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Conversational Commerce – Transforming Customer Experience in E-Commerce

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Having developed out of traditional channels over the past decades, conversational commerce leads the way towards a new era of individualized shopping. Until now, three main conversational commerce categories can be distinguished. They try to apply natural interaction to drive purchase decisions.

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Conversational Commerce – Transforming Customer Experience in E-Commerce

  1. 1. 1 Flash Insight: Conversational Commerce – Transforming Customer Experience in E-Commerce 010 0101 01010 10101 1010 101 0101010 01010101 010 1010 01010 01010 0101 010 0101010 01010101
  2. 2. 2 Artificial intelligence-based commerce has reached mass suitability and takes the customer shopping experience to a whole new level. Management Summary The rise of AI paves the way for conversational commerce  Telephone-, e- and m-commerce are the enablers of conversational commerce  Conversational commerce allows shopping through direct, natural interaction with retailers  It comes in the form of chatbots, digital voice assistants and digital personal assistants The customer shopping experience is taken to a new level  Customers experience more emotional and convenient shopping, tailored to their individual needs  Companies achieve significantly higher conversion rates through higher customer engagement and individual offerings First providers have successfully entered the market  Large players have entered the market, such as Amazon with its digital voice assistant Alexa or Tencent with its messenger and chatbot platform WeChat  Retailers have now started to use those new sales channels or to provide standalone solutions (e.g. in apps or on websites) Flash Insight Conversational Commerce | December 2016
  3. 3. 3 Having developed out of traditional channels over the past decades, conversational commerce leads the way towards a new era of individualized shopping. Conversational Commerce Development 1 Time estimate concerning use of technology for retail purposes suitable for the mass Degree of Automation Electronic Commerce (~ since late 1990s) Mobile Commerce (~ since late 2000s) Commercial Chatbots (~ since 2010s1) Digital Personal Assistants (future1) Text-based, reactive conversation for situational offeringsIndividual, location-based offerings Individual shopping behavior-based offerings Proactive conversation for context-based, highly individual offerings Telephone Commerce (~ since 1990s) Traditional POS Commerce Computer-based offerings through interactive voice response (IVR) Voice-based, reactive conversation for situational offerings Digital Voice Assistants (~ since 20151) Conversational Commerce Today Flash Insight Conversational Commerce | December 2016
  4. 4. 4 Until now, three main conversational commerce categories can be distinguished. They try to apply natural interaction to drive purchase decisions. Conversational Commerce Categorization DefinitionCategories Examples DigitalVoice Assistants CommercialChatbots  Hardware-embedded assistant offering own and third party products and services  Marketplace-approach  Few large players, e.g. Amazon, Google 3. Speech Recognition Software  Corporate chatbots integrated into messengers offering own products and services  Platform-approach with different providers  Few large players, e.g. Tencent, Facebook, Kik 1. Chatbot Platforms  Conversational functionality embedded within apps or chatbots on corporate websites  Limitation to company portfolio  Many different players, e.g. 1800flowers.com 2. Standalone Solutions Alexa (e.g. on the Amazon Echo) Google Assistant (e.g. on Google Home) Facebook Messenger (messenger) WeChat (messenger) “Conversational Commerce pertains to utilizing chat, messaging, or other natural language interfaces to interact with people, brands, or services and bots” (Chris Messina, Uber) GWYN (website bot) Lemonade Insurance (in-app bot) Flash Insight Conversational Commerce | December 2016
  5. 5. 5 Today, mostly large players are operating the new conversational commerce channels successfully. Concept Selection Target Use Cases & Audience Vendors Characteristics Standalone Solution GWYNChatbot Platform WeChat  Chatbot app: text interface for simple, two- way conversations (guidance through product-choosing process)  Integration on mobile/desktop site  Payment outside chatbot conversation  Platform for company chatbots: text interfaces for simple, two-way conversations (programmed Q&A-relations)  Messenger-app installation  Payment through chatbot  Customize and order a pair of Nikes (vendor: Nike)  Send an order to the nearest Starbucks (vendor: Starbucks) ~ 800 million WeChat users  Receive a tailored gift suggestion after being asked a number of questions (concerning occasion, sentiment, receiver, etc.) ~ 1.8 million GWYN customers Become #1 commerce integrator (payments control!)  Third party product/service providers (each company programs own chatbot)  1-800-Flowers.com companies Foster new levels of brand engagement (sales push!) Speech Recognition Software Alexa  Voice interface for simple, two-way conversations (programmed Q&A-relations)  Integration possible on various kinds of hardware (devices, wearables,…)  Payment through assistant  “Alexa, ask Domino’s to order a pizza” (vendor: Domino’s)  “Alexa, order toilet paper” (vendor: amazon.com) ~ 63 million Amazon Prime members  Amazon  Third party product/service providers Become #1 retailer & main commerce interface (price control!) Flash Insight Conversational Commerce | December 2016
