Brandon Metzger, Metis Strategy Associate discusses how commerce and the customer experience is becoming conversational
12/16/15
It is impossible to overstate the explosive growth that mobile commerce (m-commerce) is about to experience.
In the next three to five years, tapping and swiping will give way to a far more familiar interface: conversation
By 2020, there will be roughly four billion new consumers — not to mention an estimated 21 billion ‘things’ — connected to the Internet. With tens of trillions of new dollars flowing into the global economy, multi-billion dollar organizations will rise and fall largely on the strength of their mobile strategy.
Mobile is quickly becoming the primary channel through which customers and businesses interact, and hopefully it is already a major focus of your organization’s digital strategy.
However, as communication becomes constant, it is increasingly clear that the future of mobile interactions is not websites or native apps.
Instead, in the next three to five years, tapping and swiping will give way to a far more familiar interface: conversation
A few weeks ago, I needed to book travel arrangements for a business trip. Rather than navigate to an airline website or online travel agency such as Expedia, I opened a new app called Operator.
Rather than navigate through countless drop-down menus, imputing everything from destination and dates to preferred airlines and class, I had a pleasant conversation with one of Operator’s ‘travel experts.’
At any given time, I may be engaged in multiple conversations simultaneously (e.g., colleagues on Slack, friends on GroupMe, roommates on Facebook Messenger, etc.) As such, it was effortless — even natural — to book a flight through a conversation.
Further, though the conversation lasted roughly 30 minutes, it was far more convenient than using a travel website or app. I rarely respond to texts as soon as I get them, nor do I expect an immediate response. Indeed, the variable speeds that messages can be produced and consumed are a major advantage of messaging interfaces.
As mobile eats the world and messaging surges — we sent a staggering 43 trillion messages globally in 2015 — businesses and entrepreneurs are beginning to recognize the opportunity for commerce provided by the constant communication that is inherent to mobile messaging.
Led by Tencent-owned WeChat in the East and Facebook Messenger in the West, messaging apps are rapidly evolving to allow users to buy products and order on-demand services, send payments, communicate with businesses, and more generally engage in conversational commerce.
Conversational interfaces allow users to ask questions, receive answers and even accomplish complex tasks in both the digital and physical world though a natural dialog.
The move by major messaging platforms comes years after tech giants such as Apple, Google and Microsoft made conversational plays at the operating system level (Siri, Google Now and Cortana).
However, the tech giants are not alone. There is an ever-expanding list of conversational and invisible apps that do everything from schedule your meetings and book your travel to monitor your health and save you money.
Conversational Interfaces (CIs) allow users to ask questions, receive answers and even accomplish complex tasks in both the digital and physical world though a natural dialog.
Our relationship with the digital world will completely change due to intelligent agents you can interact with. — Yann LeCun (Director of Facebook AI Lab)
While it is increasingly clear that conversational interfaces are the next big thing in business, design and technology, there exists no clear best practices for how to implement them.
When I was booking my flight, Operator’s CI acted as an intermediary between American Airlines and myself. However, the interface can also be used to give businesses a more direct relationship with their customers.
As a launch partner for their Businesses on Messenger program, KLM will send your itinerary via interactive chat bubble in Facebook Messenger after you book a flight. When it is time to check in, you will be notified in the same thread, as well as receive your boarding pass and any updates. If you want to change your flight, simply search “KLM” on messenger, open the thread, and ask. By providing permanent context, the experience becomes friction-less.
The true promise of conversational interfaces are realized when the conversational user interface intersects the trend of intelligent agents:
As the price-performance of computation continues to advance exponentially, technologies such as machine learning, natural language processing, neural networks, and cloud computing are finally powerful enough to realize the Sci-Fi holy grail of intelligent conversational interfaces — or Virtual Personal Assistants (VPAs).
Infused with intelligence, VPAs anticipate users’ needs, further reducing the friction between the user and their goal. Imagine how my interaction with Operator could be different in the not too distant future:
Only then does it require my attention.
The night before, I set my alarm for 3:30am and go to bed.
I awake at 3am to a message from my VPA informing me that travelers are complaining of broken security equipment and long lines on twitter. It suggests I depart earlier than intended to ensure I make my flight.
I agree, and at 3:30 I get a message that my Uber is arriving.
In the current discovery based landscape, companies largely rely on brand recognition and marketing budgets to drive customers to their website or use their app.
However, as messaging and notifications replace search and discovery, the factors of competition will change. By 2016, Gartner projects that companies will compete primarily on the customer experience they provide.
Guided by the philosophy of anticipatory choice, concealed by the familiarity of messaging, and armed with powerful technologies and mountains of data, conversational interfaces will prove to be the preferred point of contact between customers and the digital realm.
In this new age, those that succeed will do so not on the strength of their brand, but on their overall ability to accomplish the tasks and sub-tasks that make up a user’s goal.
As functions such as sales, advertising, customer service and CRM increasingly shift to conversational channels, Gartner predicts that by the end of 2016, $2 Billion in online shopping will be performed by digital assistants. This may prove to be a low estimate, but Gartner echoes Ben Thompson’s analysis that conversational assistants will be the “killer application.”
Old systems will collapse as entrepreneurs figure out how to optimize and reinvent inefficient businesses, products, and services to provide consumers with all things better, faster and cheaper. — Peter Diamandis
Looking forward, companies like Viv — founded by the team behind Siri — are aiming to provide an intelligent interface to the world around us. In the new paradigm they are working to usher in, intelligent conversational interfaces become the “orchestrating mechanism to the world of information and services.” As co-founder Dag Kattlaus writes, billions of connected ‘things’ and thousands of services will cooperate and compete with each other to accomplish the user’s goal in a massive marketplace hidden behind a familiar messaging interface.
As these feedback loops continue to accelerate, conversational interfaces will quickly bring about a tectonic shift in the relationship between businesses and consumers.
Companies may be tempted to study the best practices of their competitors before committing to a strategy. However, the time it takes for a technology to go from deceptive to disruptive is plummeting, as are the barriers to entry. It is better to forge your own path — even if you are uncertain — than to be caught flatfooted.
Let there be no doubt, as conversational interfaces proliferate and consumers adapt, businesses that can provide the best experience, with the least friction between the user and their goal, will enjoy massive success.
To best position themselves, companies can prepare by taking the following steps:
Companies must put legacy, reputation and ego aside and address fundamental questions about their core values, as well as the value they provide to customers. Such questions may include:
Companies should digitize as many aspects of their products and services as they can.
In the hypothetical scenario to the left, Mattel looses a customer — despite their preference for the brand — because they were not best positioned to accomplish the user’s goal. Meanwhile, Disney gained the customer because they digitized their product and made it easily accessible.
Finally, organizations must automate as much as possible. To achieve this, companies must be able to collect, analyze and repackage data effectively, as well as be willing to integrate. As the Internet of Things explodes and machine-to-machine communications surpass human-to-machine communications, this will be critical.
In 2003, systems theorist and futurist John Smart observed that the number of words per search query was increasing at a quasi-exponential rate. Given that the average human-to-human query length is 11 words, he predicted that intelligent conversational interfaces would emerge in the 2015–2020 time frame.
Their emergence, he said, was likely to be the most important enabling information technology development and collective intelligence advance our planet would see in the next quarter century.
This is just the beginning.
Brandon Metzger is an Associate at Metis Strategy, a business and technology strategy and management consulting firm headquartered in the Washington D.C. metro area
