The rapid advancements in AI technology in recent years have changed the way businesses of all sizes and industries do business, affecting business operations, decision-making processes, and customer experiences.
For small and large businesses, the key lies in identifying areas where AI can be integrated effectively to see a return on investment (ROI). This ROI may not be a dollar amount — instead, it may be measured in enhanced operations, improved decision-making, and growth. In this post, we’ll dive deeper into the benefits of AI and how you can understand its ROI to fully unlock the transformative potential this technology holds for your business.
The 9 Benefits of AI For Business
AI’s increasing accessibility and affordability have made it an increasingly smart choice for small and large businesses. Whether they’re using AI-powered tools to analyze vast amounts of data, automate tasks, or provide valuable insights, businesses are leveraging AI to help improve efficiency, reduce costs, and drive growth.
Below we’ll take a look at key ways that small businesses as well as larger enterprises can harness the power of AI.
1. Data Analysis and Insights
AI’s advanced algorithms swiftly analyze vast volumes of data, extracting patterns and trends that might be challenging for humans to discern. By providing comprehensive and accurate information in real-time about customer preferences, market opportunities, and more, AI can help businesses improve their decision-making and adapt quickly to market changes and trends.
2. Automation of Routine Tasks
Another key benefit of AI for small businesses in particular is automating repetitive tasks to save time and resources. This automation can be applied to various areas of the business, from customer service to inventory management.
By automating tedious and time-consuming tasks, AI frees up human resources to focus on more strategic and creative endeavors, boosting productivity and efficiency and reducing operational costs.
For example, speed to lead is critical in today’s fast-paced market, and Podium offers an unparalleled advantage by ensuring businesses engage with leads within a couple of minutes—guaranteed. Podium’s conversational AI is outcome-driven – it doesn’t just respond to inbound leads; it guides conversations toward a specific goal, such as a sale or booking. Unlike other AI systems that focus on providing correct responses, Podium aims to drive specific customer actions to grow your business. Podium’s AI Employee guarantees your business engages with leads within a couple of minutes; during peak hours, off hours, and every hour in between.
3. Personalized Customer Experiences
AI algorithms can analyze customer behavior and preferences, enabling businesses to offer personalized recommendations, targeted marketing campaigns, and other tailored experiences, fostering stronger customer relationships.
For example, a business may use AI algorithms to analyze customer behavior, preferences, and interactions to recommend particular products, content, or services that they are likely to be interested in.
This type of personalization can help foster customer engagement and boost conversion rates.
4. Predictive Analytics
AI also facilitates predictive analytics. Using historical and real-time data, AI-based predictive analytics can help businesses forecast future trends, market demands, and customer behaviors. These forecasting capabilities can empower businesses to anticipate customer needs, optimize inventory levels, anticipate challenges, and make other informed decisions that help them minimize risk and maximize opportunities.
Since AI-based predictive models enable businesses to predict outcomes, businesses can use these insights to optimize strategies, such as inventory management, resource allocation, and marketing campaigns, for more effective results — rather than diagnose where they went wrong and how they could have improved after.
5. Fraud detection and prevention
Because AI can analyze large volumes of data and identify suspicious patterns or anomalies, it can help businesses detect and prevent fraudulent activities. This is particularly useful in ecommerce. Ecommerce businesses can use AI-powered systems to monitor transactions, user behavior, and other activities to detect potential fraud in real-time.
By utilizing machine learning algorithms, AI can also continuously learn and adapt to new fraudulent tactics, providing more accurate and proactive fraud prevention measures than a human security professional may be able to. This helps safeguard businesses from the negative consequences of fraudulent activities, like financial losses and reputational damage.
6. Cost Efficiencies
AI can also result in a variety of cost efficiencies. As mentioned previously, AI minimizes manual labor and streamlines processes, which can reduce operational costs. AI can also assist in optimizing resource allocation, ensuring that resources are used more efficiently and effectively. AI solutions often offer scalable models, allowing businesses to expand operations as they grow without straining their budgets.
For example, conversational AI can be used to power chatbots and virtual assistants to provide 24/7 customer support, even outside of regular working hours. This allows customers to get assistance and information whenever they need it without drastically scaling your customer support team.
You can see Webchat in action on your site and set it up to answer common customer queries or perform simple tasks to save your customer support team valuable time and resources that they can spend on more complex tasks and customer needs.
7. Human Error Reduction
AI can also improve consistency and enhance accuracy in processes like data entry, scheduling, and inventory management by minimizing human errors that may occur due to fatigue, distraction, or oversight.
By reducing human errors and ensuring a level of consistency, AI contributes to improved quality in various operations and outputs.
8. More Innovation
AI is also paving the way to low-cost experimentation, which spurs innovation.
Generative AI in particular simplifies and speeds up the testing of new ideas and structures. Especially for testing scenarios that previously relied on manual input like A/B testing for marketing campaigns, AI significantly reduces the resources and time required. This frees up teams to focus on addressing more complex or previously overlooked challenges.
