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Conversation and Customer Experience: How AI is Being Used in Retail

Learn how to create a great customer journey with voice.

June 2, 2023 by Gaea Vilage
Conversation and Customer Experience: How AI is Being Used in Retail

Retail has been around for centuries. So before we look into the future, let’s start by looking at the history of retail.

  • In the 1770-1800s, Mom and Pop shops ruled the world.  Small, family owned businesses specializing in things like bakeries, shoe stores and even drug stores were in every city.
  • By the mid 1800s-early 1900s department stores began to appear. These stores like Macy’s and Sears started to showcase the value of customer experience by showcasing demos and even events bringing retail to a different level.
  • In the 1950s, we began to see the emergence of credit cards and shopping malls which focused on convenience and ease in paying for things but also a place to be and hang out.
  • In the 1960s, the very first Walmart appeared creating an interest in big box stores that focused more on self service and efficiency.
  • By the early 2000s, Amazon led the way for online shopping creating the opportunity for people to shop any time of day or night, read reviews, do price comparison and more.
  • As technology increased, in 2007, Facebook and soon other social media sites disrupted the retail space allowing retailers to talk directly to their customers, provide customer service through social media and eventually directly market and sell to the exact consumer they were looking for.
  • And now we look at today, 2021 and beyond – after a global pandemic – where we’re seeing a large shift to personalized customer experiences that offer efficiency, ease, convenience and care with new technologies like AI and conversational AI.

AI in Retail Today

During the pandemic the data we once knew was no longer valuable.  [It used to be that] pizzas were being ordered at a certain time of day and at Costco we knew when the big Gatorades and the juice boxes would be ordered. You didn’t have kids coming out of high school for burgers and fries the way they always did which means there was also a supply side challenge.

So AI became essential in helping businesses understand what was going on around them. What schools were open, what churches were closed, all of that became so informative for store managers to figure out how to rationalize some of their offerings, how to change their inventories, how to deal with the hours that they would even be open for business,” said Gwen Morrison, Senior Advisor at the Open Voice Network and former CEO of WPP’s Global Retail Practice.

Shilp Agarwal, CEO at Blutag added “People started reordering using their Alexa device and they actually loved it, but with that said, they also did not realize that they could actually do that with their favorite brands that are not on Amazon. So that’s the education piece that we have been working with brands. A lot of the direct to consumer retail brands that don’t have a presence on Amazon, we let them know that your customers can still shop on Alexa and on Google assistant but directly through your website.”

How to Create a Great Customer Journey with Voice

With this global change, retailers had to find new ways to reach, interact and sell to their customers.  But for brands, they started to realize it wasn’t just about reaching their customers where they were at, but also where they were at along their journey.

Richard Warzecha, an Independent Consultant for Best Buy shared his views on how Best Buy is doing it. “So many people are looking for better quality and what are the right use cases for retail? And I think where we need to go with this is to look at the view on the overall shopping experience and shopping journey for a customer. I think it’s tempting within the retail space to think that it’s all about the transaction, but what we like to do at Best Buy is to look at the many stages of shopping.

There are exploration stages like looking for wireless headphones or a refrigerator and what do I need to learn in order to make a better decision? There’s the next stage, which is sort of the choosing stage, which is where, of all these different possibilities, how do we get down to the one that I want to purchase? And then once we get at that stage, we have to look at trends to actually make that as easy to sequence as possible.

And then once you’ve transacted, there’s also the stage of, how am I going to get this thing? When’s it going to show up? How do I keep track of the shipments? And if I get it, if I happen to want to return it, what do I do?  Then we ask ourselves, where along that whole overall journey is there opportunity for voice to be [more efficient and helpful].

Best Buy has gone completely multichannel with our voice perspective, with our voice experience, which means we want to be where our customers are, so that if you add something to your cart via the website or a voice you could, or mobile, it’s all the same part and you should be able to do it. If I add something to voice, I could purchase it via a website and vice versa. And we’ve delivered on that recently and now we continue to polish that and look at the journey to see where there are places for us to improve.” (You can try out their voice skill on Amazon or Google here.)

