How Brands Are Using AI Personalization in Customer Experience

AI personalization is a form of AI-driven personalization that brands use to create tailored, 1:1 customer experiences at scale. 

Leveraging AI personalization is a standard business practice these days. Nearly all brands (92%) report using AI-powered personalization to create personalized customer experiences (CX), and it’s no wonder why. Personalized experiences are a powerful tool for getting customers to choose a brand—and stick around. 

In fact, according to a 2023 Medallia Market Research study on how consumers feel about personalization, most consumers (82%) say “personalized experiences” drive their choice of brand in at least half of shopping situations. Perhaps unsurprisingly given this finding, in our 2024 State of CX Personalization Report, we discovered that making customer experiences more personalized was the #1 priority for CX professionals. 

If you’re looking to do the same, you’ve come to the right place. Ahead we’ll explore:

• What AI personalization is and how you can use AI personalization to scale your personalized experiences
• The top AI personalization tools leading brands leverage to tailor the customer experience
• The top use cases for AI personalization
• A real-world case study of one brand that has used AI personalization to improve conversions
• Why personalized customer experiences matter

Let’s get to it.

What Is AI Personalization?

As the name suggests, AI personalization is a form of AI-driven personalization that’s powered by AI personalization tools. Brands use these advanced technologies to create tailored, 1:1 customer experiences that feel unique and personal to the individual at scale. 

By leveraging advanced algorithms and data analytics and data about individual customers’ behaviors and preferences, AI personalization tools make it possible for brands to tailor:

• Every customer interaction
• Piece of content
• Product
• And service offering

Plus, these solutions do so at a level that would be unattainable through manual effort alone.

The result? Your business can set the standard for customer experiences and service—and deliver consistently across every touchpoint. 

Top AI Personalization Tools

Some of the most popular AI personalization tools companies use to personalize their customer experience include:

• Conversational Intelligence
• Smart Response
• Customer Experience Orchestration

Here’s an overview of each.

Conversational Intelligence (Text Analytics, Speech Analytics)

AI personalization tools like Text Analytics and Speech Analytics are able to analyze large quantities of data related to customer behavior, preferences, and interactions, and generate insights brands can use to craft experiences that meet—and anticipate—the needs and desires of each consumer. 

New data from a 2025 Medallia Market Research study on conversational intelligence (CI) finds that AI-powered CI tools help brands drive KPIs across the contact center and enterprise, boosting everything from NPS® to revenue per customer. That’s likely one reason why most CX practitioners plan to increase their investment in conversational intelligence in the next year.  

Smart Response

Other AI personalization tools like Smart Response understand the content of a customer interaction and use AI to create personalized replies based on this context. 

Customer Experience Orchestration

Solutions like Medallia’s Experience Orchestration take insights from previous customer interactions to dynamically curate the next best actions and experiences for customers based on their intent, interests, and behaviors in real time, optimizing the cost to serve the customer. 

How Are Brands Using AI and Personalization in CX?

Behind the scenes, AI is playing a pivotal role in transforming customer experiences. Not only does AI open up exciting possibilities for next-level consumer personalization, it makes personalization efficient and scalable. 

Here are some examples and key use cases for AI personalization in CX. 

AI and Personalization in Customer Experience (Examples)

AI personalization tools leverage customer data to craft products, services, content, and experiences that resonate on a more personal level and are aligned with an individual’s specific customer journey with your brand. Personalization AI not only enriches and differentiates the customer experience; it also fosters a stronger, more resilient connection between consumers and brands to supercharge customer satisfaction and loyalty. 

