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Outsmart the competition: Who is the customer of the future and what does that mean for businesses?

It’s no secret that the expansion of the Internet of Things and rise of connected devices is accelerating at an incredible rate. There are vast industrial applications for connected sensors, which monitor everything from manufacturing plants to power lines. And then there is the fact that I personally now own far too many smart lightbulbs, especially when considered alongside the smart plugs, smart speakers, smart scales, fitness trackers, and the smart television already in my house – I’m sure I’m not alone. But with ever more intelligent devices, what does this mean for the concept of the "customer"?

"When it comes to customer experience, perception is reality, and the numbers don’t lie."

The reason for this is really very simple – smart technologies make our lives easier and enable us to do things that we previously couldn’t. Some may contest that this is a false benefit, that our lives were simpler and more fulfilled before we could track our every step and every heartbeat. But the sales statistics speak for themselves. ABI Research predicts that smart home voice control devices, such as Google Home and Amazon Echo, will grow globally by close to 30% in 2020. When it comes to customer experience, perception is reality, and the numbers don’t lie.

Of course, it’s not just our hard-earned cash that we are spending on these devices. The real currency is data, which is why an Amazon echo dot costs only £29. In interviews with CNN and CNBC, Dave Limp, the head of Amazon’s hardware business, made clear that the goal is to make money when “customers use the Alexa products, not just when they buy them”. In other words, to create new opportunities for customer engagement, from the use of home connected devices, not just their sale. This changes the Amazon Echo from being a fun gadget into a very serious customer engagement and sales channel.

Smart assistants, in particular, function better the more they know and the more data we provide. In all walks of life, context is critical to be able to decide and act appropriately, and this is as true for us humans as it is for the digital assistants that now support us. When my four-year-old commands “Alexa, play You’re Welcome”, Alexa needs to understand that he wants the soundtrack from the Disney film Moana, rather than an old Beach Boys B-Side. That requires data – data about our own listening habits, data about what millions of children listen to, and even data about what children sound like.

"If smart assistants are now the real decision makers that businesses need to convince, what does that mean for the concept of “customer experience”?"

If you ask anyone familiar with corporate life, they will almost universally tell you that, by far and away, the most important people in the office are the Executive Assistants. They control access to the people at the top; they decide what those people see and who can speak to them. EAs learn the habits, preferences and quirks of each executive, and can often pre-empt their decisions. Smart home assistants are no different, indeed they strive for exactly this. They collect, assimilate and interpret the information we provide, and use that to make better decisions. The only difference is that the digital assistants are not only doing this for us as individuals, but learning from the millions of users of that service. This makes their potential, in many ways, much more powerful.

Such a high level of contextual understanding is needed to enable the next big shift for these devices – shopping via the voice interface. Just as online shopping is now the norm, many commentators see a major move to purchasing via voice as the next big change. But it is only possible with significant amounts of data and understanding. For example, say I find that we have run out of Baked Beans, and I ask my Smart Assistant to buy some more. I don’t have time to specify exactly how many tins, of what size, and what brand; but I would quickly stop using this channel if all that turned up was a solitary half-size tin of supermarket own-brand beans! I would expect there to be enough contextual understanding to know our preferred brand, and that as a growing family, anything less than a four-pack of beans simply isn’t going to be noticed.

Admittedly this is a frivolous example, but the point is that the entire model for home assistants, and for many other connected devices, relies on sharing enough data to enable a phenomenally deep understanding of ourselves. This is the sort of understanding that many of us have only previously experienced with our closest family and friends.

"Just as online shopping is now the norm, many commentators see a major move to purchasing via voice as the next big change."

Now, usually this is the point where the conversation around data moves into the territory of privacy, data security and the “big brother”. There are valid reasons to be concerned, not least because as data subjects, we have frighteningly little control over what actually happens to this data that we give so freely. Nevertheless, the projections for smart assistants and smart devices show that, rightly or wrongly, for most people these concerns rarely outweigh the benefits on offer.

Therefore, this trend will continue, and purchasing decisions will increasingly be made not by people, but by Alexa, Siri and their peers. Rather than be presented with every brand of Baked Beans each time I go to the supermarket, I will just ask and be given the brand that my assistant assumes I want. If we extrapolate this, we can quickly see the impact that it will have on a wide array of businesses.

 

"Brand becomes critical to survival."

Firstly, if smart assistants are now the real decision makers that businesses need to convince, what does that mean for the concept of “customer experience”? For sure, there will be technical work that can be done to make a product easier to buy through a voice interface. But equally, the idea of brands paying Amazon, Google and others to preferentially choose their products is not a big leap of the imagination. This new commercial reality is likely to be not far away at all, and those that anticipate it will be well placed. Established businesses may be well placed to anticipate this, but smaller businesses lacking funds are likely to find it more difficult. That’s where brand comes into play.

Brand becomes critical to survival. To be a brand that is known, trusted and desired will matter so much more. All consumer-facing businesses should be investing much more in developing their brand, and thinking hard about how to maximise the reach of it, well beyond the traditional shop windows (physical or virtual) and marketing channels. But how do you make your business seen in an unseen world? There will always new and exciting platforms and channels with which to get a brand known, and savvy brands will be constantly working to stay on top of this and knowing where the user attention is. Perhaps just as importantly, negative perceptions of a brand also spread so much more quickly, so Public Relations and media management could become critical.

Nevertheless, it will undoubtedly make life much harder for new entrants. Those that don’t already have a recognisable brand will find it much more difficult to break through to the mass market, with market share consolidated in those that already dominate. Being known for something specific, and occupying a niche may be the only chance of gaining a foothold.

"But is this future inevitable? It’s certainly highly likely. But it will only happen if we collectively choose it."

Of course, all of these trends are not just confined to the purchasing of consumer products, as important as that is. Automated decision making is increasing in all industries, from the fact that next-best-action software already a mainstay for many, to the huge advancements in AI that are only just beginning to have an impact.

But is this future inevitable? It’s certainly highly likely. But it will only happen if we collectively choose it, and there are those that have justifiable privacy concerns. The great Tim Berners-Lee is pioneering the concept of the “data pod”, an idea that any data generated by you or your things should reside in your own secure “pod”. You can then control access at a meaningful level, where consent has real power. If that becomes the case, I might find I still have to buy my own Baked Beans.

Ben Parsons

Associate Partner
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Ben Parsons

Associate Partner

Ben is an experienced Management Consultant with experience of shaping and leading a variety of complex global programmes across the full delivery lifecycle. His experiences range from initial strategy definition through to leading programme mobilisation and hands-on delivery.

Ben has worked with a range of major Utilities, Retail, and Oil and Gas clients leading business-critical change programmes from setup to close-out, and launching market disrupting technology to customers. He led projects in locations such as Oman, the Netherlands and India, and developed a deep expertise in retail payments innovation.

Bibliography:

https://www.abiresearch.com/press/covid-19-pandemic-impact-germ-concern-over-shared-surfaces-will-help-push-near-30-growth-smart-home-voice-control/