Rugs Direct, a prominent online retailer specializing in floor coverings, has successfully integrated an on-site, AI-powered conversational assistant named "Ask Cleo," marking a significant step forward in its customer engagement and sales strategy. The rollout, overseen by its parent company, Elevated Brands Group, has yielded impressive results, demonstrating a substantial uplift in key performance indicators (KPIs) across both Rugs Direct and its sister company, Lightopia, a lighting retailer. This strategic adoption of generative AI in customer service and product discovery underscores a growing trend within the e-commerce landscape, where businesses are increasingly turning to intelligent automation to enhance the online shopping experience.
Elevated Brands Group, which also owns Lightopia, initiated a phased deployment of Ask Cleo, beginning with Lightopia in May, followed by Rugs Direct in early June. The AI assistant, powered by agentic AI technology, is designed to revolutionize how consumers interact with online stores by enabling natural language conversations for product searches and design assistance. This sophisticated tool goes beyond simple keyword matching, allowing shoppers to describe their needs in a conversational manner, and in turn, the AI can ask clarifying questions to refine recommendations and even offer solutions to complex design challenges, such as identifying the ideal lighting fixture for a room with a vaulted ceiling.
The impact of Ask Cleo has been particularly notable in its ability to drive purchase intent. Sharon Gautschi, Chief Merchandising Officer at Elevated Brands Group, shared that since the assistant’s implementation, the add-to-cart rates for customers who engage with Ask Cleo have been an astounding eight to nine times higher compared to users who rely on traditional search methods. This remarkable figure highlights the efficacy of a conversational AI in guiding customers towards desired products.
However, Gautschi also provided a nuanced perspective, emphasizing the importance of engagement volume. "But you do have to temper that with engagement," she cautioned in an interview with Digital Commerce 360. "Certainly, the majority of customers are still using classic search. So that is a higher add-to-cart rate, but on a smaller base. We’re still ramping up engagement.” This statement suggests that while the conversion rate among Ask Cleo users is exceptionally high, the overall volume of customers utilizing the AI assistant is still growing. This is a common challenge in the early stages of adopting new technologies, where user adoption and familiarity play a crucial role in widespread success.
The underlying technology behind Ask Cleo is a testament to the advancements in generative AI. By employing agentic AI, the assistant can understand context, infer user intent, and provide personalized recommendations, mirroring a knowledgeable sales associate. This capability is particularly valuable in sectors like home furnishings and lighting, where aesthetic preferences, functional requirements, and technical specifications can be complex. For Rugs Direct, customers can use Ask Cleo to inquire about rug materials, thickness, and dimensions, ensuring they find a product that meets their practical needs. On the Lightopia website, the AI is adept at handling more technical queries related to lighting, such as dimmability, compatibility with ceiling heights, bulb types, and color temperature, reflecting the intricate nature of lighting design.
The Genesis of Ask Cleo: A Strategic Partnership and AI Training
The development of Ask Cleo was a collaborative effort, with Elevated Brands Group partnering with Constructor, a leading AI search and discovery platform, to bring the conversational assistant to life. The training of the AI agent was a comprehensive process, drawing heavily on Elevated Brands Group’s extensive internal knowledge base. Gautschi explained that the company played a significant role in feeding the AI with relevant information, including its own library of articles, blog posts developed for public relations and search engine optimization (SEO) purposes, and detailed product specifications.
This extensive content repository, meticulously curated over time, formed the foundation for Ask Cleo’s understanding of the brands’ offerings and their respective market niches. The AI training process, estimated to take approximately four to six weeks, was characterized by a strong emphasis on data integrity, a factor Gautschi highlighted as a key differentiator. "Even some of the larger companies I’ve worked with, getting one spec updated across my assortment is really hard, but here, we’re pretty nimble with data integrity,” she stated. This agility in managing and updating product data is crucial for ensuring that the AI provides accurate and up-to-date information to customers.
