In 2012, Target predicted a customer was pregnant, and then sent offers to her for products like diapers. Some saw this as a disconcerting invasion of privacy. However, it also demonstrates the potential insights that can be gleaned from data using artificial intelligence (AI) to help inform the next step that should be taken.
Additionally, entertainment industry companies such as Netflix leverage the horsepower of AI all the time to make movie recommendations.
These kinds of transformational changes are becoming integral across many sectors. They are defining industries, enhancing the customer experience and adding to the bottom line – and chief executives without the right tools and the right people to make it a reality are going to be left behind.
However, it’s important for CEOs to think about the best way to apply AI within their organization. First, it’s not necessary to set up a data center or create a group dedicated to AI. Instead, leverage the resources that already exist in functional groups with people who are passionate about AI, such as computer programmers, statisticians and employees with an analytics background.
Second, partner with a tech-enabled firm with AI experts to constantly invigorate your organization with new capabilities.
Third, if you are building fresh capabilities, leverage cloud computing platforms to save time and money to build a sustainable solution. To remain competitive, it’s essential to continuously develop innovative capabilities.
The concept of AI is not new, and it has already disrupted many industries, including retail, automotive, hotels, airlines and media. A specific example seen in the automotive retail industry outlines how CEOs can get the most out of their companies’ data. A C-suite executive of one of the largest auto dealer groups in the nation with over 100 dealerships nationwide wanted to transform the car-buying experience from a painful, multi-hour, day-long ordeal into an easy and exciting experience for the customer. A dynamic solution was developed leveraging AI, which enabled the automotive dealer group to analyze vehicle trade-ins, purchases and driving habits of customers, and then it recommended two to three specific ancillary products to car buyers.
Before the solution was in place, the finance & insurance manager would offer 15 different products to their customers. Now, the solution recommends two to three products that are tailored to the customer, which increased products bought per transaction, and overall margins.
The automotive dealer group results achieved an increase in finance & insurance profits of 7 percent, over 6 percent improved ancillary product penetration, and 60 minutes in reduced time to complete a transaction on the lot. Thanks to the power of AI, the firm saw tens of millions of dollars in profit gains.
The examples above are just a glimpse into how AI has the power to fundamentally transform the way a company does business. It’s not as exciting as robots and flying cars, but AI can help CEOs shake up their industry and move miles ahead of the competition.
With the right team in place, battle-tested technology and change management, companies can eliminate the unknowns that are holding them back – all with data they already have at their disposal.