With AI becoming ubiquitous across industries, a majority (89%) of business leaders believe ethical use of AI can be a competitive business advantage. Over half (54%) said they are addressing consumer concerns around data privacy and ethical considerations in AI by implementing robust privacy controls.
Twilio's recent State of Customer Engagement Report found that almost half (49%) of respondents said they would trust brands more if they openly disclosed the use of customer data and AI-powered interactions. With a careful balance of innovation, transparency, data privacy, and ethical best practices, organizations can maintain consumer trust as they leverage AI to deliver better customer experiences.
"Personalization is table stakes in the world of marketing. Today's consumer not only expects brands to understand them, but they want brands to anticipate their needs, and AI is making that a reality," said Robin Grochol, VP of Product Management at Twilio. "Our latest State of Personalization Report found that most business leaders are shifting from reactive to predictive personalization to help them deliver on increasingly sophisticated and dynamic consumer demands."
Now in its fifth year, the report underscores how evolving consumer demands drive business leaders to focus on delivering predictive, emotionally intelligent, and highly personalized customer experiences. AI is central to this shift, with businesses utilizing more dynamic models and metrics, enhancing interoperability between tools such as Customer Data Platforms (CDPs) and data warehouses, and prioritizing data privacy and the ethical use of AI.
The report also found that Gen Z (18-27 year olds) are setting the trends that will shape the future of engagement. A generation of digital natives who grew up immersed in tech, Gen Z holds massive buying power and is breaking the traditional marketing funnel with their unique preferences, including higher expectations for authenticity, transparency, and engagement on their terms.
It's clear that businesses are receiving the message, as 85 percent of companies currently plan to adjust or optimize their marketing strategy to accommodate Gen Z consumers' unique needs and preferences.
In alignment with the demands of the Gen Z consumer, 86 percent of business leaders expect a significant shift from reactive to predictive personalization across the industry. Brands are pivoting to anticipate what's next from consumers, using AI/ML to craft experiences tailored to individual needs and preferences. This proactive approach allows brands to engage customers with the right messages at the right time.
Artificial intelligence equips businesses with the ability to process massive amounts of data in real-time, providing the needed insights to craft dynamic customer engagement. This is fundamentally changing the way brands can and will interact with customers.
As part of this shift, 82 percent of leaders emphasize embedding emotional intelligence, or the ability to respond to human emotions, into AI systems. Additionally,80 percent of marketers plan to adopt more sophisticated metrics (customer lifetime value, emotional engagement, and brand affinity) to measure the effectiveness of personalization beyond traditional engagement and conversion rates.
From marketing to customer service, the report found AI will become the silent partner helping companies address consumer expectations and harness data-driven insights to deliver targeted personalization. Additional findings include:
73% of business leaders agree that AI will change personalization and marketing strategies.
58% of business leaders believe that AI chatbots will be the most impactful AI-driven personalization technology over the next five years.
By 2025, 59% of surveyed businesses expect their teams to use AI daily.
72% of companies use a customer data platform (CDP) for personalization, while 48% use a data warehouse. A CDP's strength in handling real-time customer data meshes seamlessly with a data warehouse's robust, scalable environment, providing a dynamic approach to personalization.