The Intersection of AI Value Chain and Retention Strategies in the Digital Age

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Jul 24, 2023

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The Intersection of AI Value Chain and Retention Strategies in the Digital Age

Introduction:

In today's rapidly evolving digital landscape, businesses are increasingly relying on artificial intelligence (AI) to drive innovation, enhance customer experiences, and gain a competitive edge. The AI value chain encompasses various stages, from compute and data to fine-tuning models and deploying applications. At the same time, retention strategies have become crucial for businesses, particularly in the midst of the COVID-19 pandemic. This article explores the commonalities between the AI value chain and retention strategies, highlighting the importance of both in the digital age.

The AI Value Chain:

The AI value chain consists of several interconnected components that work together to harness the power of AI. At the compute layer, raw power is required to run algorithms. However, it is not as straightforward as relying on a specific type of chip. Some AI algorithms necessitate the simultaneous operation of hundreds or thousands of graphics processing units (GPUs).

Moreover, AI models are typically trained using datasets. Previously, labeled datasets were believed to be essential for training AI. However, advancements in AI algorithms have enabled the generation of models using unlabeled data. Fine-tuning is a crucial step in the value chain, where a foundational model is customized for a specific use case. This process involves adjusting the model to achieve desired outputs.

The Role of Retention:

Retention, particularly in the context of COVID-19, is about building and deepening habits. It is through habit building that businesses can drive customer loyalty and enhance long-term engagement. Retention is primarily focused on usage, as revenue retention is an outcome of consistent and active usage. To improve retention, businesses must identify and address the core inputs: Activation, Engagement, and Resurrection.

Activation refers to the initial steps taken to onboard and engage customers. Engagement involves maintaining ongoing interaction and usage, while Resurrection focuses on re-engaging lapsed users. By understanding how customer habits have changed and may continue to change, businesses can allocate resources to enhance the relevant input and improve overall retention.

Commonalities and Insights:

Both the AI value chain and retention strategies share common themes and insights. In the AI value chain, the foundational model is crucial, but fine-tuning and customization for specific use cases are equally important. Similarly, in retention strategies, understanding and addressing the core inputs of Activation, Engagement, and Resurrection are essential for long-term customer retention.

Furthermore, both AI and retention strategies rely on continuous improvement and adaptation. In the AI value chain, fundamental models are expected to improve rapidly, reducing the significance of fine-tuning. Similarly, in retention strategies, understanding how customer habits change and adapting accordingly is vital for sustained engagement.

Actionable Advice:

  • 1. Invest in AI talent: To succeed in the AI value chain, businesses must attract top talent capable of driving extraordinary feats. The ability to leverage AI models effectively and understand customer needs is essential for building breakthrough products.
  • 2. Prioritize usage and customer experience: In retention strategies, focusing on usage and enhancing the customer experience is key to driving long-term engagement. Continuously monitor and adapt to changes in customer habits to ensure your product remains relevant and valuable.
  • 3. Embrace AI as an enabling technology: AI should be seen as an enabling technology that allows businesses to build breakthrough products, rather than the product itself. Entrepreneurs who understand both the capabilities of AI models and customer needs will be best positioned to create AI-native products.

Conclusion:

In the era of AI-driven innovation and the COVID-19 pandemic, businesses must navigate the complexities of the AI value chain while prioritizing retention strategies. By understanding the interconnectedness of these processes and incorporating actionable advice, businesses can leverage AI to drive customer retention, enhance user experiences, and ultimately thrive in the digital age.

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