From Alexa and Siri to the use of chatbots as part of customer service, conversational commerce is already present for many in our everyday lives.
This post examines what has enabled the recent rise, the state of play today, how might it evolve in the future and what the implications are for organisations.
Conversational Commerce Today
As part of work to support Mastercard’s thought leadership position on the Future of Conversational Commerce, unveiled at Money 2020 in June 2018, Future Agenda conducted desk research and a series of expert conversations to better understand the current state of play and to uncover emerging shifts of note. This is an overview:
Conversational commerce is not new, but it is evolving. Commerce has always involved conversation, from direct dialogue (e.g. with a shopkeeper) to more distant conversations (e.g. via a phone) to digital channels (e.g. email). Todays “digital conversational commerce” enables customers to interact in real-time with brands, using voice or text-based chat. These personalised interactions (between customer service agents and customers) can take place via any channel or interface (e.g. website, messaging app, voice) and can be used to help and support customers. In its narrowest sense conversational commerce is usually used to refer to chat with AI powered digital agents or bots through messaging apps (e.g. FB Messenger, What’s App, WeChat) or virtual assistants (e.g. Alexa, Siri) to drive commerce. In a broader sense, the consumer could engage with a human representative, chatbot or a mix of both.
Digital conversational commerce has reached a tipping point and is poised for more complex interactions. The recent development and acceleration of digital conversational commerce has been enabled by 4 key drivers:
- Advances, deployment and consumer adoption of real-time Intelligent Chatbots (i.e. intelligent contextual participation in conversation by machines)
- Deployment and consumer adoption of real-time messaging platforms (e.g. Facebook Messenger)
- Advances, deployment and consumer adoption of virtual personal assistants (e.g. Alexa, Siri)
- Improved ability to pay easily and securely, digitally, with payment now embedded in major platforms
Conversational commerce represents an evolution for the consumer, from needing to work hard to use and engage via separate and often disconnected channels and brands towards one integrated conversation and experience. We are in the early days of digital conversational commerce, but it already provides consumers with a convenient, accurate, tailored and emotionally engaging experience. Today relatively simple tasks are becoming automated using voice or chatbots (e.g. Alexa, order me an Uber) and already 1 in 4 US consumers and 1 in 5 in the EU have used conversational commerce to shop. Rapid growth in spend is forecast.
But the future promise is tantalising, with the May 2018 demo of Google Duplex perhaps the best example of natural language AI to date, enabling customers to easily make haircut bookings, restaurant reservations and check opening times as if they were speaking to a human. For retailers, the promise is of increased customer satisfaction and conversion at a lower cost to serve.
Looking forward, organisations looking to integrate conversational commerce into their activity need to consider and be aware of a number of important challenges and opportunities.
- Access to the customer: As with access to the internet and walled gardens before, the race to access and provide access to the customer is already a key battleground. Amazon, Google and Apple are among those that recognise the potential prize and who are already ensuring their technology is adopted both directly and via partners (e.g. BMW will integrate Amazon’s Alexa into new vehicles from the middle of 2018). The potential risk to brands is being locked out of the conversation. For organisations to participate in and benefit from a broader ecosystem, it is essential for success to be in the ‘conversational flow’.
- Voice alone is not enough: As with other channels and interfaces, voice is not a panacea and it needs to interact with other channels. Voice has its own benefits and drawbacks and customers, too, have their own preferences. Appropriate use within different contexts, user journeys and across interfaces need to be understood.
- Trust(worthiness) is as key as ever: But brands will need to build trust at the ‘bot’ or individual level, more than just at a corporate or brand level. Trust in a pre-digital conversational commerce age was at the individual level; so, it is again in the digital world. Trust areas include trust in bot understanding of consumer needs and trustworthiness of the recommendations it makes.
- Speed: There is increased emphasis on real time response needed from organisations. For example, in Turkey, residents of Istanbul can order over 1200 products via Facebook Messenger and have it delivered within 10 mins using Getir.
- Ecosystem Development and Unintended Consequences: Key players who build out the CC ecosystem need to consider today: Where do we want this to go? What do we want it to do? How do we want consumers to respond? For example, take a look at the ethical backlash to Google’s Duplex demo.
- Broad and integrated organisational response: The implications of conversational commerce are wide and will affect how organisations market, how they meet demand and provide service. In some cases, it will even disrupt the organisational commercial model (e.g. a commercial model predicated on success in search). To respond well will require a comprehensive approach.
As detailed in our shared open foresight summary, the future of trusted conversational commerce will be shaped by three inter-related themes. These are:
- Enhanced Customer Experience - As conversational commerce meets proof points of viability, feasibility and desirability
- Being Human - As bots (and humans) become more informed, more natural and more helpful, powered by real-time AI and fuelled by organisation-wide accessible flows of data. NLP improvements add other ‘human’ psychological elements, e.g. hesitance.
- Data’s Richness - As the economic imperative to identify and make best use of data – whether generated or procured from multiple sources - remains at the heart of ecommerce activities. With pervasive AI in place, it’s the data, not the engine that differentiates.
Implications for Organisations
In order to embrace the potential opportunities and avoid un-necessary risk in relation to conversational commerce, organisations might find it useful to ask themselves key questions including:
- What use cases lend themselves to conversational commerce?
- How will we ensure we are part of the conversation?
- How (quickly) can we build integrated, seamless and consistent experiences across access points and channels?
- What data do we have / need to integrate and to what end?
- How will we build deeper, more meaningful and appropriate ‘conversational’ relationships?
- What new areas of the ecommerce economy should we be investing in for the future?
Conversational commerce is already here. Its’ impact on consumers buy and retailers sell will continue grow. Organisations need to design today for the future.
If you have your own observations to share or would like to learn more about how other organisations are making the most from the Future Agenda insight resource and associated advisory support, please do get in touch.