The rise of voice recognition technology
Rob is loading the dishwasher when he realizes he is about to run out of tabs. He doesn’t stop what he’s doing to write down a grocery list. He doesn’t make a mental note to go to the supermarket tomorrow. Instead, he continues his chore and says:
“Hey Siri, can you buy dishwasher tablets?”
A voice responds: “OK, you bought Dreft Platinum last time. However, Sun All-in-One is for sale this week. Would you like those instead?”
“Yes please,” Rob replies while closing the door to the machine. Siri confirms: “Sun All-in-One Dishwasher Tablets is added to your grocery list.”
What are voice-enabled smart devices?
This is voice assistance in practice. A new category of smart devices has made their way into our households. They are powered by highly potent AI platforms, that can be accessed through smart speakers, car equipment, smart phones, watches, televisions, and even microwaves and fridges. Interactive voice recognition technology, a.k.a. a voice assistant, enables us to control home systems and appliances, order products and services, and access media with the use of our voices.
Key players include Alexa, which powers the Amazon Echo devices, Google Assistant, that works on the Google Home speaker, and Siri, Apple’s voice assistant. They've seen an explosive growth: 3.25 billion voice assistants are in use today and 133 million people globally own a smart speaker as of early 2019. Voice recognition technology seems highly promising and use of smart speakers and voice technology is only expected to increase. Says Adobe Analytics: ‘Having a smart speaker dramatically increases confidence in the technology, and more frequent usage as a result.’
Half of all searches are expected to be carried out by voice by 2020
With ever-increasing market penetration, wars between the AI platforms on which the smart devices operate are raging, and only a handful of general-purpose ones are expected to remain standing.
Now, before we dive into the consequences of these developments for B2C companies, let’s look into the reasons why users are so keen to adopt voice technology.
Why consumers embrace voice recognition technology and commerce
It all boils down to one main benefit: convenience.
First of all, voice recognition technology offers a much more natural and intuitive approach than traditional interfaces, such as websites, mobile apps, and remote controls. This is because spoken language is the easiest way to translate thoughts into commands that direct action. People wish to use voice to simplify the devices they already use. Also, voice significantly simplifies access to the web for both visually impaired and illiterate people.
Secondly, according to our Fjord Trends, people almost universally express a desire to spend less time with screens.
Closely related to this argument is that ‘today’s consumers are perpetual multitaskers who benefit from the hands-free interface of voice-driven systems', as CMSWire puts it. In terms of voice commerce, they don’t want to interrupt what they are doing to carry out routine purchases. We refer to Rob, the dishwasher-man at the beginning of this article, who so easily ordered new tablets while continuing his household activities.
Indeed, Rob did not need to browse the various offers for dishwasher tabs manually. Instead, his Apple device queried the internet on his behalf. People are burdened by the endless amounts of choices they are presented with, and self-learning voice-enabled devices will apply the knowledge of their users’ criteria to make considered choices. Hence, people no longer need to browse the internet themselves.
In addition, voice potentially minimizes costs: if you ask your voice assistant to compare products, the risk of making a wrong choice can be minimized.
Ultimately, devices enable what Amazon’s David Limp calls ‘ambient computing’. They are part of the daily lives of their users and fade into the background when they are no longer needed.
Voice commerce risks for consumers
Of course, there are also reasons why people might still feel reluctant to allow voice assistants to take over their purchases.
For one, many people are fazed by their novelty. Some seem disinterested while others only have limited knowledge of the capabilities voice technology offers and will abandon their tasks when they become too complex.
Secondly, technical challenges might also put people off: not all devices deliver the required voice recognition quality.
A third reason for the limited use of voice commerce is a lack of trust. Artificial intelligence demands a leap of faith for the use in companies. This seems to be true for customers as well. Adweek reported that ‘the tally from voice orders isn't typically as high as purchases made online.' Moreover, consumers tend to focus on convenience goods, which are relatively cheap, and products that don’t need to be examined physically before being ordered.
The lack of trust is also expressed in concerns about privacy and platform motivation. Users worry that voice assistants are listening in on conversations. And rightfully so, as Amazon, Apple, Facebook and Google have been recording and listening to your conversations. In addition, they are afraid of someone hacking into them, to make an unauthorized purchase, for instance.