The concept of conversational AI can include chatbots or voice technology.  And voice technology can not just include a voice skill, but a voice can be added to a website, a mobile app, a device and more.  “I think there’s currently this big focus around just creating the most efficient experience for me to come to a website, find what I need and ultimately purchase it,” added Collin Borns, Business Development at Speechly.  “So really trying to create that efficiently, from discovery to ultimately purchasing, is a big topic that we’re seeing within the retail and e-commerce space. So I think in e-comm, that’s a very sort of natural fit for a voice interface where you can take the value that we’ve seen so far from voice, which is, efficient command and control or efficiently getting a task done and bring some of that to the e-commerce space to ultimately realize that goal.”

What it Means to Build a Great Experience for Customers

And as mentioned before, retail is no longer just about sales, it’s about creating an experience as well.  “To understand ROI, yes you can track sales, but then on the flip side, and this is kind of what we tell our brands all the time and the companies we work with, it’s no longer all about the sale.  It’s also about creating an emotional connection with someone, so that you gain brand loyalty,” said Heidi Bailey,VP, Futures & A.I. at The Integer Group.

“It’s about creating an experience. And so you shouldn’t just be tracking ROI, but you should be looking at what kind of experiences the conversational AI is giving you in terms of an emotional connection. Is it increasing your brand affinity? Is it increasing your loyalty? People may not be buying right that second, but maybe they do a few days later because the experience was so great. So always look at those two things. It’s not just all about ROI. It’s also about how you measure how it affects the rest of your brand.

We have a proprietary methodology [at Integer] where we’re marrying the emotional aspect alongside sales with some of the analysis that we do for our clients. We’re pulling in both quantitative and qualitative measures in order to get there, we weigh them, we score them and then ultimately you can then understand how sales or emotion or brand loyalty or any kind of brand affinity metrics are actually affecting your sales and correlating them and adding coefficients to them. So that is something that we also do on the backend,” said Bailey.

“It’s always been important to have that connection with your customer,” added Agarwal. “But I think today in this new era, personalized connection with your customer is even more important than ever. So how do you make sure that when someone walks into the store, you can have the store design reflect your brand’s personality? How do you make sure that reflects when somebody’s shopping from home or in their car and a voice [of your own] is something that really brings that out. It makes it a lot more human where you can actually have that connection. So I think those aspects are pretty game changing when it comes to voice.”

Real Use Cases in Retail

How do you create connections in a real use case?  What does that look like when it comes to voice and AI for retail?

For Agarwal, “if it’s something that’s a reordering of a replenishable item, a lot of our top customer categories are groceries, baby and beauty. The big reasons for these categories to be popular for voice is a lot of repeat orders and they don’t require a visual.

So now people can just say, Hey, reorder my coffee from Don Pablo coffee. And essentially it knows who you are. And it’s able to grab that previous order that you did, and use Amazon pay essentially to place that order.  And it’s a completely friction-free method. So once people get used to that aspect of it, it is really hard to take that habit back, because now they’ve experienced that aspect of being able to do that with the brand.”

“If you look at the grocery side of things, this is where I think approaching voice as a feature can unlock some of these different types of use cases,” said Borns. “We work with this company called the S group, they’re the largest retailer in the Nordics and we helped them create this voice enabled grocery list.  So if you could picture just being able to list out, eggs, ham, cheese, Ben and Jerry’s ice cream, pizza, whatever it may be, but then let’s say there was an error on one of those objects in the middle, or let’s say you wanted to make a slight change to the cheese. I don’t want Feta cheese. I want cheddar cheese. If you could imagine trying to do that purely from a conversation point of view, again, we’re talking about a very sophisticated and challenging sort of user experience, that might not even be the best user experience and [therefore just having a one way vocal conversation like we created may be best.]”

Morrison added, “I can even envision a shopping experience that starts at home where I can actually kind of tour the store. And I can say, I’d like to see 4th of July special napkins, what’s available today?  We could look at voice as being the driver to say, take me to the right areas of this e-commerce platform that becomes more visually three-dimensional. That allows me to say, turn this way. I want to see what’s over there. We haven’t gotten to that point yet, but that’s how I see voice as being an essential component to a much more interesting aspirational shopping experience. It may start in the home. I may click and collect. I might get it there, I might say, but now I want to see more of what was in that other area. And there’s a reason for me to go into that store.”

How to Integrate AI and Brick and Mortar Stores Together

Does AI mean brick and mortar stores are dead?  It’s not about one or the other, it’s about connecting the two.

