of the program is to use artificial intelligence to automate repetitive tasks like scheduling and inventory management so that humans can be freed up to spend more time with, well, more humans, also known as customers.
Speaking about Deep Brew on an earnings call last year, Starbucks CEO Kevin Johnson said: “I want to highlight another very important element of our digital strategy, artificial intelligence. Over this past year, we have been dialing up our in-house capabilities and investments in AI with an initiative we call Deep Brew. Deep Brew will increasingly power our personalization engine, optimize store labor allocations and drive inventory management in our stores.”
“Deep Brew is also already being applied to personalize customer offers and recommendations on our mobile app to improve the customer experience. Deep Brew solutions will support our partners in many ways such as sequencing orders, anticipating equipment maintenance, streamlining supply chain logistics, and more. It’s all so our partners can spend more time focusing on the most rewarding parts of working at Starbucks – connecting with customers and practicing their coffee craft.”
Starbucks has also put AI in its coffee machines, yes you read that correctly. Last year Starbucks began rolling out AI enabled Mastrena II espresso machines. These machines not only brew your coffee but they collect data using built in sensors that know exactly what customers are buying and in what quantities. This data is then used to provide recommendations on inventory, local advertising plans and personalized drink recommendations. They also flag when a machine needs repairing. Starbucks hopes the technologically advanced espresso makers reduce operating costs. By the end of next year these machines will be in all stores in Canada and the United States.
2. Lowe’s
Lowe’s has introduced LoweBot, a customer service robot. The robot uses natural language processing to answer customer questions. If you ask the LoweBot where can I find lightbulbs, the LoweBot will travel across the store to show you where lightbulbs are located. It can also provide information on what is in stock in store. This information can be accessed by customers directly or by store associates.
One of the goals of the initiative is to provide store associates with readily available data so that they can better assist customers. The goal is to augment the work of sales associates (not to replace them) so that they are available for higher value tasks. When asked if the LoweBot could eventually eliminate jobs, Kyle Nel, Executive Director of Lowe's Innovation Labs said “most definitely not — my phone doesn't make me obsolete."
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3. Neiman Marcus
Neiman Marcus launched a feature within its mobile app called Snap. Find. Shop. Customers use the feature by taking a picture of an item using their smartphone camera while in the app. The app then scans its inventory to see if Neiman Marcus carries a similar shoe or handbag. If it does it makes a product recommendation which the customer can purchase. The innovative app has increased customer engagement and overall app usage. Scott Emmons, Head of the Innovation Lab at Neiman Marcus calls the functionality the “Shazam for shopping”.
All of these innovations show the impact that technology can have on providing a better customer experience. If organizations can get the application of leading technologies such as AI right they will reap the benefits in terms of better customer engagement and higher revenues.