How do you know if the recommended products are just advertised—paid for by brands—or the result of organic searches?
We also hear that people question the motivation of the voice assistant that powers their smart device: is their recommendation based on my needs or on their desire to plug certain products? In other words, how do you know whether the recommended products are just advertised—paid for by brands—or the result of organic searches? We will go into this in more detail shortly.
A final hesitation towards using voice assistants is embarrassment. Not many people use voice on their mobile devices, in spite of the growing popularity of voice-assisted search. A simple explanation could just be that ‘some people may feel embarrassed using their mobile device voice capabilities while they’re in public’.
So far, we have seen the many reasons for customers to use or not use voice assistance. But what about B2C companies? How will this new marketing channel impact their businesses?
Consequences of voice commerce and marketing for B2C companies
Voice marketing poses a number of challenges and opportunities for B2C companies. We have listed them below.
Increased dependency on AI platforms
Brands have always been dependent on intermediaries to deliver their commercial messages to the right people. The AI platforms on which the devices operate act as a portal to their clients. Unfortunately, this dependency will not just increase. The power balance will tip in favor of Google, Apple, Amazon, and other platform providers. They will decide which products to recommend.
This means that by choosing a voice assistant and platform, consumers will lock themselves into a relationship with that platform’s partners. Brands will pay to have their products recommended, effectively keeping other companies from competing.
We would like to stress that there is no way to predict where these advertising developments will take us. Contrary to Google Ads, consumers have no way of knowing if a voice recommendation is paid for or not. Whether they will accept advertising depends on the extent to which they trust their voice assistants. Social norms are still evolving, and governments are likely to weigh in, eventually.
The run for ‘position zero’
Although AI platforms might plug their own products (Amazon), or start partnerships with other suppliers, we have seen they will want to avoid creating the appearance that they are bowing to their partners’ wishes, rather than serving their users’ needs.
That is why they'll also, perhaps even predominantly, recommend the highest-ranking search result to their users. Not the top three. Position zero is the only position that will open the door to customer interaction. After all, consumers don’t want to hear multiple options. Their ‘I-want-what-I-want-when-I-want-it-attitude’ dictates an immediate solution to their problem, not a survey into all possible options. We will fade away from the current research-driven decision-making, and focus solely on the first, and maybe second, search result.
Position zero—ranking number one—is the only position that will open the door to customer interaction.
Since half of all searches are expected to be carried out by voice by 2020, this development is bound to impact your SEO activities.
Changing search results needs
Following this line of reasoning, the search results needs will also change. For one, searches will become less research-oriented, increasing the importance of brand awareness. Also, a greater focus on audio will impact the visual design of your brand’s channels.
The risk of consumer backlash
A final risk posed by voice marketing, is the backlash companies face when unbridled data collection breaches customer trust. We refer to the well-known story about the teenage girl whose father found out she was pregnant because Target sent her an e-newsletter containing relevant offers. By combining search patterns, the company had gleaned the girls’ impending bundle of joy, before she had had time to tell her father. In spite of the convenience offered by personalized deals and recommended products, at some point, it becomes creepy. As we saw before, people don’t like to feel that they are being overheard by their voice assistants.
Fortunately, voice recognition technology also offers some highly interesting opportunities.
Building genuine relationships
Voice assistants work in the privacy of their users’ homes. Through smart devices, brands can truly become part of their lives and establish a genuine connection with their customers.
Making reliable predictions
The devices are self-learning and can analyze big data. Over time, they will be able to predict their users’ needs and wants, even before they are themselves aware of them. Also, they will be able to offer advice on the best times of day to target their customers.
Prices will become less important
Rob the dishwasher-man may have benefited from a sale, but voice technology will typically lead to a lessened focus on price. At home, people are on autopilot: they are doing something entirely different while ordering a product, and are likely to settle for their voice assistant’s recommendation. This voice assistant aims to serve its user’s needs as well as possible, but it might not recommend the most economically priced product. Brands that don’t compete on price may benefit from this.
Convenience products will benefit most
As we have seen, customers tend to buy cheaper, non-complex products, and items they don’t necessarily need to see beforehand. This offers excellent opportunities for brands selling groceries, books, home care items, and electronics, to name but a few product categories. Clothing and travel companies, among others, might benefit less from voice recognition technology, as people still prefer to try on garments or talk to a travel agent before deciding on a purchase.