Here’s a few examples of types of content, experiences, products, and services that can be efficiently powered by AI personalization tools:

• Customized product recommendations based on browsing and purchase history
• Email campaigns and customer service responses personalized to address preferences, pain points, and previous interactions
• Tailored newsfeeds and content streams that align with engagement and interests
• Dynamic digital experiences that change according to each visitor’s interests, behaviors, and demographics
• Individually tailored loyalty offers, rewards, coupons, and more to encourage repeat business
• And in our roundup of winning personalization examples, we shared how our customer Walgreens has used AI personalization to automatically triage customers when they arrive at the pharmacy counter so that by the time it’s a customer’s turn to check out, the pharmacist has everything they need to tailor the experience 

Key Use Cases for AI Personalization in CX

Data Collection and Analysis

The foundation of AI personalization is the collection and analysis of customer data using AI capabilities like Text Analytics and Speech Analytics. From purchase patterns and online behaviors to customer service interactions, personalization AI aggregates and examines vast amounts of information for businesses looking to understand their customers on a deeper level. 

Predictive Analytics

AI-powered predictive analytics can anticipate customer interests, churn risk, and behaviors based on the data you’ve collected. This is an important capability for businesses that can be harnessed to proactively offer personalized suggestions, offers, experiences, and content to make a positive impact on the customer’s journey and drive retention. 

Segmentation

Another AI personalization capability is smarter segmentation, ensuring that consumers with similar qualities and interests receive customized recommendations and experiences. 

Personalized Product Recommendations

How can you cater to customers without them telling you explicitly what they want to see? By 

using AI-powered recommendation engines that can analyze past customer behaviors to suggest products or services that are likely to be of interest, enhancing the browsing and purchasing journey. 

Next Best Experiences

Personalized AI’s ability to tailor content and experiences dynamically can dramatically transform how brands and customers connect with each other—while boosting satisfaction along the way. By adjusting website interfaces, email content, and more based on real-time user data, AI crafts a custom experience to delight every individual based on their preferences. 

Tailored Generative AI Responses

Gen AI tools like Smart Response can take customer insights and use them to create personalized responses for customers based on their individual interaction with a brand. 

AI Personalization in Customer Experience Case Study

Brands that leverage AI personalization to enhance the customer experience have the potential to drive significant business results. That’s been the case for BSH Group, a global leader in the home appliance industry that uses Medallia’s AI-powered personalization and experience orchestration capabilities to:

• Listen to and fully understand who their consumers are across 40 multichannel touchpoints (websites, campaign channels, email, in-store, CRM, and more)
• Identify where and why consumers abandon their journeys, detect drop-off points, and single out the root cause of abandonment
• Uncover activities that drive conversion
• Calculate real-time customer engagement scores for each individual customer
• Personalize experiences based on customer engagement and guide customers to successful conversion

By partnering with Medallia, BSH has been able to deliver meaningful, friction-free experiences that have led to:

• A 106% increase in the company’s conversion rate
• A 22% increase in the company’s add-to-cart conversion rate

Read the full case study here. 

Why Personalization Matters: Top Statistics 

Personalization is a gamechanger for loyalty and revenue growth, but most brands are barely scratching the surface of what’s possible, missing the mark when it comes to meeting customer expectations. Here are some recent data points that underscore why brands are investing in AI personalization to tailor experiences at scale. 

• CX practitioners who currently self-rate their brand’s personalization capabilities the highest are 2x as likely to achieve major revenue growth (10%+) than brands that self-rate their capabilities lower, according to Medallia’s 2024 State of CX Personalization Report
• Most consumers (82%) say “personalized experiences” drive their choice of brand in at least half of shopping situations, as cited above from our Medallia 2023 report “How Consumers Really Feel About Personalization”
• Only 24% of CX practitioners rate their personalization efforts as highly personalized, almost identically mirroring previous research that found only 26% of consumers rate their last company interaction as highly personalized, according to the Medallia 2024 State of CX Personalization Report

Use AI Personalization to Improve Your Customer Experience with Medallia

You can’t meet your customers’ needs if you don’t know what they are and if you aren’t tailoring your interactions, experiences, products, and services based on those insights. The world’s leading brands use Medallia’s AI personalization capabilities to gather the right data and act on it in the moments that matter most. Transform how you connect with your customers and see the results for yourself: Get a demo with Medallia today.