Exec: We’ve Reached Tipping Point With AI

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Exec: We’ve Reached Tipping Point With AI

By Suzy Frisch - 11/27/2018
Craig Elston of The Integer Group

Minneapolis — Evolving from the visions of science fiction buffs and technology wizards to the marketplace, artificial intelligence has firmly planted its roots in society. Thanks to the emergence of smart speakers, robots, drones and smart assistants, people are getting increasingly comfortable with incorporating artificial intelligence in their lives.

As consumers get accustomed to speaking with purpose to devices, artificial intelligence will continue becoming more of a central part of commerce. Its utility and ability to save people time makes AI appealing for consumers and subsequently for brands as a marketing tool, according to Craig Elston, global chief strategy officer at The Integer Group.

Elston presented research from Integer’s study about artificial intelligence called “Embracing the Machines: AI’s Collision with Commerce” at the Path to Purchase Expo in October. In the near future, AI will make its presence known in the way we browse, purchase and pay for items, or even call to arrange appointments.

In fact, Gartner estimates that by 2020, artificial intelligence bots will power 85% of customer service interactions. AI also is on the cusp of making a big splash in the economy. It has the potential to double annual economic growth by 2035 in 12 developed economies that, together, generate more than half of the world’s economic output, according to Accenture and Frontier Economics.

“We’ve reached the tipping point. The change now is about commercialization,” Elston said. “AI is really starting to influence behavior and shopping behavior.”

Already one in 10 American households have a smart home device – 11% are on Team Alexa and 4% Team Google – with the technology becoming ever more useful. In early 2016, smart speakers had about 135 skills, such as reporting the weather. By fall 2018, they offered more than 40,000. And the more they can do, the more we use them.

So what do retailers and brands need to know and do to prepare for a world of AI? There are plenty of opportunities, with consumers generally feeling optimistic and excited about using the technology, Elston said.

Already one-third of shoppers are open to letting AI make purchase decisions for them today. Key drivers for shopping with AI include saving money and finding the best deals (78% and 74%), while 55% aim to save time and 42% want their questions answered.

Overall, consumers are most excited to use AI to find deals, remind them when household items are running low, compile shopping lists, and make purchasing suggestions, Elston says. They are less interested in having AI automatically buy staples or perishables they usually purchase, and it goes too far if AI technology proactively orders items it thinks consumers might like.

Currently, the biggest share of voice shopping includes groceries at 20%, entertainment at 19%, electronics at 17% and apparel at 8%.

Brands that will succeed with AI must go beyond the wow factor to make the technology useful. For example, Tide created an Alexa skill that allows users to ask for step-by-step advice for removing tough stains – a natural extension of its brand. Sephora’s Virtual Artist app allows consumers to virtually try on makeup, turning browsers into shoppers.

As companies start implementing AI features, it’s important to make sure consumers can easily find and use them. It’s already a challenge. Though Amazon boasts those 40,000 skills for its smart devices, 60% have zero reviews. In fact, there is only a 6% chance a person continues to use a voice app after two weeks, Elston noted.

To make sure your skill doesn’t find itself in the dustbin of history, ensure that the AI features add value for consumers. And create a roadmap for people to find them. “It’s very challenging. But if they don’t get discovered, they don’t get used,” he said. “If you create something best-in-class, you still have to drive people there.”