Executive

Perspectives

Transformation through
AI and GenAI
Customer Engagement
December 2024
Introduction In this BCG
As part of our ongoing series of C-suite conversations on AI, we are sharing our most recent
Executive Perspective,
learning in a series designed to help navigate the rapidly changing world of AI. After working we show you how to
with over 1,000 clients in the past year, we've found that AI is at an inflection point: in 2024,
the focus is on turning AI's potential into real profit. leverage AI to transform
and create value in
In this edition, we discuss the future of customer engagement and the role AI will play in
turbocharging the way companies interact with customers and generate ideas. We address customer engagement
key questions including:
• How can AI help ideate new products/services?
• How can AI use data to improve product fit and gauge customer reception?
• How can AI turbocharge personalized customer communication?
• How can AI transform the way we communicate with customers?
• How can AI augment the capabilities of existing teams?

Copyright © 2024 by Boston Consulting Group. All rights reserved.

We identify company archetypes poised for maximum growth through AI-powered
customer engagement…
Consumer-focused Large enterprises Organizations Customer service-
companies with high with complex seeking innovation oriented companies
customer interaction sales processes acceleration
…yielding the quickest path to value and first-mover advantage

This document is a guide for CEOs, customer engagement leaders, and product
development teams to cut through the hype around AI in customer engagement
and understand what creates value now and in the future. 1
Executive summary | Leveraging GenAI to enhance customer engagement

The rapid advancement of generative AI (GenAI) is revolutionizing how companies engage with customers,
reshaping traditional insights, marketing, sales, and service functions into highly personalized, efficient, and
innovative processes. The transformative potential of GenAI centers on three critical levers:
AI reinvents
• Market mirror – virtual simulation of customer feedback (i.e., what you offer): GenAI empowers
customer businesses to enhance value propositions through customer intelligence and synthetic persona-driven insights
engagement
• Creativity at scale (i.e., what you communicate): By enabling hyper-personalization at scale, GenAI allows
in three ways companies to craft tailored content across all channels, significantly increasing engagement and relevance
• Conversational capability (i.e., how you engage): GenAI-driven conversational agents and virtual sellers are
transforming customer interactions, providing seamless, personalized, and efficient experiences

Copyright © 2024 by Boston Consulting Group. All rights reserved.

The human To fully seize these opportunities, organizations must transform people, processes, and technology. This means
element is key creating AI-centric roles, upskilling teams, and adopting agile structures. Empowering people is crucial to
to succeed unlocking AI's full potential

Transform This deck provides a strategic roadmap for implementing GenAI, guiding organizations from initial adoption to fully
to lead in integrated (3-18+ months), AI-powered customer engagement. By embracing these innovations, businesses can
the AI era achieve unprecedented levels of efficiency, innovation, and customer satisfaction, to be leaders in the digital age

2
AI is revolutionizing business, fundamentally reinventing
how companies engage, innovate, and deliver experiences

GenAI is already driving …with a large potential to transform the way companies engage with
near-term enhancement… customers and organize around customer intelligence

Faster and better

Always-on
Select examples customer intelligence
innovation grounded
on richer customer
synthesis engine
insights
• Mass qualitative interviews at scale

• Real-time segmentation and trends

Robust data management

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Enhanced-customer More productive
and analytics to organize
• AI-assisted synthesis and queries of experience with 360° marketing with auto-
and interact with new
data sets view on customer generated content
model of information flow

• Interrogation of synthetic panels

• Automation of survey drafts Hyper-personalization Iterative feedback loop

of offers/services to on concepts with
each customer synthetic customers

Source: BCG experience 3

Customer intelligence drives competitive advantage,
yet many fail to turn it into better results

Many types of customer ...informing many ...with

intelligence... customer-centric decisions... proven value

Primary research (quantitative, Revenue

qualitative) ~10-20% growth

First-party data Differentiated Optimized go-to-

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value proposition market activation
Cost savings
Social listening ~15-25% from optimized
operations and activation

Market data

Brand
Etc.
Improved customer White space ~20-40% advocacy
experience identification

Source: BCG experience 4

What if AI-driven customer intelligence could help
you answer key business questions…

