Be honest — exactly how does your organization plan to strategically leverage artificial intelligence? The technology has captured the imagination of businesses like few others, but in the dazzle and hype it’s actually an often-neglected consideration. The truth is, AI requires far more planning and careful integration than many anticipate, a mistake now likely to be amplified on an industrial scale as investment in the technology blooms.
Yes, AI has the power to reshape CX in hugely positive ways, helping businesses move far beyond traditional engagement models. But it is not a silver bullet that automatically solves complex customer experience challenges, and it can’t just replace the status quo at a reduced cost.
Instead, the correct deployment of AI has the capability to radically enhance relationships and augment the hard work of humans. So to help make this a reality, this article explores some of the defining principles every business should consider to get the most out of their AI investments, based on our experiences working with businesses on cutting edge CX strategies.
The New Loyalty Model
Personalization and loyalty will always underpin a good CX strategy. However, in the age of AI, this is evolving. While transactional and points-based loyalty programs still have a place, true loyalty is increasingly earned by anticipating customer needs and delivering seamless, valuable experiences. AI can play a crucial role here in understanding the nuances of customer behavior, enhancing personalization and creating organic loyalty by improving experiences rather than just rewarding purchases.
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For example, a clothing retailer might use AI to analyze browsing history, purchase patterns and even social media interactions to predict which customers are likely to be interested in a new product line before it even launches, offering them exclusive early access. This level of hyper-personalization, operated at scale, fosters a sense of true value and significantly strengthens the customer relationship. Achieving this, though, demands a deep understanding of the customer journey and how AI can enhance each touch point. It’s not just about having a smart algorithm.
Indeed, many organizations make the mistake of assuming that investing in AI will automatically revolutionize their customer experience, forgetting that it must be strategically integrated with the right foundational elements.
Data, Infrastructure and a Vision
AI models are only as good as the data they’re trained on or fed, which means businesses will require high-quality inputs, and in that regard relevant, timely and diverse first-party data is the gold standard. Without it the technology risks becoming ineffective at best and harmful at worst. However, many businesses overlook this essential component, leaving powerful AI tools to operate in a vacuum.
Yet even having the best first-party data is still useless without the right infrastructure to store, process and analyze it at scale. This data often includes legacy data acquired by businesses over many years and also means including valuable knowledge that is often scattered across silos, unstructured documents and databases, and untapped human expertise.
And let’s not forget the big picture: AI needs a purpose. What problems are you solving? How does it fit into your wider CX strategy? Without a clear strategic vision, AI risks becoming a solution in search of a problem.
The most successful AI implementations follow a structured, deliberate approach, beginning with carefully designed proof-of-concept phases and scaling incrementally based on measurable outcomes. It’s a process that requires a culture of patience and curiosity and a mode of working that is both agile and iterative. Furthermore, goals should be clearly defined, and achievable KPIs should be set based on customers’ specific needs.
In our experience, no AI-driven customer experience solution has succeeded without ongoing performance monitoring, feedback collection and model refinement using real-world data. This approach, which ultimately is about identifying pain gaps to build a better view of audiences, remains the most effective way for businesses to keep pace with evolving customer needs and market conditions.
In the mid- to long-term, the integration of AI must also be holistic, spanning the entire customer journey rather than existing as isolated technological interventions. Businesses need to avoid a CX experience where one touch point is really slick, smart and useful but another isn’t, particularly because the bad can easily outweigh the good.
Furthermore, businesses require early and comprehensive involvement of stakeholders from legal, compliance and data teams to address potential regulatory and ethical considerations. Success also should be measured across all dimensions, tracking engagement and sentiment across multiple channels and interaction points.
AI’s Role in Real Relationships
The narrative of AI replacing human interaction is commonplace but misleading. The most successful CX strategies leverage AI to enhance, rather than replace, human capabilities. AI excels at handling repetitive tasks, allowing human agents to focus on complex, emotionally led interactions that require empathy and critical thinking.
For example, AI-powered chatbots can manage routine inquiries, freeing up human agents to provide personalized advice and resolve escalated issues. This balance enables businesses to offer 24/7 support while still maintaining a human touch where it matters most. This is what good CX looks like.
However, poorly executed automation can do more harm than good. Rigid chatbots and impersonal interactions risk frustrating customers rather than enhancing their experience. AI must be designed with intelligence, trained on high-quality data and be able to recognize when human support is needed to ensure smooth and satisfying interactions. It’s like a hotel failing to train its front-of-house staff — what’s the point of a receptionist who doesn’t know how to check in a guest or book a taxi?
The changing competitive landscape further highlights the need for strategic AI deployment. AI-powered shopping assistants — such as those we see in the AI search engine Perplexity — are redefining how consumers discover and purchase products, shifting brand engagement toward algorithm-driven experiences. Essentially, the consumer can now bypass the branded webstore or marketplace, signaling a paradigm shift that removes the emotional and symbolic aspects of buying and focuses instead on the transaction in a more brand-agnostic fashion.
Our view, therefore, is that businesses must prepare for an era in which customers increasingly rely on AI intermediaries for purchasing decisions, meaning trust and reputation will be more important than ever. Companies that fail to integrate AI thoughtfully risk becoming invisible in an AI-driven marketplace.
To be blunt, technological and strategic inaction will kill off some businesses. While some organizations dither or forget the foundational elements we’ve outlined, others are aggressively accelerating their AI-driven CX strategies with a high-performance iterative approach. These businesses are the ones setting new benchmarks for their markets. Companies that get this wrong may find themselves marginalized as competitors enhance customer engagement through AI-driven insights and capabilities.
So again, be honest — exactly how does your organization plan on strategically leveraging artificial intelligence? If you’re moving ahead and dreaming big but the foundational elements are not yet in place, pause and recalibrate. AI is a hugely exciting and powerful tool, but, like any other tool, wielding it requires skill and care.
Scott Michaels, Chief Product Officer at Apply Digital, is an experienced strategist and product leader specializing in digital products, including large-scale consumer platforms with more than 100 million users. At Apply Digital, he engages with clients, communicates strategy with senior stakeholders and leads the company’s innovation-focused Lab team, which excels in bridging the gap between business and technology stakeholders. Lauren Milne is Chief Strategy Officer at Apply Digital. With over 15 years of experience, she excels at collaborating with businesses to drive digital transformation, generating meaningful value across industries. She has worked with Fortune 500 brands in sports, entertainment, healthcare, hospitality, retail and financial services. At Apply Digital, Milne collaborates with teams to solve complex challenges, leveraging her expertise in business transformation, innovation and digital strategy.