“When it comes to voice, there’s a lot of other aspects that make a lot of sense as well. So for example, we work very closely with the Alexa print team, and it’s a really cool feature and it’s getting a lot more usage now because more people are home. Essentially, what it does is that it gives you the ability to print anything on your printer just by speaking to your Alexa device. So, for example, if you want to print a coupon to Bloomingdale’s, for example, you can just ask Alexa for that coupon. And it says, ‘Oh, I found this coupon for 20% off for next Mother’s Day. Would you like to print it?’  All you have to do is say yes, and it prints it for you. So whether you’re waiting for a sale or you’re walking out of the door, going into the store quickly, ask your device, ‘Hey, is there a coupon?’and if it responds back, “Sorry, I don’t know that that means,” the retailer does not have any coupons or sales available. And now with our company having more than 500 retailers we’ve worked with, we do see more and more people getting very used to asking that question and using voice,” said Agarwal.

Bailey added a retail concept she’d love to see. “So if you think about a fashion stylist for instance, you could have a stylist conversational AI and they’re asking you what type of clothes you want or what styles you like and they’re putting some interesting things in front of you instead of you just buying it. So let’s say for instance it’s for Nordstrom’s and there’s a Nordstrom’s 10 minutes from my house. What, if I could try this on, can the chatbot or voicebot now switch gears and essentially book an appointment with me at Nordstrom’s to come in and try the outfit?

And when I get there, the outfit’s already waiting in the waiting room. I don’t have to try to find clothes. I try them on. If I like them, I buy them. And so you’re seamlessly kind of connecting the digital and physical spaces and you’re having a great connection with the consumer. You also then potentially eliminate some of your returns. I think it’s a really interesting concept and one that I’ve been exploring to see how we can make that a reality.”

Morrison shared a voice skill she found interesting called Send Me a Sample.  “I asked Alexa, send me a sample. It said, what would you like? I just said, well, what do you have? There wasn’t much of a visual that I could see, so I said how about something in beauty? And then I did get an Estée Lauder sample of something that is on its way to me now. So we’ll see what it is. It’s fun to put a little surprise and delight into retail. That’s what retail is all about to begin with.”

How to Win with Brand

If you’re creating a real connection with your customer, that also includes showcasing your brand and who you are through conversational AI and voice. It’s hard to connect with a brand if they all sound the same.  Creating a seamless journey is a huge part of it, but making it sound and feel like your brand is equally as important.

“I think voice is incredibly important. Think about how much time a brand spends creating their brand colors and logos. When you are starting a social channel, you have to have a certain feel and look, and your images kind of roll up into that. And there’s a lot of thought, effort and investment that goes into creating a whole brand environment,” said Bailey.

“And so when you think about voice and how it’s starting to fit into that, it deserves the same kind of level of investment and strategic thinking. It becomes essentially your brand. If you are a brand that is more serious, you wouldn’t want to create a chatbot or a voice skill that talks about humor or that’s humorous, or has funny answers, because it’s a disconnect between what your brand stands for. So always look at your purpose, always look at your values, always look at how did you develop the brand in the first place, again, looking at the gap, where does a voice fit in and then find out where that voice and tone of voice should be in order to kind of facilitate a really great experience for customers.”

Looking for help to build a voice that represents your brand or offers a mix of options for your customers to hear, we at ReadSpeaker can help.

Carissa Merrill, an Independent Consultant for Best Buy added, “I really do think that the foundation of having an inclusive product and inclusive system really needs to be built intentionally from the ground up. [It’s important for companies to] live those values of inclusion, as well as build really inclusive teams and having those teams build inclusive products. And then also getting a [diverse group of] active user buy-in, getting active engagement and feedback.”

“We like to say that we don’t create products for our customers. We create products with our customers, “ added Warzecha.  “Our lead researchers and team ensure that we not only include looking at age and gender within our participants but also sexual orientation, gender identity and eventually cognitive capabilities too. [People tend to] make assumptions of how it’s going to go over with their customer base [so it’s better to] expose some of those blind spots [by having your] participant panel be representative of your [vast] customer base too.”

One Tip To Building Your AI for Retail

If you’re a retailer, voice is here and will be the next part of history we create for the retail industry.  Here’s one tip from each of our retail experts to help you get started and thrive in this space.