Brand Product/offer …yielding faster, better,

messaging development cheaper results?
How can we position and message What products, services, and
our brand to resonate effectively experiences should we develop
with our priority demand spaces? to meet our customers' needs? Higher
Innovation
Pricing Go-to-market quality
Quality
and value execution
How can we align different pricing, What strategies should we use
promotion levels, and service to promote our offerings via
3-5X

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offerings with our consumer targets? strategic distribution, advertising,
and sponsorships? Faster insights-to-
Speed impact process
Consumer Investment
engagement decisions
How can we optimize CRM1, Which partnerships should 30-40%
influencer and digital marketing, we develop to deliver both Cost saved on
and customer experience to functional and emotional value Cost qualitative research
maximize consumer engagement? to our customers?
1. Customer Relationship Management. Source: BCG experience 5
GenAI's transformative power is redefining
insights-driven customer engagement in three ways

What you offer What you communicate How you engage

Market mirror Creativity at scale Conversational capability

Informed by customer insights, BCG's Strategic planning ensures targeted, Engagement strategies optimized with
GenAI platform "market mirror" creative, and scalable hyper- GenAI-driven direct and human-led
drives enhanced value proposition personalization interactions
and innovation

Copyright © 2024 by Boston Consulting Group. All rights reserved.

More compelling value proposition, precise 4x faster content generation and 5x faster 2x customer acquisition at sustained CPA1,
targeting of customers; increased speed and copywriting, enhancing communication with improved customer satisfaction and
efficiency of innovation and activation efficiency; decreased cost of acquisition LTV2 (brand loyalty); decreased cost to serve

Example: Strategic insights enable a consumer Example: Strategic GenAI integration allows a Example: A software company implements a
goods company to turbocharge innovation for biopharma company to enable "always-on” "GenAI sales assistant" to support B2B sales
impact, reaching 10x concepts in 10x shorter time content generation throughout marketing value teams, enhancing lead quality and allowing reps
chain; delivers more content in less time to focus on relationship building, which improves
customer satisfaction and loyalty

1. Cost per Acquisition; 2. Lifetime Value. 6

Market mirror | A comprehensive solution is essential
to harness GenAI for revolutionizing customer engagement…

Core advantages

Ongoing data capture, deep synthesis across diverse data sources, and interactive
Deep “always-on" insights insights repository (e.g., proprietary business data, market, primary customer insights)

Synthetic twins Segmented customer demand space "synthetic twins" trained on key drivers of choice,
and a panel of business expert stakeholders to generate and react to ideas

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Forward-looking market simulation to test, refine, and prioritize ideas of value
Continuous market testing proposition (e.g., GTM1, innovation, pricing)

Dynamic dashboard for Dynamic interface generating tailored outputs based on user prompt
strategic scenario planning (e.g., messaging, reports, marketing copy and visuals, scenario planning and war gaming)

Democratized access to insights, customer-centric value proposition,

360° customer centricity innovation, and activation

1. Go to Market. 7
Market mirror | … leveraging advanced, actionable insights
and dynamic innovation to differentiate and guide strategy

Illustrative

Key
Insight retrieval and synthesis Concept creation and value prop Testing and validation
enablement

Augmented Answer Agentic Product Image Concept and Customer

search refinement concept gen. user query feedback
AI
RAG1

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GenAI AI AI
platform Pre-processing of data through Codifying data inputs into Using data inputs to model
vision pipeline into vector DB guardrails for concept generation synthetic consumers

Market and customer intelligence (3P/1P) Demand Centric Growth output2® BASES tests
(i.e., emotional and functional needs of demand spaces)
Social listening/posts and reviews A/B tests
Data (e.g.) Brand-specific checklist
Primary customer insights (2P) Entire compendium of DCG
Legal and R&D guidelines output

1. Retrieval augmented generation & re-ranking & multi-query; 2. BCG's proprietary Demand Centric Growth offer leverages deep customer insights to unlock
untapped market potential, driving strategic growth that maximizes revenue and market share, positioning companies for significant competitive advantage 8
Market mirror in consumer goods E2E demand generation case study |
GenAI turbocharges innovation, achieving 10x concepts in 10x shorter time

Illustrative example

End-to-end Rich insights Rapid ideation Immediate

demand generation generation and innovation synthetic testing
• Understand customer • Integrate feedback, • Generate product • Test with real-time
needs and the market trends, and proprietary concepts feedback from synthetic
• Strategize for growth data • Illustrate with tailored twins to fine-tune
opportunities • Validate insights content strategies
• Target demand spaces through conversational • Ensure brand and legal
and analyze consumer refinement compliance
influence pathways

