AI-driven personalization framework for SMES: Revolutionizing customer engagement and retention

Abstract

In today's competitive business landscape, Small and Medium Enterprises (SMEs) face unique challenges in building and maintaining strong customer relationships. An AI-driven personalization framework offers a transformative solution by enabling SMEs to deliver highly targeted and individualized customer experiences, improving both engagement and retention rates. This review outlines how artificial intelligence (AI) can empower SMEs by integrating data-driven insights with customer interaction processes to revolutionize business practices. AI-driven personalization leverages machine learning algorithms, natural language processing (NLP), and predictive analytics to analyze customer behaviors, preferences, and feedback. By aggregating data from various sources—such as online interactions, purchase histories, and social media activity—AI can generate personalized recommendations, offers, and communication strategies that resonate with individual customers. The framework facilitates dynamic customer segmentation, allowing SMEs to tailor marketing efforts and enhance service delivery. The personalization process also extends beyond marketing by optimizing customer support through AI-powered chatbots and recommendation systems, which provide real-time solutions and advice. This level of personalization fosters stronger emotional connections, increasing customer satisfaction and brand loyalty. Additionally, AI-driven insights enable SMEs to anticipate customer needs, predict churn rates, and proactively address potential issues, thereby boosting retention rates. For SMEs, the implementation of an AI-driven personalization framework is not only cost-effective but scalable, making it accessible even to businesses with limited resources. As SMEs increasingly adopt digital tools, the integration of AI-based personalization becomes essential for staying competitive in a rapidly evolving market. This review highlights the potential of AI in transforming customer engagement strategies for SMEs by offering a tailored, efficient, and sustainable approach to enhancing customer experiences.