How the conversational web is going to change the game
By: Bart Vijfhuizen
Tags: Artificial Intelligence, Messaging, Conversational UI, Conversational Interfaces, Conversational Commerce

At the start of this year, Uber’s Chris Messina declared 2016 ‘the year of conversational commerce’. Others have used the phrases conversational interfaces or the conversational web. In essence it all refers to the same trend: the changing way in which businesses interact with their customers. It is transforming from graphical interfaces like websites, to natural two-way communication supported by artificial intelligence (AI). This may sound like the ‘next big trend’ that will remain a distant future scenario. Meanwhile, you are waiting for the tools that you need as a business, to keep up with the hundreds, thousands, millions of customers-conversations at any moment in time. However, — like other fundamental changes driven by technology have shown — being too late to the game may mean you don’t get to play.

The conversational web is a huge topic, ranging from bots to AI, from voice recognition to smart devices, and from China to Silicon Valley. Nobody knows how it is going to play out, and neither do I. So instead of trying to provide answers, I am going to explore the driving forces behind the conversational web. I will describe three scenarios that picture a possible future and how this future will change the rules of the game for businesses.

Where the conversation starts

Conversational interfaces take us back to what we were used to back in the day: having an actual one-on-one conversation while doing business. That’s what business was. Personal. A customer speaking to a store attendant, to an insurance agent, or to a bank teller.

Once technology advanced and businesses grew, interfaces like interactive voice-response systems and websites were developed to cope with the growing number of customer interactions. These interfaces were mostly non-intelligent, so a lot of the work that used to be done by businesses, shifted to the customer. Searching for a product; comparing alternatives; finding solutions for problems; customers now do the job when they connect with your business online. Not because you choose to simply let your customers figure it out, but because there is no other economical way to manage enormous amounts of customer interactions.

At least, until recently. With the emergence of conversational interfaces this is about to change. Companies like KLM, Hyatt, Disney and Suitsupply are undertaking experiments to engage in personal communication with their customers through Facebook Messenger and WhatsApp. Through these channels they aim to engage in meaningful conversations with their customers, either delivering a service or selling directly.

KLM sends me my boarding pass via Facebook Messenger

Suitsupply uses WhatsApp for personalized clothing advice and lets customers order directly from the conversation.

Why now?

Conversational interfaces clearly make sense. But why are they emerging now? There are three driving forces. First, the enormous increase of free messaging services has been a prerequisite. In 2015, 75% of all smartphone users worldwide used at least one messaging app, and this is expected to increase to 80% in 2018. This paved the way for low-barrier, ongoing conversations.

The second driving force is the ability to use rich elements like images, video, links and certain software in conversations. This has enabled companies to have more meaningful conversations via messaging services.

Operator offers products directly in their messaging app (source: businesswire.com)

Third, advances in artificial intelligence allow meaningful conversations to happen without speaking to an actual human being. Bots can speak to people, either through written or through spoken conversation. This significantly increases the amount of client-conversations a company can handle. Sure, conversations are still often quite awkward, but technology improves fast and a growing number of start-ups is proving that AI can already be very good at executing specific tasks.

Amy Ingram is your virtual agenda assistant that plans meetings for you (source: x.ai)

The race to the platform

Now that interfaces start to become more conversational, the question arises: which interface are customers going to use? Will they choose different interfaces for different purposes, or will they choose one interface that acts as a gateway to all services behind it?

The Silicon Valley Giants are aiming for the latter, closely looking at China, where the use of WeChat is practically equal to the use of a smartphone. As Satya Nadella -Microsoft’s CEO- explained at the last Microsoft Build Conference, in his vision the future will revolve around humans, virtual assistants and bots. Humans will remain the centre of everything we do. But they will be supported by bots, which are capable of executing tasks like purchasing products or finding the right insurance. Virtual assistants, in their turn, are able to learn human needs and understand human language, acting as a platform for the bots. Microsoft stimulates the community to create bots via its Microsoft Bot Framework, with Cortana as the conversational backbone.

Competitors are following similar strategies. Apple has just opened up Siri as a platform for external developers, and is making Siri more central to its business by rolling it out to desktop. Google recently launched its own smart messaging app Allo, as well as voice assistant Google Home. Meanwhile, Facebook has announced to open up WhatsApp to businesses — just like it did with Messenger — and to invest in its virtual assistant M.

