How Small Businesses Can Leverage AI to Improve the Customer Experience

By Grace Lau

Success no longer depends purely on products or pricing. For 80% of consumers, customer experience is the priority. Positive experiences make people feel good about their purchase and the brand, turning them into loyal customers and advocates.

So, in an increasingly connected world, providing satisfying customer experiences is a must to stand out from the crowd, but how do you do it as a small business without blowing your budget? 

Many companies have turned to AI to help improve their processes, with 270% of businesses adopting it in the last four years. AI excels at crunching large pools of data, performing repetitive tasks, and predicting behaviors, making it ideal to meet the demands of consumers in a cluttered marketplace and keep costs low. 

AI is the present. To stand out and succeed, you need to take advantage of it to improve your customer experience. Read on to find out how you can do this with AI.

How does AI improve the customer experience? 

Customer experience can define companies, such as Apple. When done well, it can drive growth. When done badly, it can cripple your business. Unfortunately, smaller businesses often lack the resources to provide a high-level customer experience. Luckily, the most sophisticated AI solutions offered by pentwaterconnect agents can reduce costs without sacrificing the customer service qaulity.

AI-powered solutions outperform humans by eliminating human errors, increasing workforce efficiency, and facilitating data-driven decisions. It uses machine learning and natural language understanding to process data, manage repetitive tasks and analyze customer data in real-time. 

For example, AI chatbots can answer typical questions from customers, directing them to human employees only when needed. It relieves the burden on your employees and reduces your costs, improving business processes.

When used to improve the customer experience, AI strengthens customer engagement, improves brand loyalty, and encourages retention. It creates personalized customer strategies by understanding your customers better.

Personalization is vital for positive customer experiences. Customers want to feel valued and using AI to tailor their journey to them is essential to grow and succeed. While it won’t replace human employees, it’s a valuable asset in their arsenal to provide excellent customer experiences.

customer experience

5 steps to enhance customer experience with AI

AI isn’t a magic spell to improve customer experiences. Like any tool, it’s crucial to understand how to use it.

Below are five steps to using AI to deliver an improved customer experience.

1. Craft a customer experience strategy

Having a clear strategy is vital. First, consider your customer experience strategy.

Think about the vision and expectations of your customer experience. Hold meetings with employees, especially those in customer service and marketing roles. Work with them, using their insights to put together and implement your customer experience strategy.

2. Map and analyze user journeys

Users connect with your brand at different touchpoints and platforms. Mapping and analyzing the interactions and channels they use will show you how they experience your brand. A comprehensive understanding of the customer journey allows you to understand where AI can improve customer experiences and benefit your business.

3. Understand AI solutions

There are several ways AI improves a customer experience strategy, such as virtual assistants, real-time analysis, or AI sales. However, not every AI solution will fit your business. You will have specific business needs and expectations. Here, look at the AI solutions that can integrate into your business model to meet those requirements.

4. Decide to create or buy AI-solutions

Once you know where to use AI you have to decide to build or buy your AI solutions.

An in-house, tailored AI solution can be cheaper than commercial options. But, a commercial CX/AI solution will integrate into your workflow faster. Outsourcing AI development can be a happy middle ground between the two. Your needs and expectations will be the deciding factor here. Consider your budget, resources, and in-house skills. You may need to train or employ staff to drive your AI strategy.

5. Track and measure success

To be successful, you have to ensure incorporation of AI into your customer experience strategy is working. Use metrics and KPIs to track the performance of your AI/CX strategy. Look for signs of improvements or failings. This stage will identify areas for future improvement.

Track and measure success

How AI improves the customer experience

Now we know how to use AI to improve the customer experience. Let’s delve into a few of the applications that AI has.

Supercharging customer service and support

One of the biggest advantages of AI is to make customer service automated, fast, and hassle-free. Providing a human touch is essential for great customer experiences. But employing human teams 24/7 is expensive and unsustainable for small businesses. 

AI doesn’t need to sleep, take breaks or get sick. It can learn new skills, provide consistent performance and keep productivity high. This makes it an essential customer service assistant. Machine learning can scale your support services by giving customers around-the-clock omnichannel support across email, chat, social media, voice platforms, and more. 

