As AI continues to dominate discussions amongst the CXO’s of Fortune 500 companies; Startups might in fact be at the pole position to derive strategic gains accruing from leveraging AI.  Armed with accessible funding, young and upbeat talent professionals and overall buoyancy in the demand consumption, Startups are increasingly challenging and upending incumbent businesses. This is attributed to a substantial extent due to their unwavering focus on adopting exponential – including artificial intelligence(AI) – to acquire, retain customers, embed AI across the business value chain and cement their market share. Several startups have initiated to leverage to disrupt their existing and adjacent industries. The transformative power of AI has been the cornerstone of their exponential growth.

AI continues to be a secret sauce and competitive advantage for startups. Data detonation, lower cost of storage and processing and continuously enriched self-learning machine curated algorithms, AI will continue to be a huge multiplier for startups – by bolstering customer acquisition and retention to improving efficiencies, augmenting the top line and getting embedded across the business value chain of their businesses.

Entrenching Competitive Advantage Through AI

Industry and functional use cases of AI range far and wide. It is imperative that startups first consider their business model to identify the drivers to their business, estimate potential uplift and time-to-value to prioritize the order in which AI use cases are deployed. Here are few areas that can deliver immediate impact.

Understand Your Current Customers

AI can both accelerate the speed and quality with which you understand your current customer base – alongside informing startups of the most opportune ways to serve them. For instance:

• Recommender systems – which are extremely mainstream today. Ecommerce websites are increasingly tapping into the purchase and browsing history of customers, not only to surface their next purchase, but also nudge customers through promotional pricing.
• By using natural language processing (NLP) powered chatbots, startups can very quickly build and scale their customer service function – while ensuring continuous availability at a nominal long-term cost. When combined with sentiment extraction and mining, these ‘intelligent’ agents can pre-process customers’ emotions and provide preferential pricing / promotional offers to customers who have had a negative experience with the startup.
• With AI, startups can capture and re-create customer journey maps – how customers navigate pages, information contained on web-pages and ultimately make the purchase decisions. This can enable startups to build more personalized customer experience on their digital platforms. 

Acquire Your Next Customer

In additional to galvanizing CLTV and other retention metrics, AI can also be a crucial part of the customer acquisition process by:

• Improving the accuracy of prospect targeting, by continuously analyzing the drivers of current buyers and mapping them against the cues provided by current prospects – all the while maintaining a lower cost of customer acquisition
• Measuring and benchmarking the success attribution of marketing initiatives and spends – enabling marketing teams to focus their efforts on high-impact marketing activities to continuously drive improved performance.
• In a B2B setting, AI can help judge a browsing prospect’s propensity-to-purchase / act on a call-to-action (based on past users’ actions). This can inform sales teams’ efforts and act as a strong pre-qualification stage in the B2B sales process.

Accelerate Time-to-Market for Products

Beyond commercial functions, AI can also have a transformative impact on the manufacturing and distribution process and help startups realize significant advantages by:

• Pushing closer to 100% on-demand production – through continuous improvement in demand forecasting. This will help create leaner production units, improve predictability in production schedules and reduce wastages due to over-production.
• Using autonomous physical systems for packaging, shipping and warehouse management
• Running smarter and leaner distribution chain – through better demand forecasting at a micro-level, optimizing the size of the delivery vehicle and delivery routes of vehicles (based on inventory shipped) to contain transportation costs.
• Ensuring optimal stock availability at storefront – while balancing wastage due to oversupply and stockouts due to insufficient supply. This would again be incumbent on improving demand forecasting.  

Running a tight ship

Finally, given that startups typically operate on very tight budgets and at high speed of execution, AI is a crucial intervention to help them run a tighter ship. While all these tasks are crucial – whether you are a startup or a large enterprise, AI can help achieve outstanding outcomes at a fraction of the cost. This can happen by:

• Speeding up the recruitment process through bots and NLP-powered automated resume scanning. This can reduce the TAT for new hires, by sifting through a large pile of resumes to identify and shortlist the most viable candidates for interview.
• Augmenting the budgeting and financial planning process using AI. Here AI can help going through multiple reports and compiling the findings that eventually inform budgeting decisions
• Automating administrative tasks such as travel planning and front-desk management.

Why AI Is a Game-changer for Startups

Startups cannot afford to ignore the disruptive power that artificial intelligence can bring. AI is particularly suited to be a game-changer for startups because:

• Given the size and scale at which startups operate, it is easier to conceptualize and implement AI-centric solutions – without having the navigate the bureaucracy of multiple stakeholders in the decision process.
• Scalability and continuous improvement are built into the very fabric of AI – investments in AI by startups will see exponential value realization with enriched data sets and refined algorithms.
• The need for speed and cost efficiencies is paramount for startups. For startups to truly disrupt their industry incumbents, speed is of essence. A slow pace of growth usually kills startups before their story even takes wings.
• Having seen examples of corporations who ignored their startup rivals burning their fingers (from Blockbuster and Netflix to Yahoo and PageRank) traditional incumbents are increasingly taking note of technology savvy startups and partnering with them to entrench their market position, through VC’s and startup accelerators. If focusing on channels is crucial to growth in your industry, AI-centric processes will provide a clear competitive differentiation over your rivals.

AI is both a necessity and an important lever for Startups to grow exponentially in their markets. Through AI, Startups will be better positioned to successfully disrupt their incumbents, win market share and customer delight. Startups not actively harnessing the power of AI to achieve speed and manage scale will be doing so at their own peril.