H&M: So how would you describe your style?
H&M: Perfect! I’ve just created a custom style for you.
H&M: Here’s an outfit with a polo shirt. Do you like this?
Me: Looks great.
H&M: Awesome! Would you like to shop this, share it, or save it?
Me: Share it.
H&M: Which friends do you want to share this outfit with?
An engaging conversation with a helpful retail employee. Except the person helping me wasn’t a person: It was a bot. And the conversation didn’t take place on H&M.com or the company’s mobile app. It happened on Kik, a third-party messaging app.
Welcome to the era of “conversational commerce,” the term for online business that’s powered by natural language technologies. With a combination of rich visual interfaces and artificial intelligence (AI) technologies from Google, Facebook, Amazon, and others, brands can scale relevant, personal, and helpful interactions with customers.
Users are already in the habit of interacting on messaging apps. Although the use of brands’ mobile apps has exploded since 2008, “brand app fatigue” is starting to settle in. Messaging apps, by contrast, have never been hotter. Today six of the top 10 global apps are messaging apps, used by 1.4 billion people worldwide and growing by 12% annually. Facebook’s WhatsApp and Messenger are leading the pack. China’s WeChat has 10 million business accounts (called “official accounts”), which its 650 million monthly users can interact with in ways similar to how they’re interacting with their friends. Send a sad emoticon to Starbucks, and Starbucks sends back a song to go with your mood.
And messaging provides a continuous thread between customer and brand, unlike the disjointed experience of email. An order confirmation email, even one prompting further action, often dies in an inbox, but conversation on messaging apps is more like an ongoing dialog. This difference makes follow-up conversation easier and more natural, increasing the opportunities to cross-sell, encourage sharing, solicit input, and flow seamlessly between commerce and support.
Perhaps the greatest advantage of these app-based, AI-driven conversations is the ability for the brand to zoom in immediately on what customers need (regardless of how they say it), based on strong understanding of context. The brand can offer the customer a narrow set of relevant choices that address the need but leave room for additional options. On Messenger, the user always has an authenticated status, which simplifies the process for a brand to deliver relevant information. The trade-off for brands is that they cede some control to the apps, just as they do when they engage with customers on Facebook or Twitter.
Some companies are already moving aggressively into conversational commerce. For example, 1-800-Flowers.com is a conversational pioneer on Messenger and Amazon’s Alexa. The company was able to launch a beta product on both within 90 days by having its CEO as a champion, charging a corporate marketing unit with the overall effort, and involving few people in merchandising and IT, to avoid internal debates on prioritization. The company relies on external experts for customer experience design and bot technology. Conversational commerce is managed as a new channel, with the expectation that it will be mostly incremental, and that when it matures it will be embedded within all the company’s brands.
If interacting with 1-800-Flower.com’s customer service on Messenger feels incredibly human, that’s probably because it is. The company focused first on designing and building a bot-based commerce experience for the customer, while letting its customer service staff interpret service questions from customers. It plans to “train” a bot to do so down the road for generic inquires. The company felt confident in betting on messaging technologies because they’re where its customers were already spending their time online, so meeting them there became important for providing a best-in-class customer experience.
To succeed in conversational commerce, a disciplined, skillful design of the customer experience is critical. Customers will increasingly expect accurate natural language interactions, which means understanding context. The system will need to know that “Where is my order?” is a question about a customer’s most recent undelivered order, and that the customer needs an answer about where the order physically is as well as when it will arrive.
Conversational commerce is in its learning phase as companies wrestle with technology, customer experience, and support. Early adopters’ choices have been guided by focusing on getting customer experience right. Smart companies are already moving up the learning curve and building relevant marketing and IT skills. They stand the best chance of winning the next battle for the customer.
Gadi BenMark is a leader in eCommerce and loyalty at the McKinsey Marketing & Sales practice in New York.
Dilip Venkatachari is a Vice President at McKinsey Digital Labs in Palo Alto, and leads our digital marketing technology and analytics services.
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