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IMPACT 5x faster from 10x concepts in 10x shorter 3x more breakthrough innovations,
data to insights time, with 100% brand fit lower lead time and cost
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Creativity at scale | GenAI delivers personalized,
convenient, values-driven experiences that meet evolving customer needs

Hyper- Real-time Cutting-edge Community

personalization ultraconvenience experience and connection
Explosion of customer solicitation Shift to online and new Beyond physical stores, augmented Connection with communities
emphasizing brand communication technologies raising standards experiences building on around passions/similar interests
and offering relevance especially for checkout, delivery, and customer emotions and brands with similar values
aftersales

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Of Millennials are willing Of Millennials had an Of customers say the Of Chinese customers'
to share personal data active Amazon experience provided purchase decisions are
63% to get personalized
77% Prime membership
79% is as important as the
45% influenced by key
offers and discounts in the US in 2024 product sold opinion leaders/
influencers

These expectations span customer demographics—with a stronger emphasis by Generation Z and Millennials

Sources: Ocean Insight customer trend survey; BCG Social Retail Playbook; BCG customer trend survey; Statista; Salesforce; Shoptalk; desktop research; BCG analysis 10
Creativity at scale in biopharma case study | Always-on GenAI
content generation delivers more assets with significant time saved
Illustrative example

Marketing content development Material approval process

Launch and performance
Marketing value chain Campaign asset detailing Artifact/asset creation MLR1 and revision monitoring
• Marketing team creates • Write ad copy • Revise marketing content • Launch/execute campaign
outline on campaign • Source/generate images • Update claims matrices • Monitor performance
Today from • Brief agency on asset • Review content pre-MLR and • Generate proof for final • Periodically review by
8-10 weeks development requirements localize as needed post MLR approval expiration
Current avg
time spent 2-3 weeks 2-3 weeks 2-3 weeks ~1 week
• Tailor brief to the customer • GenAl creates images from • Automatically review • Automatically document and
from business plan campaign briefs, claims promotional material perform checks for final

Copyright © 2024 by Boston Consulting Group. All rights reserved.

matrices approval
• Rapidly develop concept for
creative builds • Automatically perform QC and • Synthesize data
localize content
• Notify need for periodic review
Reduce time to final campaign Reduce agency support and time
Future with GenAl Reduce agency support and high Reduce agency support and rapid
design and high first-time right to review content due to high first-
To 3-5 weeks content generation
first-time right content generation
time right content
documentation and localization

Expected at-scale
value Estimated 20-40% 30-50% 10-25% 0-25%
Timeline 1-2 months -2-4-day acceleration -3-6-day acceleration -1-3-day acceleration -0-1-day acceleration
For new campaign launch

1. Medical, Legal and Regulatory. Source: BCG experience. 11

Conversational capability | GenAI conversational agents simplify
interactions, cut customer effort, and provide quicker, accurate solutions

Human support
Self-help through
conversational agent
Entry Assignment Resolution
Spending hours browsing Being forced to provide Getting transferred to Waiting on sparse
state (from)

public sources to get manual input across multiple agents and communication
Current

generic answers many support portals needing to reshare updates on the

to create a ticket info each time case's status

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Resolving common issues in Easily opening a case Troubleshooting Receiving real-time,
state (to)

minutes via personalized with a single GenAI with one agent who on-demand updates
Future

AI responses dialogue interface is fully up-to-speed on recent actions,

with the issue turnaround times, etc.

Overall effort saved: Improved speed and accuracy of diagnosis, eliminating repetitive communication and
steps

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Conversational capability in sales | GenAI transforms sales with
hyper-personalization and AI-driven roles

B2C sales B2B sales

Conversational commerce Sales planning and operations
Grocery Helper conveys hyper-personalized promos or messages in customers' AI agents execute sophisticated planning to optimize coverage, territory design,
family group chats, understanding purchase drivers of customers involved in and goal setting and provide advanced automation for deal desk, approvals,
conversations, boosting basket size, and enhancing buying experience (can also performance management functions
be relevant for B2B sales in fragmented trade)
Gen AI sales team support/
work as a team with seller