Beyond factual data, Elevated Brands Group also invested in training Ask Cleo to embody the brand voice and desired customer interaction style. The objective was to create an AI that functions as a "well-informed friend with great design, style and taste," offering not just product suggestions but also valuable advice and considerations. This approach moves beyond a transactional interaction to a more consultative one, aiming to build trust and rapport with customers. The company employs a rigorous testing methodology, where internal teams pose questions to the AI to evaluate its responses. Any instances where the AI’s output is deemed suboptimal or can be improved are fed back to the third-party developer, Constructor, for continuous refinement. This iterative process of training, testing, and feedback is essential for optimizing the AI’s performance and ensuring it consistently aligns with brand expectations.
Data-Driven Insights: The Performance Metrics of Conversational AI
The introduction of Ask Cleo has provided Elevated Brands Group with a wealth of data that illuminates customer behavior and preferences. Gautschi noted that customers who engage more deeply with the AI, asking a greater number of questions, tend to exhibit higher KPIs. This suggests that the more a customer interacts with Ask Cleo, the more signals they provide about their needs and intent, leading to stronger conversion paths. "The signals are stronger. We’re seeing higher add-to-cart, higher purchase rates,” she confirmed. This correlation between engagement depth and conversion success underscores the value of conversational AI in facilitating informed purchasing decisions.
The differing product categories of Rugs Direct and Lightopia also influence the nature of customer inquiries directed at Ask Cleo. On Rugs Direct, customers might use the assistant to gather information about the tactile and visual aspects of rugs, such as their weave, pile height, and color palettes. Conversely, on Lightopia’s platform, the more technical nature of lighting products prompts users to ask more specification-driven questions. These could range from inquiries about the lumens output of a fixture to its compatibility with smart home systems or its suitability for specific architectural features. This differentiation in usage patterns highlights the AI’s adaptability to varied product complexities and customer needs.
Broader Market Context: AI’s Growing Influence on E-commerce Traffic
The success of Ask Cleo within Rugs Direct and Lightopia is occurring within a broader e-commerce ecosystem where AI’s influence is rapidly expanding. Gautschi observed a growing trend of customers arriving at their sites via AI platforms such as OpenAI’s ChatGPT, Anthropic’s Claude, or Perplexity. While this AI-driven referral traffic currently accounts for less than 10% of total visits to their sites, it represents a significant emerging channel. "We are definitely getting more traffic from AI platforms, but not enough,” Gautschi stated, expressing a clear ambition for increased visibility through these channels.
This sentiment is particularly relevant for mid-sized retailers like Elevated Brands Group, who are continuously seeking competitive advantages against larger players. "As a smaller company – we’re not Wayfair, we’re not Walmart – we’re competing with those big guys,” she remarked. The potential for AI-generated traffic to become a substantial source of qualified leads is a key focus for the company. If these AI platforms can deliver increasingly discerning shoppers, Elevated Brands Group anticipates that the return on investment (ROI) and return on ad spend (ROAS) from such traffic could surpass that of traditional paid digital marketing programs. This prospect suggests a strategic shift in how e-commerce businesses will allocate their marketing budgets in the future, prioritizing channels that leverage AI for targeted customer acquisition.
Navigating the AI Landscape: Ranking and Future Outlook
Rugs Direct’s position within the e-commerce hierarchy is further contextualized by its rankings in industry databases. The company is listed as No. 622 in the Digital Commerce 360 Top 1000 Database, which tracks North America’s largest online retailers based on annual e-commerce sales and other metrics. More significantly, Rugs Direct is also recognized at No. 492 in Digital Commerce 360’s new AI Rankings, a testament to its forward-thinking adoption of artificial intelligence in its operations. These rankings, available within the Top 1000 Pro with AI Database, provide valuable benchmarks for industry performance and innovation.
The ongoing integration of AI, both on-site through tools like Ask Cleo and off-site through AI-powered search engines, signals a transformative period for online retail. For Elevated Brands Group, the successful implementation at Rugs Direct and Lightopia serves as a powerful case study. As AI technology continues to evolve, its ability to personalize customer journeys, streamline product discovery, and drive conversion rates will undoubtedly become even more pronounced. The company’s proactive approach to embracing these advancements positions them well to navigate the complexities of the modern e-commerce landscape and capitalize on the emerging opportunities presented by intelligent automation. The journey of Ask Cleo is far from over, and its continued development and broader adoption are poised to reshape customer engagement and sales strategies across the retail sector.