And then there are successful examples of Amazon’s Alexa, virtual assistant Hound, and promising ones like Viv — made by the creator of Siri and recently acquired by Samsung. All are focused on building a developer community. The stronger the community, the more bots are developed, the more relevance the virtual assistant gets, the more users it attracts, and so on.

Hound is praised for its accuracy (source: popsci.com)

What is going to happen next?

There are so many things to take into account looking at this conversational trend that it is very difficult to — I hope I’m not alone here — foresee the possible future. I have summarized my thoughts into three scenarios, ranging from ‘pretty likely to happen’ to something that sounds like taking a return trip to Mars.

Scenario 1: It’s play time! Experiment and learn

I believe this is the scenario we are currently experiencing. Conversational interfaces are decentralized and early adopters use whichever platform is most convenient at any specific moment in time. Virtual assistants like Siri and Cortana are mainly used to obtain information. Other specialized conversational interfaces are better at interacting with businesses. For example: customers receive their KLM boarding through Messenger, they order a pizza at Dominos through Slack’s pizzabot, or they ask Siri about tomorrow’s weather. Conversations are a mix of human-to-human and human-to-bot, mostly because bots are not yet capable of handling complex interactions.

This is the time to experiment. By doing this, you get to understand what it means to communicate through conversational interfaces, which has its own rules and tricks, especially if you let a bot handle the conversation. And customer expectations are low, so you have the room to make mistakes and learn from them. Even better, you might create sympathy and publicity by being one of the first.

Scenario 2: This is getting serious — new business models are emerging

In this scenario artificial intelligence is at the level that it enables a virtual assistant to not only provide information, but also to execute various standardized tasks. In this case you could tell a virtual assistant that you would like to order a pizza margarita with extra mozzarella in 45 minutes, and the virtual assistant will use a bot to select the right pizza company for you. And — if assistants are true to their promise — they will learn. So next time you order pizza, you don’t need to tell the virtual assistant that you would like extra mozzarella, the assistant will simply remember.

However, if you want to execute a non-standard task (like asking for buffalo mozzarella instead of the cheap version), artificial intelligence runs into its limits. You will either run into a dead end, or you’ll be connected to an actual person working at the pizza place.

In this scenario, personal assistants and bots are likely to get substantial traction, because there is some actual value in the services they deliver. And when that happens, conversational interfaces get real traction. With real traction [KT3] comes a fight for attention from customers, which means that businesses will need to put effort in optimizing their presence in virtual assistants and bots. Think Bot Optimization and Bot Marketing (BO and BM) in parallel with SEO and SEM.

Thinking a little further ahead, this will probably also mean that a customer choosing for a business is less determined by their marketing messages than it is now. It is hard to convince a bot with a nice story. It is much easier to convince it with hard proof like assortment, price, delivery times and customer reviews.

Is this scenario likely? Well, Viv promises that you can order a pizza once the platform is launched, and Hound is already capable of pretty complex interactions, as you can see in the example above.

Scenario 3: Talk to my assistant! — the power of the virtual assistant

Taking it one — big — step further: suppose the virtual assistant is capable of executing complex, non-standard tasks, removing the need — not necessarily the desire — for customers to communicate directly with a business. What if the virtual assistant cannot just order a pizza, but can also change the delivery address, ask for a specific topping and file a complaint if the pizza is cold. And imagine that the virtual assistant also takes care of communication flowing from business to customer, filtering out only those messages that the virtual assistant has learned its user wants to receive. This would mean that the only remaining direct contact with the pizza company would be at the time of delivery. Unless the delivery is made by Uber Eats, of course.

In this scenario the customer experience is almost fully determined by the virtual assistant and its bots. This means that businesses will need to rethink what will determine a customer’s’ choice for their business. Imagine that you as a customer can choose between two insurance companies and they are both equally qualified. One still requires you to contact them directly when you want to make a claim, and the other allows Siri to do it all for you, which means you don’t have to remember client numbers, contact details or even the insurers name. What would you choose?

What will it be?

It is impossible to say how this all will play out. But one thing is for sure: it will play out in some way. So if your business is slow to pick up on innovations like this, now is the time to learn a lesson from previous technological disruptors — e-commerce and digitization of media for example — and to be early to the game this time around.

I’m very curious to know what you think. Feel fee to comment!