7 Ways AI Is Transforming Customer Retention

Building a successful business has always been a challenge, but the wide range of advanced tools, services, and software on the market is making it easier. You don’t need web development skills or deep business experience to get started these days. If you have a good product or service to offer, you can be selling it in no time at all. But with the lower bar for entry, the marketplace is all the more competitive.

That’s why customer retention is more important than ever. To build a stable business with the potential to expand, you need a foundation of loyal customers, and that comes from focusing on customer needs, eliminating friction points, providing a smooth onboarding experience, and building trust. That can be a tall order; businesses are increasingly turning to artificial intelligence (AI) to help them navigate these challenges.

To better understand how AI can help you carry the load, it’s helpful to see how AI is impacting customer retention. Our State of the AI Connected Customer report covers insights we gained from more than 16,000 consumers about their expectations and trust in the age of AI.

We’ve identified seven key ways that AI is transforming customer retention. Let them help give your business a competitive edge.

Let’s look at the most prevalent ways that businesses are using AI to tackle customer retention, what their outcomes have been so far, and which areas still need work.

Here’s what we’ve discovered:

1. Personalisation is surging, but customers want fair value
2. AI agents are accelerating retention as long as humans stay at the helm
3. Trust in AI is falling, making retention harder
4. Price sensitivity is colliding with AI-powered loyalty programs
5. Agentic AI is expanding retention possibilities
6. Transparency in AI is more vital than ever
7. Upskilling employees is key to AI retention

We’ll cover each of these in a little more detail, including the statistical data that supports each claim.

With increased competition in the marketplace, consumers are now in a position to demand more from businesses. Fostering customer loyalty now involves personalising the customer experience rather than treating everyone like a number. According to our research, businesses are rising to the challenge.

Up to 73% of customers feel that brands treat them in a unique way (up from 39% in 2023). However, only 49% think that brands use their data appropriately. Customers today demand a fair trade-off between the personal data they share and the value they receive.

Some businesses manage to strike this balance effectively to achieve brand loyalty. Australia Post, for example, moved away from focusing strictly on products and services around the time of COVID-19, replacing it with a sustained emphasis on the customer journey. They combined all available data from their various sources into a single CRM interface where they could effectively map the customer’s entire journey with them.

Powered by Salesforce’s Service Cloud, they were quickly able to give each of their customers the personalised experience they were looking for. The onboarding experience went much faster, and automation allowed their customers a greater ability to get exactly what they wanted.

The key takeaway is that businesses need to deploy tailored, flexible purchasing options, and avoid a one-size-fits-all model if they want to remain competitive.

One way businesses can use AI to give their customers a personalised touch is by using AI agents, a feature known as agentic AI. Essentially, a business can take individual AI tools and software and connect them to create a comprehensive, autonomous AI-driven customer experience.

One of the most widely used types of AI agents currently in use is the automated chatbot that now appears on most websites. These chatbots are becoming more refined, and customers can now use them for directions to a destination to get the assistance they need.

However, customer retention strategies are more likely to pay off if customers feel they’re still getting a human-centric approach. Our research shows that 71% consumers and business buyers say a human should validate AI outputs . This makes it clear that, while the use of AI is becoming more accepted, most people don’t trust AI to fly solo.

Several trust-building measures involve thoughtful collaboration between humans and AI systems. National Australia Bank (NAB) has fully embraced this approach with its Customer Brain technology, which uses AI to give customer interactions a human feel. These interactions and outcomes are continuously refined by human inputs, which have helped to drive a 40% increase in overall customer engagement.

Our Agentforce tool is another great piece of technology for businesses wanting to add AI agents into their operations. Our in-built Command Centre gives business leaders the ability to understand and monitor every task and operation that their AI agents are completing and optimise it when needed.

AI is a revolutionary advancement that will have a significant impact on businesses, especially those focused on building lasting customer relationships. Trust in AI was surprisingly high at first. People seemed very receptive to the changes businesses were making.

Now that we’ve experienced a few years with AI, trust has plummeted, with only 42% of consumers saying they trust businesses to use AI in ethical ways (down from 58% in 2023).

This decline could be attributed to a variety of issues, including concerns over transparency and bias, data breaches, copyright and intellectual property infringements, AI-caused job loss, and inflated prices. AI was designed to make things better; in some cases, it hasn’t.

Unsurprisingly, if a business is caught up in an AI-related incident or its sector has a problematic reputation, maintaining effective customer retention can be a challenge. And at a time when customer trust is already fragile, the negative consequences could be significant.

Fortunately, there are steps that Australian businesses can take to reverse the situation. This includes becoming compliant with recognised AI safety standards issued by VAISS and the Australian government and following responsible AI best practices.

