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How Theory Of Mind is Changing AI In the eCommerce Space

The ultimate goal of artificial intelligence is to simulate human thought processes in a machine and enable it to make decisions as we would.

As detailed in ‘Artificial Intelligence: Transformative Potential Across Multiple It Fields In 2024’, current AI technology is already on its way there. But while AI is capable of remarkable feats like answering queries, providing recommendations, and predicting customer behavior, it still lacks the most sophisticated aspects of human cognition – understanding one’s thoughts, beliefs, desires, and intentions.

In in-store shopping experiences, it’s the seasoned shop assistant who can read the uncertainty in the customer’s eyes and recommend the perfect product based on their needs. Obviously, this isn’t an option on online platforms. Hence, the need for systems with excellent perception.

That’s precisely where the Theory of Mind (ToM) comes into play. Once AI researchers nail down how they can teach machines this vital skill, we will see a drastically different eCommerce landscape.

What is the Theory of Mind?

In psychology, ToM refers to the ability to attribute mental states – beliefs, intents, desires, pretending, knowledge, etc. – to oneself and others and to understand that others have beliefs, desires, intentions, and perspectives that are different from one's own.

To be able to communicate effectively in a digital world, AI systems need to grasp the essence of ToM in a manner that they can interpret and emulate it. MongoDB classifies it as one of the advancements needed for us to achieve “strong AI.” This has been the focus of AI scientists lately as they attempt to equip machines with this cognitive skill.

How Theory of Mind Will Transform eCommerce AI

Each user's online behavior is a rich tapestry of likes, dislikes, emotions, and intentions. The Theory of Mind can help AI perceive this depth and steer interactions accordingly. For instance, according to statistics by Hotjar, the online shopping cart abandonment rate is at least 70%. There are several reasons for this, from high costs to complicated purchase processes. But a large contributing factor is simply indecision on the part of the customer.

By using ToM, AI can “understand” this uncertainty and take proactive steps, like offering a discount or recommending similar, cheaper items. This could potentially result in higher conversion rates.

Augmenting Personalization

In our previous post ‘7 Ways To Use AI In Ecommerce Personalization’, we’ve established how personalized experiences are a crucial aspect of successful eCommerce. It’s already known that AI plays a major role in driving these experiences.

However, AI with ToM can take personalization to the next level. Beyond basic demographic data and observed behavior, ToM can help AI systems “comprehend” a customer's current emotional state, motives, and intentions. Is the customer in a rush? Are they simply browsing, or are they looking for a specific product? With ToM-based AI, such observations are possible, leading to highly intuitive and personalized interactivity, and hence, a smoother, more tailored user experience.

Improving Customer Service

Excellent customer service is another cornerstone of a successful eCommerce business. Live chat options, FAQs, and quick responses have revolutionized how companies interact with shoppers. However, customer service AI often falls short in understanding the nuanced wants and needs of the customer, which is why eCommerce companies still assign human representatives.

ToM would change the game entirely. AI could simulate a real conversation with customers by understanding their sentiment and providing empathetic responses. This can result in faster problem-solving, a better experience, and ultimately, increased customer loyalty. Plus, human employees can spend their efforts on more strategic tasks.

Predicting Future Needs

It isn't enough for eCommerce businesses to simply respond to their customers' present needs; they need to anticipate future requirements as well. ToM can help build predictive models that can assess the likelihood of a customer needing something based on their past behavior and current emotional state.

Imagine an AI system being able to gauge a fashion enthusiast's excitement for the upcoming winter season and offering her an exclusive sneak peek at the newest collection of coats. Such proactivity can result in higher engagement and repeat customers, furthering the success of an eCommerce business.

Looking Ahead

ReportLinker predicts that the market size for AI in retail will reach $29.45 billion by 2028, indicating that the deployment of AI across the sector is only set to grow. As we move towards this future, the Theory of Mind stands on the horizon as the next giant leap for AI in eCommerce.

The potential rewards for the ecommerce industry are massive. The advent of ToM in AI could signal the beginning of a new era where online interactions feel as genuine and personal as in-store conversations. With AI able to perceive user intent and respond empathetically, personalization and customer service in eCommerce could be revolutionized, leading not just to increased sales, but also fostering greater customer loyalty.

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