Carissa Merrill, an Independent Consultant for Best Buy: “[It’s important to remember to continue to] build trust again and again with a holistic approach. Start small and iterate, iterate, iterate, because there’s so much to be learned and every use case, every retailer, every customer is different, so get something out there and keep experimenting.”

Richard Warzecha, an Independent Consultant for Best Buy: “Get the experience on a device as soon as possible. This is a new medium. It’s not like web or print. There are plenty of no-code or low-code options out there, so just get started.”

Collin Borns, Business Development at Speechly: “Ask yourself, is a voice assistant the best use for my business in terms of voice technology, whether that’s a general voice assistant skill or action on an Alexa or Google, or whether that’s an independent type voice assistant, or would my company or business benefit more from just voice as a feature?”

Heidi Bailey,VP, Futures & A.I. at The Integer Group: “I would love to share two. First, before you start building a conversational AI or any kind of AI experience, make sure that it has an actual purpose, make sure that it integrates with your brand, it ladders up to what your brand stands for and ultimately also what you’re trying to achieve. Because if consumers have a bad experience somewhere, it doesn’t quite match your brand or they’re like, what is this?  That’s how you start to lose brand loyalty. Most important of all, bring in lots of people from the company in different areas. Typically it’s the data or the AI team who is building these types of experiences, but you never know, there might be some things the creative team brings that they really think are necessary and notice gaps where they could help improve it.

Second, ask yourself, is what you’re doing driving behavior change?  This goes back again to measuring emotion. You have to benchmark it and you have to understand, where is your brand in the market today? What is the perception of your brand and of your products?

You could look at what consumers are talking about? What are they saying? What are they saying about your brand? Look at your reviews on Amazon, look at all those things and potentially do some natural language processing on top of that. What exactly are people saying, what is the emotion? What is the need? Where is that gap? Where’s that friction? And then you start to build something smart, because you are essentially eliminating this gap or this friction for consumers making the experience more powerful and more personal for them because you’re actually listening to them. And you continue to monitor your brand affinity – are my affinity metrics going up, is my net sentiment in social going up, are people giving me more positive reviews on Amazon, on Google, etc.? When you’re measuring these things consistently, you can start to understand behavior change, but at the same time become smart about how you shift and change your conversational AI to take into account all the new things that are happening in the market.”

Gwen Morrison, Senior Advisor at the Open Voice Network and former CEO of WPP’s Global Retail Practice: “Learn about what the possibilities are. I wouldn’t initiate a project that’s for the sake of integrating a voice strategy into the center. I would always say, how is voice an extension of what we’re trying to do? How does it become an enhancement and how do we learn? Always considering, well, what’s the voice component of this use case, and then be realistic about whether if what you’re talking about for the future can really be deployed today, or what are we doing with our technology partners to assess, how reliable is it going to be, because the thing you don’t want is to set up a situation where you’re frustrating a shopper, because voice isn’t working. I’ll give you an example of going into a mass retailer and you see a kiosk and you can type in what you’re looking for or use your voice. And of course, it’s easier to use my voice. I don’t want to put everything down and try to key in something, but if I use my voice and it doesn’t work, [that could be a frustrating experience] so keep experimenting with that [before you release it to the public].”

Shilp Agarwal, CEO at Blutag: “Start sooner rather than later because what’s happening is that I think a lot of brands are going through this aspect saying that, oh, voice isn’t that big right now, we have to hit these numbers and our KPIs, and voice is not something that’s playing that role, because the number of users that we get on mobile or web are a lot more than voice at the moment. But I think it’s just a very wrong way to think about it. We have customers that are getting revenue from voice. In fact there’s one company we brought on board three months ago, getting 30,000 interactions through the voice assistant every month.

And now what’s happening is that their customers are so aware of these voice apps that now the vendor has the ability to send them a reminder like, ‘Hey, are you running out of your coffee? Do you want to reorder it?’ All these bands are going to have such a massive advantage a year, two years down the line because they’ll have tens of thousands or more of these voice ads that have been enabled across all devices and they already have that connection with their customers.”

Want to learn more from these experts?  Check out the full interviews on our YouTube channel here and listen to our podcast Creative and Tech here.

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