Seller Intelligent Sales

Assistant
Customer

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Solution Engineer

Sales Coach
Virtual seller
Engages directly with customers from
customer identification through closure
in an entirely AI-powered channel
Personalized offers promo Personalized messages and
instant promo in store
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Conversational capability in B2B sales | GenAI reinvents how sales teams
in the field engage with customers across different channels

Future of sales deal life cycle, powered by PredAI + GenAI

Channel Discover Learn Try Buy Use Discover Learn

Sales coach Solution engineer Sales assistant Sales assistant

Slack/IM proactively maps buyer identifies lack of identifies high- creates tailored semi-
power map product adoption and propensity cohort automated campaign
sends summary aligned to new product journey with content,
offering emails, and calls

Phone/ Solution enginee Sales assistant Solution engineer

text

Two months later

summarizes call, identifies budget cycle updates quote via
compiles quote based and process – adds to phone call from customer
on needs identified account after in-person meeting

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Solution engineer Sales assistant
Email creates tailored answers customer
adoption plan, aligned inquiries and schedules
to buyer values meetings

Sales assistant Sales assistant Sales coach Sales assistant Solution engineer Sales assistant Sales assistant
CRM prepping for QBR1, creates personalized pushes notification via schedules meeting drafts custom SOW2 provides holistic offers to create stage 0
generates research and relationship app with commercial and creates a draft of and proposal content performance review, opportunities
insights for company development plans construct to accelerate content peer and market
and attendees close date comparison
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1. Quarterly Business Review; 2. Statement of Work
Path to implementation | Shift the insights function from data
requestor to insights curator for customer-centric growth

The insights curator: The future of insights goes beyond responding to data requests. Instead, it will
involve curating insights from a broad range of sources—structured or unstructured, requested or
not—to drive more holistic, customer-centric decision making

Requested data Unrequested data

A new approach to
customer insights
Unstructured

Qualitative data Social data

Communities Ratings and review data Customer insights are not just

Copyright © 2024 by Boston Consulting Group. All rights reserved.

about gathering data on demand
AI and
human
expertise Today’s focus is on combining
human expertise with AI to
Structured

Survey data Behavioral data

Search data curate and synthesize data from
Behavioral data with opt-in
CRM data
multiple sources, enabling more
informed, customer-centric
Biometric data Open data
decisions
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Path to implementation | Navigate the GenAI vendor ecosystem
with rigorous assessment to unlock value

GenAI vendor landscape Build vs. partner assessment

Insights to impact
Example use cases Ex. vendors Build in-house if: Partner assessment criteria
value chain
• Automate AI-driven survey writing and quant analysis
Technical capabilities and
• Boost niche segments with synthetic respondents
Primary performance
• Synthesize open-ended questions automatically
research: Custom,
BCG serves as integrator; providing strategic guidance

quant • Analyze video surveys with AI insights

in-house
• Interact with data conversationally
GenAI Customization and
and E2E change management throughout

Gather and flexibility

synthesize • Moderate AI conversations for qual insights at scale platform
Primary
customer research: • Generate summaries, themes, verbatim analysis
intelligence qual • Conduct large-scale online focus groups
Data security and privacy

Copyright © 2024 by Boston Consulting Group. All rights reserved.

• Layer GenAI on social listening tools • GenAI use case is a
Secondary • Summarize research with thematic analysis and basis of
research quote ID differentiation for
your company User experience
• Synthesize 1P/3P data and digital engagement
• There are significant
data security/IP
Synthetic • Test concepts with AI-generated customers and leakage risks
testing expert advice • There aren't Support and maintenance
effective vendors (SLAs)
Innovate Innovation • Generate product ideas with GenAI that deliver the
and activate performance
expected
Marketing • Create marketing content and briefs quickly
• Cost of working with
Cost and pricing model
a vendor is too high
Note: This is a small sample of the
Source: Company websites growing GenAI vendor ecosystem, 16
with new solutions emerging regularly
Path to implementation | Rethink customer-facing team
structures, streamlining into three unified, AI-driven processes

Not exhaustive

Today, organizational functions These functions will be unified with the emergence of
engaging with customers are
distinct (e.g., R&D often AI and organized across three main processes
disconnected from the
end users) 1 Insights-driven product development • Customer insights
• Customer research
• AI in data analysis for customer insights • R&D
• Inside sales • Direct sales • AI-enhanced, demand-driven product • Product development
Sales • E-commerce • Channel sales development/R&D process • Growth and pricing

• Customer support
Service • Technical support 2 Content generation & personalization at scale

Copyright © 2024 by Boston Consulting Group. All rights reserved.

