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Artificial Intelligence and its Impact on the Purchasing Process

By Juan Vallejo - Google Mexico
Sector Leader, Retail

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Juan Vallejo By Juan Vallejo | Sector Leader, Retail - Fri, 05/19/2023 - 12:00

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In recent years, at a global level, a series of macroeconomic changes have occurred, from inflationary factors to less investment in all countries of the world, that have altered the way in which consumers manage their money, causing them to become more cautious with their finances and in the decisions they make when making purchases, reinforcing their research process. This is a very different reality compared to several years ago.

Mexican consumers aren’t exempt from the effects driven by the global environment: 9 out of 10 consumers report that their way of shopping has changed considerably compared to the beginning of 2020, before the pandemic; they now spend more time researching a product or service before deciding to buy it, according to a study we conducted earlier this year in conjunction with the research firm Offerwise.

If buyers are making more cautious transactions and doing more research, what can businesses do to approach them and stay among the best options? To answer this question, it’s necessary to understand where they are conducting their searches and what means they use to investigate products and services of interest. For example, the same study showed that 46% of shoppers browse in physical stores, while 42% go to Google and 38% to YouTube. However, when asked about the relevance of these platforms in their purchase process, they took on an even greater importance, increasing respectively by more than 30 percentage points (76%) and 15 percentage points (53%).

These changes in the economic paradigm aren’t  distinguished by generations. The study found that Generation Z, young people born between 1997 and 2012, consider price to be the main deciding factor when making a transaction with 73%, followed by ease of purchase and previous experiences with a brand. This isn’t a big change  from the 75% of previous generations who pay particular attention to the cost of products, but it’s a key indicator of the importance that personal finances and their administration have taken prior to a purchase decision.

Bearing in mind that the aforementioned channels are destinations where people go to find answers and recommendations, and discover new products and brands, it means an opportunity for companies of different sizes and industries to innovate and integrate solutions into their well-established strategies that allow them to stay close to their clients. Artificial intelligence (AI), for example, has various benefits, including the ability for businesses to grow profitably, find potential customers, have greater knowledge about buyers, and even grant the ability to enhance creativity, therefore generating greater value and impact.

I want to bring into the conversation the success story of Best Buy, the multinational brand that offers consumer electronics. This company wanted to respond to the changes in the business environment and the new expectations of its consumers by improving its performance with Google Ads. The team decided to test Performance Max, a tool that integrates AI capabilities into its core to reach the target consumer through the right channels, at the right time. This solution helped Best Buy increase its return on ad spend by 33%, while boosting its omnichannel revenue by 42%.

Looking ahead, predicting consumer needs in changing contexts, such as that of recent years, represents an opportunity that AI and automation solutions can help capitalize on. It’s also essential that retailers stay on top of changes and be flexible with them, making use of technology to optimize their strategies according to what the market demands of them, and their own plan, from expansion to the incremental increase of a specific product. 

As for consumers, video has become highly relevant among audiences, particularly for the youngest. Given the wide variety of content available online, there are new tools where AI generates video ads and improves existing ads through the automation of creative processes, giving businesses more options to reach the right audience in less time and with fewer resources. 

Offerwise points out some of the priorities that consumers will have in the future: 64% will seek to make purchases more practical and faster, 60% expect new payment methods to emerge, and 44% want their shopping experience to be more innovative and technological. Also, consumers are looking for a more personalized experience while they do their shopping (42%), and expect more channels for them to receive client attention (34%). Taking these insights into consideration, future consumers are calling for something new in their shopping experience. 

Addressing these preferences and the changes they cause in an agile manner is possible with the help of technology. Therefore, this is the time to bet on strategies that combine the proven with the new. Opening the spectrum to incorporate different solutions, capable of optimizing execution time, isn't giving up control, it’s opening up the opportunity for better results.

Photo by:   Juan Vallejo

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