  6. 6. 6 Through conversational commerce, customers can experience a highly emotional and convenient shopping process tailored to their individual needs. Conversational Commerce Potential for Consumers 1 BI Intelligence More Convenient Usage Scenarios  Easier and more convenient interaction with companies  Less friction through easy navigation  Ability to ask questions 24/7 (service expansion)  Simplified order/payment process Plus in Emotionality of Customer Experience  Direct company access for specific enquiries  Smart support along whole customer journey Increase in Tailored Offerings  Individual responses and tailored offerings in real-time  Individualization offering through rich data analyses  Narrowing down of information overflow Strengthening of Trusted Relationships  Strong relationship-building through more personal interaction  Bond creation through positive experience Messenger users in the US having interacted with chatbots1 60% of the 18- to 55-year olds Initial growth in the first three months1 +100%#apps +170%#messenger bots Flash Insight Conversational Commerce | December 2016
  7. 7. 7 With higher customer engagement and individual offerings, companies achieve significantly higher conversion rates through the new channels. Conversational Commerce Potential for Businesses Ability to Enlarge Reach  Reaching an especially attractive (young) audience beneath common target groups  Higher customer engagement: high messenger usage; higher retention rates; enlarged and global presence through platforms Prospect of Higher Conversion Rates  Only single customer touchpoint without price comparison options  Ability to create bonding on a more personal level and thus strong customer loyalty  Increased conversion through individual offerings & instant reactions Opportunity for Cost Reduction  Less expensive than currently applied technologies  Cut in operational expenses (e.g. personnel/facility costs) Possibility of Higher Service Quality  Individualization of responses to direct service requests  Information-provision in real-time Tens of millions of companies already use platforms like WeChat as a sales channel. HOW ABOUT YOU? 1800flowers.com already applies chatbot technology for instant individual offerings. HOW ABOUT YOU? HOW ABOUT FOR YOU? Providers already use digital assistants like Alexa for plenty direct services. HOW ABOUT YOU? Flash Insight Conversational Commerce | December 2016
  8. 8. 8 More about Mücke, Sturm & Company: www.muecke-sturm.de Mücke, Sturm & Company would like to get in touch with you to shape your strategy for the conversational commerce era. Headoffice Munich Theresienhöhe 12 80339 Munich T +49 89 461399 0 F +49 89 461399 777 Office Hamburg Kaiser-Wilhelm-Straße 93 20355 Hamburg  Over 20 years of management consulting experience  Extensive experience in the development of innovative digital business models with a concrete customer focus  Proven company track record in digital transformation & organization and innovative service models Michael Mücke Managing Partner at Mücke, Sturm & Company m.muecke@muecke-sturm.de +49 173 3910492  Several years of consulting experience in commerce and mobile communication  In-depth experience in the development of concrete measures to improve customer access and increase sales performance  Proven track record in customer experience management Nicolas Bell Associate Partner at Mücke, Sturm & Company n.bell@muecke-sturm.de +49 151 58243366 Flash Insight Conversational Commerce | December 2016
  9. 9. 9 Copyright This document is intended for personal use only. Distribution is only permitted without any changes or omissions – publication, in whole or in parts, requires prior written consent by MÜCKE, STURM & COMPANY and correct citation of sources. The herein published texts and graphics were used by MÜCKE, STURM & COMPANY in the context of a presentation; they themselves do not represent the presentation in its entirety. All mentioned company names, logos, brands, brand symbols and other copyrighted material are the sole properties of the respective company; they are only used for illustrative purposes. Flash Insight Conversational Commerce | December 2016

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