• Field service • AI-driven content creation • Marketing
• Personalized marketing strategies • Personalization strategy
• Account • Customer • Automated and AI-enhanced customer • Content strategy
Customer
management training interactions
success
• Onboarding • Renewals

Customer • Market research 3 Customer interaction management

research • Customer surveys • Sales
• Automated and AI-enhanced customer • Customer support
interactions • Customer success
R&D/ • Product innovation • Concept • Chatbots, virtual assistants, and CRM systems
• CRM
• Prototype validation
product • User testing
development
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Path to implementation | Design scalable architecture to
support the expanding GenAI ecosystem

GenAI is embedded across all layers,

Smart business layer (systems of engagement)
from customer interaction (smart AI copilots Conversational apps AI assistants …
business layer) to data analytics (data
layer) and innovation testing (AI layer) AI layer 4
Guardrails
Systems of engagement include AI-
driven tools like intelligent sales 1 Orchestration Ops and
assistants, virtual sellers, and E2E app monitoring
vendors Model garden Foundation/other small models
autonomous agents, as well as

Integration
conversational and cognitive apps for 2 Model platform

Security
a seamless and highly personalized

Copyright © 2024 by Boston Consulting Group. All rights reserved.

customer journey Data layer
3 Data products Operational
The core transaction and data layers
integrate real-time data activation, Repository and storage data
insights, and advanced analytics, services
Distribution and integration
supported by the GenAI layer for
predictive and AI-driven innovation
Core transaction layer

Infra and cloud layer Public cloud Private cloud Specialized hardware (GPU1 & TPU2)

1. Graphics Processing Units; 2. Tensor Processing Units. 18

Path to implementation | Develop practices to manage risks
and ensure responsible AI use

Provide disclosure Provide transparency Protect sensitive data

Disclose use of AI/GenAI to customers, Provide transparency into data usage at time of Be cautious of inadvertently revealing sensitive
including in cases where they are interacting collection, allowing for explicit opt-out information arising from AI-derived insights
with a GenAI agent or receiving AI-generated (e.g., emergent health issue identifiable from
content recent medication purchases)

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Limit types of engagement Prevent bias Ensure quality

Explicitly consider the degree of Identify and mitigate demographic bias (e.g., Ensure GenAI systems, especially those that
personalization allowed based on class of gender, age) in personalized messages/services are directly customer-facing, are fully tested
product (e.g., no segment-of-one or products offered for quality and risk (e.g., offensive language,
personalization for potentially addictive recommending competitor products, offering
products or services, no engagement around products at steep discounts, inaccurately
products related to death of loved one) answering customer questions)

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Call to action Identify GenAI opportunities to drive customer centricity
• Evaluate where GenAI can enhance value propositions and boost
productivity, including customer insights, sales, and customer service
Begin your GenAI transformation
today—strategize, upskill, and Develop a strategic GenAI roadmap
innovate for successful customer • Elevate customer engagement by progressively embedding GenAI
engagement across all touch points
• Engage senior leadership to set short-term goals and long-term plans
for GenAI integration

Launch cross-functional centers of excellence to drive

productivity gains
• Create cross-functional centers of excellence that bring together

Copyright © 2024 by Boston Consulting Group. All rights reserved.

expertise from various departments (e.g., marketing, sales, customer
support, tech, R&D) to drive GenAI implementation
• Institute human-led best practices and support implementation
across functions to manage risk and ensure responsible AI use

Invest in skills, technology, and human-led processes

• Upskill your workforce to leverage AI effectively
• Establish human-led processes, enhanced with AI
• Build necessary tech infrastructure to support GenAI applications
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BCG experts |
Key contacts
for GenAI in
customer
engagement Karen Lellouche
Tordjman
Lara Koslow
Managing Director
Ben Eppler
Managing Director
Managing Director & Senior Partner & Partner
& Senior Partner

Copyright © 2024 by Boston Consulting Group. All rights reserved.

Lauren Taylor Stephen Edison Greg McRoskey Melike Inonu
Managing Director Managing Director Partner & Sr Manager - Customer
& Partner & Partner Associate Director Demand & Innovation

21