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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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Smart Retail – Why Conversational Commerce Matters


Back in 2008 much of the World was either in, coming out of or about to go into the ‘Great Recession', Barack Obama was elected president for the first time and Apple was selling the new ultra-thin MacBook Air notebook that was less than an inch thick and even turned on the moment it was opened. Technical Innovation within the retail sector was beginning to emerge.

An analyst at Kleiner Perkins Caufield Byers called Mary Meeker made a bold prediction - ‘mobile would overtake desktop users by 2014'. Mobile usage is no longer in question, Mary Meeker was indeed correct. Instead, the real questions today surround how consumers behave when using ‘different' mobile devices and what their individual demands are.


In retail, many possibilities exist for delivering these personal experiences. For example, Augmented Reality (AR) tools exist today, especially at coffee houses, grocery stores, video gaming or even in digital tourism. The idea of flipping the ‘virtual reality concept' into the ‘real world' has been a long time coming and many wondered if this technology would break into the mainstream market. Customer personalisation is essential in driving the AR experience.

As consumers look to retailers to deliver quicker, smarter and more tailored experiences, consequently how AR can evolve and become

monetised will be vital for brands if retailers are to stay relevant.

Another possibility for delivering a personalised experience can be delivered using artificial intelligence and natural language analysis. Combining these with your store databases and making them available through an interface to your customers is an opportunity to engage in a targeted and customised way.


Your Social Network Is Bigger Than Your Website

Adobe's Digital ‘Best of the Best' report stated that consumers visited branded websites less frequently in 2015, and those visits were typically shorter.1 Consumers are changing the way in which they behave. Brands will need to be where their customers are and at a time the customers wish to engage. This is changing the way consumers shop, buy and interact with brands and retailers be it online or offline. Technology is going to be an essential driver to deliver this.  

The Rise of Messaging Apps Over Social Networks

According to Business Insider Intelligence's Latest report2, people are spending more time on messaging than on other websites or social channels and that the combined user base of the top four chat apps is larger than the combined user base of the top four social networks. As well as scale, chat apps reveal specific characteristics that make their audiences relevant to businesses and marketers, factors including size, retention and usage rates, and the user demographics.

Figure 1 – User Activity, BI Intelligence2, Jan 2016

Conversational Commerce

Conversational commerce is transforming the "messaging app" and the customer journey. Imagine a world where your customers could use the messaging app they know and type or speak to their need. For example, she can then say “I need a formal dress for my best friends wedding next week, black or navy, under £150.” In seconds, she gets a message back saying “what do you think about this dress?” With an image and a  link to a personalised product recommendation with express shipping selected, choices of colour, and her size already accounted for, which she can then pay for, and track the delivery status, without ever leaving the conversation. Individual needs are taken to purchase. The experience is tailored to your client and is the experience very quick and she probably won't know if she is talking to a human or not!

It is a growing trend and it is already here: in the world's biggest ecommerce Market in China3 an App called WeChat released only in January 2011 and conversational commerce is thriving. Here are some interesting facts4.

Figure 2 – WeChat Statistics4, April 2016

With development of messaging apps and Facebook's  development of services like M, an assistant within Messenger apps, the opportunities for retailers are almost limitless. And also in Europe companies are already experimenting with selling (Ditzo, car insurance) or upselling (KLM)  through Whatsapp. It's a huge opportunity for your business, big or small to get closer to your customer.

Smartphone users are limiting their use of apps to one or two social platforms, one messaging and a browser. With so many options to choose from, users are now more selective in their approach to app downloads which has led to “the big 5” (Facebook, Apple, Microsoft, Google, Amazon) creating and testing intelligent chat Bots in attempt to win over users.

This innovation has shown massive potential to break new ground in the retail sector. New business models using chat apps allow for real-time services for ‘direct selling', ‘assisted product selection', ‘support with or without upselling' and so much more. Considering the time we spend on our smartphones, it is easy to see how chat Bots are the perfect technology for retail to get the right exposure at the right time. With this new channel you can be more personal, and your customers have fewer touchpoints to get confused and reach their goals faster.

How To Start?

Train your staff- A chatbot can not answer all questions you want it to from day one. You should start training your staff to work with and take over dialogues from the chatbots. They will become the trainers and keepers of your Bot(s). They will need to learn about machine-learning so they can understand why your robot can or cannot answer questions you have not yet asked.

