If you’re in the business of selling goods or services to consumers online, Amazon and Apple’s digital assistants – not to mention Microsoft’s Cortana, Google Assistant or the host of other competitors vying for supremacy – pose a disruptive threat.
These seemingly benign and helpful gadgets have an agenda: they want to come between you and your customers.
To stop them, it will be more crucial than ever before to build strong, enduring and direct relationships with your customers. Think hard about how well you know them and whether they value you: the challenge will be to focus ever more clearly on the customer proposition – to identify what is special enough about your business to ensure customers will want to retain a direct relationship with you.
Every smart consumer-facing business understands its best chance of success lies in forging the strongest possible direct relationships with customers. Brand-loyal, engaged and trusting customers will shop with you time and again, recommend your business to friends and families, and provide you with a receptive audience for everything from marketing promotions to user feedback. Your dialogue with these customers offers a rich source of business insight as well as growing revenues.
By contrast, third parties who get in the way prevent you securing these benefits. Sharing the value chain means diminishing returns. Lose control of the customer relationship altogether and the dangers multiply.
This isn’t a hypothetical idea – just take a look at what has happened to the hotel sector over the last decade, an industry which has faced an existential threat from the growth of the online travel agents. Online agents, or OTAs, such as Priceline and Expedia are now the default option for many people booking hotel accommodation, with hoteliers handing over commissions of up to 30% for each room booked via an aggregator. Despite working hard on initiatives such as loyalty schemes aimed at maintaining the relationship with travellers, hoteliers are losing the battle, with fewer and fewer customers booking directly.
If you think travel is a special case, look at the way food delivery companies now represent a potentially disruptive threat to sit-down trade in the restaurant sector. Businesses such as Deliveroo and UberEats have achieved phenomenal growth, offering a new way to connect with a broader range of customers and hopefully increased sales – but only in return for a share of the profit margin and, increasingly, control of the customer relationship.
As for Alexa, Siri and friends, they may currently be a novelty item for many users, but these tools are building powerful data stores for their sophisticated artificial intelligence and machine learning engines. Already, Google estimates 20% of all searches conducted on its mobile app and on Android devices are voice activated. Alexa users may currently just be asking their devices to play a song but it can also make recommendations or choose an entire playlist for you. From there it’s no big stretch to ask for other types of recommendations – which concerts to see, what to do on a rainy day, or even what birthday present to buy for your sister.
Over time, as these assistants learn more and more about their users – and their users’ networks – they’ll take on an ever-greater share of such work. If Siri knows what its owner bought their sister in the past – and what she buys for herself – it should be able to make good choices. The same, of course, is true of any other purchasing decision a consumer makes.
By then, digital assistants will be playing the same role as online travel agents and food delivery services, coming between the consumer and the businesses they buy from. And they’ll be operating in almost every consumer market that you can think of, rather than one concentrated niche.
Indeed, it is the potential ubiquity of digital assistants that makes them so potentially disruptive. The range of purchasing decisions means not only that every consumer-facing business will have to contend with this new intermediary, but also that the assistants will accumulate ever more data and insight, cementing their control.
The good news is that there is a way to protect your lunch: if customers value their relationship with your business sufficiently highly, they’ll want to keep it direct; they won’t ask or allow a digital assistant to come between you.
In the case of physical product, that’s going to be a question of building brand value; to establish a relationship with customers who know they can rely on you to meet their needs – whether it’s to help them identify new products they love, or if they feel they are getting some value out of the purchase above and beyond the items themselves.
In service-oriented businesses, it will also be vital to find new ways to add value. A travel operator able to tailor-make a specialist holiday in several countries incorporating a number of different experiences, for example, will stand out in a way that a package tour operator cannot hope to.
Consumer-facing companies will also need to think about search and search engine optimisation in new ways. Voice searches are more likely to feature natural language – users will simply ask their assistants a standard question – and over time, keywords may therefore become less significant. If your business is to be found on a digital voice assistant-managed search, you’ll need to adapt accordingly.
The bottom line is that consumer businesses neglect these issues at their peril – if your product or service can be aggregated, it almost certainly will. You might be unnerved to know that Siri is a Scandinavian term meaning “beautiful victory”, while Alexa comes from the Greek Alexandros, meaning “defender of man”. For assistant, think assailant – and one with the power to wrestle your customers away from you.