Five ways premium brands can profit with behavioral AI

Behavioral AI helps ecommerce businesses understand, predict, and influence human behavior. Learn how brands are using AI to boost customer engagement and drive revenue.

By Beta Ealy on June 21, 2024

Behavioral AI

As the retail landscape becomes more unpredictable and challenging, brands are constantly trying to provide their audiences with quality products and services for the right price. But creating a pricing strategy that ensures conversion without sacrificing margin and brand health has been nearly impossible without sophisticated price sensitivity and pattern recognition models.

Recent advancements in machine learning have given us the tools to analyze and predict customer behavior, helping retailers implement an effective discounts strategy. Behavioral AI can help premium brands secure sales and preserve brand prestige by enabling a targeted promotional strategy.

In-session marketing, the practice of delivering targeted experiences to users during their online shopping journey, is a marketing capability for ecommerce powered by behavioral AI. This post shares five types of behavior AI marketing experiences that increase consumer engagement and boost sales without compromising brand integrity. 

Prestige vs discounting: a balanced scorecard

Prestige shoppers are no different from other consumers–they love and expect discounts. About 50% of global luxury shoppers only purchase premium brands on sale. And though discounted prices can help commercial goals including increased conversion, new customer acquisition, retention, and inventory reduction, premium retailers have to limit promotional activity for the sake of brand image.

Some retailers choose only to discount out-of-season collections. Others do not run promotions at all, focusing on demand-planning and maintaining tight control on inventory. In-session marketing with behavioral AI provides a new set of options for premium retailers to grow sales revenue with healthy margins and high brand prestige.

5 ways premium brands can win with behavioral AI

1. Exclusives

This strategy uses unique products and experiences that consumers can only earn by shopping. Dior, for instance, has limited-edition, collectible gifts-with-purchase available to a select number of consumers. Other common exclusives include invitations to special events, access to presales, and digital and physical badges.

Behavioral AI can identify the consumers who are the best targets for limited exclusives based on their on-site actions. The exclusives are reserved for consumers whose behavior indicates they will be influenced by exclusives to make a purchase, or to increase their cart size.

  • Implementation: Identify and target loyal customers or members. Display targeted offers or exclusive deals through account-specific notifications or members-only sections.
  • Benefits: Strengthens customer loyalty, encourages repeat purchases, and creates a sense of exclusivity.

2. Limited-time offers

“Flash sales” and other time-sensitive offers create a sense of urgency and can be particularly effective for inventory reduction or to incentivize sales of a specific product category. Other examples include countdown timers, or exclusive deals available only for a short duration.

Premium brands typically seek to minimize limited-time offers in order to maintain the sense of prestige and quality associated with their products. Behavioral AI allows these retailers to use limited-time offers without brand risk by reserving the offers for the visitors and situations where they will have the most sales impact.

  • Implementation: Utilize in-session marketing to display countdown timers or pop-ups informing customers about the limited-time offer. Tailor these promotions based on browsing behavior to maximize relevance.
  • Benefits: Taps into impulse behavior, increases average order value, and helps clear inventory quickly and efficiently.

3. Bundling and upselling

Retailers of all kinds promote product bundles and related products to increase AOV. These tactics are especially valuable for selling high-value items and for selling items at high margin.

Premium brands have long been experts at bundling and upselling in-store. Online, behavioral AI helps retailers display this same selling excellence by offering the bundles and upsells that will perform best for each consumer–much as an experienced store associate will use their intuition to upsell to each store visitor.

  • Implementation: Use personalization tools to recommend bundles or upsell items based on the customer’s current shopping cart. Highlight added value through interactive sidebars or in-line.
  • Benefits: Boosts average order value, enhances customer satisfaction by providing relevant suggestions, and helps introduce new products.

4. Individualized Incentives

Personalized incentives have long been a successful strategy. Whether they offer financial discounts, loyalty rewards, status, or other benefits, these incentives encourage consumers to buy more. However, personalization depends on knowing the identity of a site visitor in order to tailor the right incentive. Personalization works poorly for visitors who browse anonymously, refuse cookies, or are on-site for the first time.

Premium brands can use behavioral AI to deploy incentives based on shopping intent and other real-time context. These incentives are still individualized in that they reflect what the visitor wants, but are not personalized in that they don’t depend on identity. This strategy helps the brand get new customers into the funnel and drive AOV for returning visitors while also maintaining brand perception.

  • Implementation: Use an AI to understand customer behavior and preferences. In-session marketing tools then present tailored messages such as targeted discounts, loyalty offers, or status.
  • Benefits: Enhances customer loyalty, increases conversion rates, and provides a more personalized shopping experience.

5. Social Proof and Testimonials

Social proof messaging and testimonials boost customer confidence and create a sense of urgency to buy. Examples of social proof and testimonials include real-time notifications of remaining items in stock, number of shoppers who have recently viewed an item, or a positive review of the item. To use social proof and testimonials effectively, premium brands need to consider the source and timing.

The source is the person or the entity that provides the social proof or the testimonial, and it should be relevant, trustworthy, and influential. For example, a luxury brand might use a famous influencer, a respected expert, or a loyal customer as a source.

The timing is the moment or the situation that triggers the social proof or the testimonial. Use timing that matches the shopper’s place in the customer journey, and that has the maximum leverage to influence a purchase.

Premium brands can use behavioral AI to maximize the leverage of social proof and testimonials by presenting them to the most influenceable audiences at the highest-leverage moments.

  • Implementation: Integrate in-session marketing tools to show dynamic notifications or pop-ups highlighting customer activity. Use customer reviews and ratings to build trust and credibility.
  • Benefits: Increases trust and urgency, leverages the influence of social proof, and enhances the overall shopping experience.

Profiting with AI

Leveraging behavioral AI to refine pricing strategies and enhance in-session marketing can be a game-changer for premium retailers. By understanding and predicting customer behavior, brands can offer targeted experiences that not only drive sales but also maintain brand prestige and margins. This approach ensures that resources are used strategically, catering to specific consumer segments and optimizing the overall shopping experience.

As we navigate the complexities of the modern retail landscape, the use of advanced machine learning including behavioral AI will be increasingly essential. Retailers that embrace these technologies will be better equipped to deliver consumer experiences that convert, ultimately leading to sustained growth and success in a competitive market.

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