You will need to build a new skill, analytics based on natural language, this is to enable recognition of intentions and behaviour and also to improve the Bot's relevance and effectiveness.

Start with an easy topic - The choice and type of ‘robot-assistant' to build depends on your customers' needs. But if you can, start with the easiest robot to implement. The easiest chat robot with direct business results is probably the Conversion Assistant, because of the low level of integration and artificial intelligence needed.   Fundamentally, It is a sales funnel in dialogue form, to finalise a purchase.

Adapt your BackOffice to the Bots - The sooner you can connect and adapt your BackOffice systems to your Bots the better. You will need systems that can add more fields to customer and product databases: once you have insights into which questions the Bot cannot answer, you can then add more information to the database. Next time the question is asked, you can then teach the Bots about the new information and right answer. For some companies, this is the biggest challenge, as it may require new BackOffice systems and investments.


Strategies & Tactics

Although all lights are green for Conversational Commerce to really take-off it is not yet clear what the winning combination of chatbot and platform will be . Yet, once Conversational Commerce is implemented, the road is wide open for VR-assistants and in-store robot assistants.

Picking the right chat Bots - Technology is key to this new transition in retail. Picking the right chat Bot platform and understanding how it can be monetised will only be the first stage. How retailers can scale the required personalisation is going to be a key factor in customers adopting, using, sharing and being an advocate of given brands or retailers' solution.  You will need to monitor the customer adoption of each platform.

Choose the right App - There is no guarantee for success, even when you choose the apps that big companies are investing in. Some Bot technologies are still in preview5. So moving in incremental steps will be key. Experimenting with different technologies, on a few different messaging platforms is the best choice until it's clear who has won the platform battle6.

CHALLENGES when working with BOTS

A new Bot learns right and wrong answers as it is being used and grows in experience. This brings some challenges that must be managed by you.

Prevent harm and offence - It would be necessary for retailers to ensure that the automated messages sent from a chatbot in response to questions provide the right advice and should not put anyone in danger. The best way to circumvent risk is to have a human answer any questions that haven't been asked before.

Create a lasting experience

Once you interact with a business, you open a thread that will stay forever. You never lose context, and the business never loses context about who you are and your past purchases. It removes all the friction.” David Marcus Facebook VP of Messaging products11

 “Creating an experience where booking a ticket (with messenger) is as seamless as if your best friend worked for the airline”11


Regulatory guidelines: Will the rule book be rewritten?

As with much of the digital marketing space, there are some interesting challenges and discussions on the way surrounding ‘conversational commerce' regulations. Older millennial (Gen Y) and the previous generations are more concerned with security and privacy, it's less of an issue for the younger generation.  As things transition, will this be an opportunity to rebalance the rules?

Transitioning into a sales and marketing channel will require retailers to ensure they are explicitly clear of the intention to market and promote products.

For example within the UK - to ensure compliance with and clarity of ‘marketing communications, In line with CAP Code 02, ‘Recognition of Marketing Communications'.   CAP Codes 06 ‘Privacy' and 10 ‘Database Practice' will require modification as will companies' privacy policies will need to be updated in line with the new mediums.

Privacy laws would need to restrict retailers to refer to individual customers in a wider communications context without explicit permission.   

Terms and conditions would disallow sharing customer's contact details with third parties without explicit permission.  

Code 09 ‘Distance Selling' would apply as selling products via message app, rather than exchanging goods face-to-face. Selling contracts would be subject to Consumer Contracts (Information, Cancellation, and Additional Charges) Regulations 2013. There are exemptions, but these tend to apply to longer term contracts such as; gambling, financial services, rentals and property construction and holiday packages. For the type of products we would be selling, we would need to ensure consumer contracts cover this channel.

Get ready for the challenge!

Teaching the Bots to communicate about more complex tasks like combinations of products on an acceptable personal level, may take some time and enabling human staff to accompany and take over the dialogues in a hybrid model may be the best transition.

A Bot must grow up and the audience needs to become familiar with the idea. ROI in a short period of time will be slow to be realised.  

The technology is getting nearer,   so get ready for - the robots are taking over!









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