Innovate for the Customer: The Key to Competitive, Lasting Differentiation
Learn why AI solutions should address customer pain points, drive user experience, and provide benefits to build trust.
Doug Johnson, vice president of product at Acumatica, stresses that leadership must support the customer-driven approach to innovation. Executives should set a clear vision, promote a customer-centric culture, and allocate resources to stay responsive to customer needs.
We have entered a fascinating era of technology in which the exciting new possibilities around artificial intelligence go hand in hand with concerns over unintended impacts and consequences. And where the transformative power of new AI capabilities comes with overblown hype that every new product and feature is the next big AI innovation. In this landscape of hype and confusion, one fundamental principle remains paramount for enduring success for IT vendors: understand what the customer wants and deliver what they need.
Let’s be clear: AI is coming. There is tremendous business interest and potential value for companies to integrate AI-powered solutions into their operations. Delivering solutions that smartly leverage the latest technologies and capabilities is fundamental to what businesses need to stay ahead. Research indicates that businesses are approximately three times more likely to meet their customers’ needs using these capabilities.
So, AI can play a pivotal role in fostering technologically advanced developments. However, these innovations need to serve specific purposes and solve real-world problems. Keeping customers top-of-mind will help solution providers garner trust and be relevant and successful in this new age of AI.
Here are some approaches to adopting a truly customer-first approach to better serve clients, differentiate product offerings, and build trust and loyalty in an increasingly competitive landscape.
The Impact of Customer-Centricity on AI Innovation
In January 2024, Forbes contributor David Henkin reported that customer-centric innovation creates value by focusing on addressing real-world needs and experiences. In AI, it means developing technologies that solve customer pain points, enhance the user experience, and provide tangible benefits to businesses.
Vendors must acknowledge that the cost and delivery of solutions must be designed to meet the customer’s use case. For example, a solution highlighting potential data and process anomalies is only helpful if the cost of highlighting problems is less than the benefit of catching the errors sooner. An AI solution that makes sales suggestions is not useful if it takes ten minutes to crunch the data, and a support chatbot making incorrect or not applicable suggestions may cost more in terms of brand loyalty than it saves in support hours.
Solution providers that center AI innovations to address the real-world issues facing businesses today are ultimately better able to forge lasting customer relationships and establish a stronger, more trustworthy brand.
Consider supply chain management, which comes with complex challenges such as predicting product demand, optimizing inventory levels, and streamlining logistics. Amazon employs AI algorithms for predictive inventory management, forecasting product demand based on factors like buying trends, seasonality, and market changes. The AI system enables Amazon to make real-time adjustments, reducing operational costs and improving customer satisfaction with timely availability and deliveries.
See More: How Digital Innovation Is Transforming the Customer Experience for Manufacturers
Addressing the Customer’s Concerns
When investing in AI-powered solutions is a top priority for many organizations, concerns remain over the consequences and implications of these technologies on privacy and security. As businesses strive to offer personalized experiences through AI, they must prioritize compliance with data privacy and security regulations, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). Compliance with increasingly stringent guidelines safeguards customer trust and brand credibility.
Technology vendors must also design AI-powered solutions that ensure inclusivity and accessibility. Similarly, businesses that serve customers across multiple industries must consider how their solution will support each vertical’s unique needs. For example, retail use cases will differ from manufacturing or distribution use cases.
Solution providers must address these concerns by constantly improving and adapting the products they create. Technology’s fast-paced nature and ever-changing customer expectations require regularly updating and refining AI solutions based on ongoing customer feedback.
Examples of this can be found in our own homes with streaming services like Netflix that are able to execute this process well. In August 2017, Libby Plummer of Wired reported that over 80% of the viewership on the Netflix platform is driven by AI recommendations, which analyze user habits, ratings and favorites to tailor suggestions. Additionally, Netflix utilizes machine learning (ML) to guide content creation and adapt to customer feedback. Through ML algorithms, the platform discerns the key attributes that enhance viewer satisfaction, granting Netflix a competitive advantage in video streaming innovation and content experimentation.
Beyond this ongoing feedback loop, there are additional best practices that can help vendors develop a more customer-centric approach to AI development and deployment.
Smart Approaches to Customer-Focused AI Development
It starts with fostering a customer-driven innovation philosophy revolving around understanding and solving customers’ most pressing challenges. Digital surveys and user testing sessions allow vendors to gather direct customer feedback, offering a clearer picture of their experiences and expectations.
Below are additional tips and best practices to help modern businesses combat the challenges accompanying AI innovation.
- Take measures to understand and track regulations and privacy laws: In today’s digital age, where data breaches and privacy concerns are prevalent, customers are looking for solution providers adept at creating advanced AI solutions and well-versed in evolving global privacy regulations.
- Conduct regular testing to check for bias: AI is susceptible to inheriting biases in its training data, which can lead to discriminatory outcomes or accessibility barriers. Regular and rigorous testing for biases related to timing and fads is essential to mitigate these risks.
- Take your time: It’s critical to have a comprehensive plan for developing and implementing new technologies. The plan should articulate where and how the solutions fit into business operations. Rushing to create and launch an AI product can leave the business vulnerable to hidden flaws or security and privacy breaches. These issues can consequently damage the brand’s reputation and credibility.
Leadership’s Role in Customer-Driven AI Innovation
These best practices can only take root in organizations with a customer-driven approach to innovation and a customer-centric culture. This culture starts with the organization’s leadership team. Leaders are uniquely positioned to set a clear vision for their employees to ensure that every decision and enhancement drives toward enhancing customer satisfaction. Leaders set the tone, encouraging teams to think from the customer’s perspective, and they can model customer-first behaviors by promoting empathy in problem-solving and requesting and implementing feedback from customer-facing teams.
The executive team also sets a strategic direction, allocating resources and ensuring that the organization remains responsive to evolving customer needs and preferences. By championing a forward-looking and customer-centric culture, executives can drive sustainable growth and competitive advantage in today’s business environment.
As we navigate AI’s complex and ever-evolving landscape, these rapid advancements in technological capabilities must be grounded in a more thoughtful and deliberate approach that addresses the customer’s needs. Those who strive to deliver AI technology that is more than just hype pave their path to sustained success with responsible, practical, and valuable principles of customer-centric innovation. This approach distinguishes these solution providers in a crowded field and fosters a deeper connection with customers, enhancing loyalty, trust, and a formidable market position.
MORE ON AI IN CUSTOMER EXPERIENCE