At Salesforce, we maintain rigorous safety protocols for AI, including conducting regular bias and trust testing across all of our Agentforce features.

Unsurprisingly, high prices can have an impact on a business’s existing customer base and will often lead to high churn rates. Around 65% of customers reported that high prices led them to stop buying from a certain brand last year, which was by far the most common reason cited (the next two most common being poor customer service and inconsistent quality).

Additionally, pricing also came out on top when we asked consumers why they switched to a new brand, with greater product selection and convenience being the other main drivers. This goes to show that while affordability isn’t the only loyalty driver, it’s still the most powerful.

In an attempt to reverse this and reduce churn risk, businesses are starting to use AI to develop winning loyalty programs that include predictive discounts and personalised offers. It’s where businesses have to demonstrate a high level of transparency to their customers and maintain their trust, as they’ll usually tap into customer satisfaction and behavioural data to develop these personalised offers.

At Salesforce, our loyalty management software gives you the power to give back to your loyal customers and reward them for their continued business. With our AI-powered solutions, you can create tailored loyalty campaigns across both B2B and B2C programmes, as well as monitor customers at risk of disengagement.

We touched on what an AI agent does in a previous section, but the future and potential of agentic AI in a more general sense are also worth paying attention to. Nearly half of respondents expect AI to match human cognitive capabilities within the next decade. With enhanced capability, AI is expected to be capable of achieving wide-ranging tasks and functions within this timeframe, which is both cause for concern and excitement.

State of the Connected Customer , p. 13

With a reliable, AI-powered infrastructure in place and individual functions and features of a business all working seamlessly together in an agentic manner to create robust omnichannel experiences, businesses are likely to improve customer retention.

Some companies, such as Urban Rest, are already using agentic AI to their advantage and seeing incredibly positive results that are focused on customer retention. By partnering with Salesforce, Urban Rest was able to use Agentforce software to integrate their loosely connected systems and develop excellent AI-powered customer support to earn strong customer feedback.

This particular finding comes as no surprise. It’s safe to say that transparency and trust are inextricably linked — when one goes up, so does the other. Advancements in AI are a good thing, but only when their inner workings are made transparent, and that transparency leads to increased trust and customer retention.

This is supported by the fact that 61% of respondents say AI advancements make it more important for companies to be trustworthy.

Additionally, companies must make it clear when they’re using agentic AI for things such as chatbots and customer service lines, with 73% of consumers agreeing with the statement that it is important to know that they are talking to an AI agent. Transparency remains (and is likely to remain) a core AI pillar, forming a key part of Australia’s AI Ethics Principles .

While customers are prepared to interact with AI agents in general, they want the reassurance that a human is always ready to intervene in the event of a poor interaction or engagement.

It’s all well and good for businesses to implement revolutionary AI programs into their operations, but this is only the first step. If your team doesn’t understand or know how to work with the new technology, your business will quickly grind to a halt, and customer retention will likely plummet.

Unfortunately, more than two-thirds of employees have seen little to no training in these new AI-driven applications, despite it being a key priority. This can cause frustration and mistrust to build among team members, which also leads to less positive customer engagement.

State of the Connected Customer , p. 20

There are several steps that business leaders could take to remedy this. Australia’s National Artificial Intelligence Centre (NAIC) offers a wide range of resources, articles, and tools to help leaders and employees develop a deeper understanding of what AI is and how it can be used, and it offers access to a free introductory course on AI.

Salesforce also provides our customers access to Trailhead, our own high-value set of resources that offers tips and information on all things AI-related. It’s also the hub for training guidance on each of Salesforce’s AI-powered products and features, giving our customers a fundamental understanding of how to make the most of their new applications.

We’ve reached a critical stage in the life cycle of AI. We’re at the point where many AI applications are powerful enough to replicate human knowledge and capability, but they’re not reliable enough, and trust is flagging.

Businesses everywhere need to commit to ensuring their AI infrastructure has a net benefit on their business as well as the wider society, with transparency, trust, and personalised customer experiences being of the highest priority. Failure to do so will result in a continued decline in trust, which will have a long-term negative impact on customer retention for businesses of all sizes and across all sectors.

If you’d like to explore these findings in more detail, you can access the full report here.

Additionally, if you’re looking for a platform that offers a wide range of first-class, integrated AI features, then Salesforce’s CRM might be for you. It combines all of our industry-leading tools into one neat package, with excellent customer support and resources available to all our customers. Try it for free today.

You can also check out our upcoming events, which are full of exclusive talks and insights to help you stay one step ahead of your competitors.