How AI revolutionizes product personalization

Data: the key to predictive recommendations

With the rise of e-commerce and digital applications, businesses are generating huge volumes of customer data, including past purchases, social media interactions, site searches and browsing histories. AI algorithms, particularly those based on machine learning, are capable of combining this data to anticipate future consumer behavior.

An emblematic example of predictive recommendations comes from Amazon. This e-commerce giant uses sophisticated algorithms to analyze each customer's purchase data, taking into account things like order history, product views, and even reviews left by other similar customers . Amazon's system then suggests products that, according to its AI, have a high probability of being purchased by the user.

Key figures:

• 35% of Amazon's sales come directly from its predictive recommendation systems.
• Conversion rates can increase by 5 to 15% thanks to AI-based recommendations (source: McKinsey).

Stitch Fix, an American online styling company, relies entirely on personalized AI recommendations. Their model combines predictive algorithms and human expertise to offer their customers boxes of carefully selected clothing. AI analyzes user preferences based on their profiles, but also through answers to specific quizzes, their purchase history, and even the items they return.

Result: 85% of Stitch Fix customers find pieces that perfectly match their tastes thanks to AI.

Benefits for the company:

• Inventory Optimization: AI predicts which items will be most in demand, reducing unsold stock.

• Ultra-personalized customer experience: Every customer feels unique and valued.



• Increased customer retention: Customers who find personalized products are more likely to return. Stitch Fix boasts a 90% customer retention rate.

Finally, let’s take the example of Starbucks. Using AI, the company can not only personalize promotional offers sent to customers based on their past preferences, but also anticipate what they might want to consume in the future, based on the weather, time of day or their previous habits. This strategy helps maximize sales while strengthening customer engagement. Starbucks has distinguished itself by intelligent use of artificial intelligence (AI) to personalize both its products and its marketing campaigns, creating a highly individualized customer experience.

This coffee giant uses data from its loyalty program, which has more than 31 million active members in the United States in 2023, and its mobile application, downloaded by millions of consumers around the world. Starbucks collects data on purchases, consumption habits and individual preferences through this channel. This data is analyzed via AI algorithms and then used to recommend personalized drinks or snacks to the user in real time via the app.

An internal Starbucks study showed that this personalization of product recommendations increases the conversion rate of its promotions by 30%, compared to a non-segmented approach. AI thus makes it possible to offer a tailor-made experience, encouraging customers to come back more often and try products that suit their tastes.

Personalization at Starbucks doesn’t stop at products, it also extends to marketing campaigns. By analyzing data such as consumption times, local weather conditions or even local events, Starbucks adapts its offers in real time. The brand deploys targeted marketing campaigns, offering promotions based on each customer's tastes or local events. For example, a customer who prefers iced coffee will receive a special offer on their favorite product on hot days. By combining these techniques, Starbucks strengthens customer engagement and optimizes sales.

According to reports from the brand, these personalized campaigns led to an increase in engagement of 150% compared to standard campaigns, as well as an increase in mobile sales of 16% in targeted segments.

The impact of AI and personalization on Starbucks' bottom line is significant. According to Kevin Johnson, former CEO of the brand, personalization via AI has contributed to a 5% revenue growth during certain periods. The company's "Reinvention" strategy, focusing on digital innovation and personalized experiences, is expected to drive long-term revenue and earnings growth, with forecasts of up to 7% global comps growth and 15-20% earnings growth by FY24 (Sources : Starbucks Investor Relations, Starbucks Stories).

By combining customer data and AI, Starbucks proves that personalization is an essential lever for improving the customer experience while growing sales.