Brands' AI adoption hampered by lack of trust and data

Businesses appear to be making good progress on implementing artificial intelligence to help power customer interactions, but are still finding both a lack of customer data, as well as transparency in how they are using that data, to be major challenges.

So says Twilio’s fifth annual State of Customer Engagement Report which reveals the growing importance of brands disclosing how they use customer data to deliver AI-powered experiences, as well as a disconnect between brands and their customers on this transparency. While 93% of UK brands say they are transparent with customers about how AI uses their data, only 40% of customers agree.

The report, based on a global survey across 18 countries of more than 4,750 B2C executives and 6,300 consumers, explores how brands are implementing AI to build better relationships with their customers, where AI is yielding the most return on investment for brands, and what engagement trends are most important to consumers.

It finds that trust is most effectively maintained by balancing security and customer experience. This year’s report reveals nearly two-thirds (64%) of UK consumers think protecting their data is the top way for brands to earn their trust.

Almost half (49%) of consumers globally say they would trust a brand more if it disclosed how customer data is used in AI-powered interactions. Meanwhile, 40% of businesses think finding this balance between security and customer experience is one of their most pressing challenges this year.

AI is helping close the customer experience gap, but businesses are still struggling with having the right data in place. Over a quarter (27%) of UK businesses say they provide ‘good’ or ‘excellent’ customer engagement, yet only 9% of UK consumers agree.

AI is helping, with almost seven in ten UK companies already using it to personalise customer experiences, but 69% of UK brands say inaccurate data or a lack of first-party data are major challenges to their ability to understand their customers. Just 19% of businesses globally strongly agree they have a comprehensive profile of their customers.

Perhaps unsurprisingly, customers spend more if they have a personalised experience, and are likely to go elsewhere if a brand does not offer it. Nearly half (47%) of UK consumers are likely to spend more money with a brand that is personalising engagement, compared to those who are not, while a similar proportion (45%) say they have made a repeat purchase from a company based on the level of personalisation they have received, with 78% giving up on a brand entirely if their experiences are not personalised.

Twilio SVP product Kathryn Murphy said: “Customers today expect personalised experiences and want to understand how businesses use their data to shape those experiences.

“It’s imperative for brands to be clear about how they use AI, ensuring that they balance how they deploy it with equally robust measures to protect customer privacy. Transparency is not optional — it’s a critical component of building and maintaining customer trust and loyalty.”