For example, AI can interact with customers, providing answers to FAQs while human employees use live chats to deal with complex issues. Two ways to do this are through chatbots and virtual assistants, both of which can significantly impact how customers perceive your brand.


Chatbots are AI-based conversation agents designed to simulate human interactions. They assist customers by answering FAQs, offering tips and advice, and helping place orders.

Virtual assistants

Virtual assistants are similar to chatbots but used for specific situations. For example, as personal shopping assistants.

AI customer service solutions enhance omnichannel experiences, prevent employee burnout and improve customer contact quality.

Generate data-driven insights

AI is brilliant at processing vast pools of data. It can collect, analyze and extract insights from customer data from multiple sources. What takes humans days, AI can accomplish in seconds.

This can help you create individual customer personas giving you an insight into each customer’s wants and needs. This lets you make data-driven decisions to tailor your customer experience around them.

For example, if customers buy a specific product every month, you could introduce a subscription service, increasing sales and revenue. Thus, the more you know about your customers, the more relevant you can make their experience.

Other customer experience analytics include:

  • Geo-location
  • On-site interactions
  • Previous communications
  • Referral sources
  • Device usage
  • Purchasing behaviors
  • Bounce rate

AI doesn’t stop there. As it gathers and analyzes data, it uses algorithms to predict future market and customer trends. This requires lots of data to be effective, but it can give you an edge over competitors.


Better product recommendations

Personalized experiences are crucial to retaining customers. 31% of consumers are more loyal to brands that provide personalization.

AI can facilitate personalized user experiences. By using data, it can tailor services and recommend products in real-time. It can watch what each user is doing on websites or apps and predict future needs and expectations. 

For example, AI can use a product recommendation algorithm to make suggestions based on browsing data, previous purchases, similar customer profiles as they browse an eCommerce site.

Offering better personalization is vital to increase retention, sales and improve customer experiences.

Create engaging email content

One way to engage with your customers is by sending weekly emails and creating customized offers. 

Companies can spend hours – or even days – composing and scheduling emails for different segments of customers. But, even with the best email segmentation, you can’t provide perfect personalization to individual customers.

AI solutions, however, can analyze individual customer patterns and learn about their topics of interest. It enables AI to send dynamic emails with customized content for each customer.

For example, instead of a single email to promote a company blog for a hundred customers, AI can select blog articles based on each customer’s interests. It can then promote the most relevant topic to them. It could even send out customized birthday cards and discounts.

The emails can be based on:

  • Previously read blog posts
  • Interactions with your website such as product searches
  • Total time spent looking at products
  • Previous interactions with call-to-action buttons or links

This saves small businesses time and resources. Employees can focus on complex tasks while AI takes care of repetitive ones. Customized content improves customer experience engagement by providing them with the valuable personalization they crave.


Hyper-relevant ads

Customers can find ads intrusive and irrelevant. AI can change that.

By tracking individual user behaviors and patterns, AI can feed increasingly relevant ads to potential customers.

AI algorithms determine if a person is likely to click on an ad using online behavior, customer profiling, and audience segmentation. Ads can be tailored to individuals, increasing marketing effectiveness. 

Over time these algorithms will improve, providing hyper-relevant ads and improving the first experience your customers have with you.

Use AI to create memorable customer experiences

Small businesses need all the advantages they can get. In an increasingly cluttered business world, excellent customer experience will push you to the front of the crowd.

Using AI is a surefire way to accomplish this. It assists you in collecting retail analytics and knowing your customers better, so you can tailor your services to suit them. You can provide seamless customer service and predict future trends, outperforming your competitors.

With AI you can grow your revenue, lower costs, and allow your employees to focus on complex tasks. Your business can handle an influx of new users without putting strain on your workers, improving the quality of customer experience you provide.

The challenge for AI is understanding how and where to use it. Develop a customer experience strategy and look for ways to use AI to boost your efforts.

AI isn’t a magic spell. It won’t fix everything by its presence. Although, by taking advantage of AI-powered solutions, you can give your customers an immersive experience they won’t soon forget.


About the Author

Grace Lau

Grace Lau is the Director of Growth Content at Dialpad, an AI-powered cloud communication and customer interaction management platform for better and easier team collaboration. She has over 10 years of experience in content writing and strategy. Currently, she is responsible for leading branded and editorial content strategies, partnering with SEO and Ops teams to build and nurture content. 


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