For example, some A/B testing tools now integrate with Open AI’s API to enable customers to use AI-generated copy as variations for their website copy and deploy them in A/B tests in less time. This allows them to run more tests and make continuous improvements based on the results.
9. Lead generation
AI can also improve lead generation in several ways. AI tools can analyze vast amounts of customer data, including online behavior and interactions, to identify prospects who exhibit buying intent or align with a business’s ideal customer profile. Some AI tools like Podium’s AI Assistant can also pull leads from sites like Angi, Thumbtack, CarGurus, and more right into a central database and send a pre-approved auto response in minutes.
Other AI tools can automatically qualify leads by assigning scores based on their behavior, demographics, interactions, or other predefined criteria. This allows businesses to take a targeted approach, focusing their time and efforts on leads that are most likely to convert. As a result, AI can help businesses increase the effectiveness of their marketing and sales efforts.
These are just a few benefits of AI. AI will continue to revolutionize how businesses operate, freeing up human resources, fostering innovation, increasing efficiency and growth, and enhancing customer experiences across various industries.
How To Calculate The ROI of AI
Calculating the return on investment (ROI) of AI involves assessing the benefits against the cost of implementing this technology. It is important to understand how AI is contributing to the success of your business. However, this process is not as straightforward as calculating the ROI of Google Ads, for example.
Let’s take a look at some of the challenges when calculating the ROI of AI below.
1. Complexity of Measurement Metrics
Usually, to calculate ROI, you’d use the following Formula:
- ROI = [(Revenue – Cost) / Cost] x 100%
However, revenue is likely not the best metric to assess the impact of AI on your business. Instead, the impact of AI may be measured in less tangible factors, like efficiency, productivity, and customer satisfaction, which may not have direct monetary value. If that’s the case, you can’t plug those values into the ROI formula above.
2. Difficult Performance Attribution
Measuring AI’s direct contribution to business outcomes can also be challenging — in part, because AI implementation is often paired with other major changes, like personnel changes. These contributing factors make it difficult to attribute specific results solely to AI implementation.
3. Unclear ROI Timeline
Implementing AI may require significant investments upfront, including technology acquisition, infrastructure, and talent recruitment. This makes it challenging to determine when the initial investment will be recouped.
Realizing the full benefits of AI often takes more time than other solutions like Google Ads, as AI systems often require training, refinement, and adaptation. This longer timeline can pose challenges in assessing ROI, particularly in the short term.
Despite these challenges, calculating the ROI of AI remains a crucial endeavor for businesses seeking to harness its potential. Overcoming these challenges involves a strategic approach, clear goal-setting, comprehensive measurement techniques, and a holistic understanding of both tangible and intangible benefits that AI brings to the organization. Let’s take a closer look at some strategies to calculate the ROI of AI despite the challenges mentioned above.
- Define Clear Objectives: Establish specific, measurable goals for AI implementation that are aligned with your business objectives. Identifying these goals and metrics before implementing AI can help you more easily measure its impact after it’s been deployed.
- Use Both Quantitative and Qualitative Metrics: Combine quantitative metrics such as cost savings and revenue increase with qualitative assessments such as improved customer satisfaction and enhanced employee productivity to get a comprehensive view of AI’s impact.
- Benchmarking and Comparative Analysis: Compare pre- and post-AI implementation data to understand changes in performance metrics. Benchmark against industry standards or competitors to contextualize the ROI.
- Incremental ROI Measurement: Break down AI implementation into stages so you can measure the ROI of AI over time. This approach helps demonstrate progress and validate investment at different phases.
- Pilot Projects and Proof of Concepts: Start with smaller AI projects or proofs of concept to assess their potential impact before full-scale implementation. Evaluate the success and ROI of these pilots to inform larger investments.
- Consider Future Growth and Innovation: Consider AI’s potential for innovation, scalability, and competitive advantage in your ROI calculations, even if the immediate returns might not fully capture this potential.
Harness the Potential of AI with Podium to Drive Efficiency and Growth
Podium offers several AI capabilities that can help you unlock some of the benefits mentioned above. Using Podium’s AI Assistant, for example, businesses can simplify and automate the following manual tasks:
- Responding to email leads and customer inquiries
- Crafting review invites and review responses
- Generating call summaries
- Write messages and campaigns about marketing promotions, appointment confirmations, and review invitations in bulk
Podium’s AI Response Generator can also help businesses quickly write thoughtful responses to customer reviews and messages to cut their response time in half while still personalizing them at scale.
Additionally, Podium has a new AI tool for you! Podium’s conversational AI is outcome-driven – it doesn’t just respond to inbound leads it guides conversations toward a specific goal, such as a sale or booking. Unlike other AI systems that focus on providing correct responses, Podium aims to drive specific customer actions to grow your business. Speed to lead is critical in today’s fast-paced market, and Podium offers an unparalleled advantage by ensuring businesses engage with leads within a couple of minutes—guaranteed.
Podium’s AI Employee guarantees your business engages with leads within a couple of minutes; during peak hours, off hours, and every hour in between. Beat your competition faster than ever with Podium’s AI Employee. Watch a demo today.
