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Businesses use AI but face challenges around transparency, lack of customer data – Twilio

The report underpinned the growing importance of disclosing how brands use customer data to deliver AI-powered experiences. It also raised a warning about the risks of underestimating consumers’ expectations for transparency.

Businesses are using artificial intelligence (AI) to power more personalized, intelligent interactions with their customers, but face challenges around transparency and lack of customer data, according to new research from Twilio. The customer engagement platform that drives real-time, personalized experiences for today’s leading brands, released its fifth annual State of Customer Engagement Report.

The global report, covering 18 countries, including the Philippines, surveyed more than 4,750 B2C executives and 6,300 consumers. It explored 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. 

The report underpinned the growing importance of disclosing how brands use customer data to deliver AI-powered experiences. It also raised a warning about the risks of underestimating consumers’ expectations for transparency.

77% of Filipino consumers want clear information on how their data is used in AI, but only 53% of brands are fulfilling this critical expectation. In addition, brands in the Philippines are less likely to inform customers when they’re interacting with AI (41%) and disclose with whom customer data is shared (30%).

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“Customers today expect personalized experiences and want to understand how businesses use their data to shape those experiences,” said Kathryn Murphy, SVP Product at Twilio. “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.” 

Filipinos rank highest in valuing transparent communications as the most effective way to maintain trust

As businesses embrace AI to drive personalized customer engagement, they gather every customer’s click, share, follow, like, and purchase to understand their preferences and needs. More than ever, businesses must keep their customers’ data safe to maintain their trust. This year’s report found that more than any other market, three out of four Filipino consumers regard transparent communication, such as clear and concise terms and conditions, return policies, and privacy policies as paramount for brands to earn their trust.

Consumers aren’t the only ones worried about data privacy. 41% of businesses surveyed report that their most pressing challenge is protecting customer data, with a further 53% citing compliance and data privacy concerns as the biggest obstacles to understanding their customers. Addressing these challenges to enhance the customer experience, 60% of brands in the Philippines say they are leveraging AI for risk and fraud management, a critical strategy for a hotspot for online scams like the Philippines. “When a company safeguards information and invests in AI-powered fraud detection and customer data protection tools, it enhances its customer experience and fosters mutual trust,” Murphy further noted.

AI bridges the disconnect between brands and customers, but activating data and having the right tools remain a challenge

While data is crucial for personalized customer experiences, brands in the Philippines are among the least likely to agree that they have the data needed to understand (51%) and develop comprehensive profiles of their customers (52%).

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The report found AI is helping businesses close this gap and improve their customer engagement. In particular, seven in 10 companies already leverage AI to predict customer behavior, 69% to understand customer needs and pain points, and 68% to personalize content and marketing. As a result, these forward-thinking brands are realizing many benefits, including better data-driven decision-making (48% of companies), higher customer satisfaction scores (47%), and increased cross-selling and upselling opportunities (44%). 

Even as more businesses in the Philippines are embracing AI and have invested in tools like CRM or customer relationship management (70%) and CDP or customer data platform (54%), a mere 54% report having the right tools to understand their customers. On the upside, reliance on third-party cookies decreased from 87% in 2022 to 57% in 2023. 

AI-driven personalization boosts the bottom line but Filipino brands underestimate its impact

When companies embrace AI-powered personalization, consumers reward them by spending an average of 54% more with them compared to brands that do not. Focusing on the Philippines, 57% of consumers are willing to spend more money for a customized experience and half say they’ve made a repeat purchase from a brand based on the level of personalization they received.

Personalization isn’t just preferred by Filipino consumers – it’s expected – and the majority of consumers (78%) are likely to quit a brand that fails to deliver personalized interactions. While 40% of Filipino consumers care about personalization, only 8% of brands treat it as a priority, personalizing engagement just 47% of the time.

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The full 2024 State of Customer Engagement Report is available here.

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