In short, there are ample reasons to prepare for voice marketing—either because of the threats it poses or the opportunities it offers. But should you start your preparations now, or is there still time? Is voice recognition technology about to disrupt your marketing activities?
When will voice marketing truly take off?
Although we have seen that millions of people own a voice-enabled device, the shift to voice requires a substantial change of mindset for customers. Many people continue to be wary, and not everyone will be convinced. Moreover, technical challenges remain to be tackled, and the battle between the AI platforms is far from over.
That said, voice commerce will increase from $1.8 billion now to $40 billion in the US by the end of 2022. For the UK, these number range from $200 million now to $5 billion in 2022. If these predictions become reality, we expect that within the next three years, the tipping point will be reached for voice commerce first in product categories, and subsequently voice marketing. So, how should you respond?
How to respond to the developments?
Roughly speaking, B2C companies can deploy two strategies to make sure voice assistants recommend their products.
Increase brand awareness
First of all, if people request ‘Prodent’ instead of ‘toothpaste’, all competition is effectively eliminated. Premium brands and companies with products that are synonymous with a category, like Kleenex, hold the cards to achieving this level of brand awareness.
Voice Engine Optimization or Voice Engine Marketing
If increased brand awareness is not feasible, companies should focus on Voice Engine Optimization (VEO) or Voice Engine Marketing (VEM).
VEO aims to secure position zero by using voiced keywords, which tend to be longer and phrased like a question (“Can you buy me dishwasher tabs?”) as opposed to the written keywords used in regular search engine optimization. To achieve this, they will need to improve their knowledge about their audiences and target them more precisely than they do now. It will be better to reach 10 percent of the market with a position zero product than to try and reach 50 percent, only to be ignored by voice assistants.
Alternatively, companies can establish before-mentioned partnerships with platform builders. This is VEM: brands pay these platforms to be recommended by voice assistants.
Now that we described two possible strategies, let’s address the final questions that remain: should all companies look into voice marketing? And when should you start your preparations?
To answer the latter question, we believe it is important to assess the opportunities now, as implementation takes time. As for the former question, let’s see what our five-step plan reveals.
The five-step plan to prepare for voice marketing
We propose five steps that will help you evaluate whether voice marketing is or will be an essential channel for your company and prepare accordingly.
Step 1 – Establish the voice marketing potential for your business
Not every business will need to look into voice marketing. After all, not all audiences will be equally prepared to use voice assistants for their purchases.
Customer characteristics will tell you the extent of their interest. As we saw, convenience products have a bigger chance of success than items that require research, or visual cues, are expensive or complex, or target B2B transactions.
Also, although smart speakers are most popular with those aged 35-44 and elderly groups, it is the younger generation that most often uses voice for shopping and the middle classes that tend to be less price sensitive, and therefore, more interested in voice commerce.
Step 2 – When will voice reach its tipping point within my industry?
Next, getting to know your potential customers will help you predict when they are ready to embrace voice commerce.
Start monitoring. How many people in your market have smart devices and how many use their voice assistants? How many are making actual purchases using interactive voice assistants? The answers to these questions will help you find out when it’s time to make plans.
Step 3 – Develop a strategy
Step three looks into the strategies we mentioned earlier. Do you need to focus on short-term or long-term marketing?
Short-term marketing has a performance focus. It is about selling your products to your target audiences. This is what you do when you wish to secure position zero.
Long-term marketing, on the other hand, is also called brand advertising and aims to increase brand awareness and recall.
Step 4 – Make a product overview
Next, apply a portfolio growth share matrix to rank products based on their relative market shares and growth rates. This will help you identify which products to invest in. Subsequently, decide on your marketing approach: which products benefit from increased brand recognition and which require VEO efforts?
Step 5 – Experiment and operationalize
Based on the overview you created, choose with which products you wish to begin.
Starting now enables you to experiment, as technology is still in its early stages and competition isn’t fierce yet. Perhaps you should begin with generic products, which pose small risks while providing a steep learning curve.
Then, find out how to influence the algorithms of the various AI platforms. Look into when, where, and how to prompt purchases and discover to what extent big data and predictive analytics should be applied to anticipate customer needs. Keep in mind the risks of consumer backlash when you breach social standards. Learn from your lessons and apply these to other products.
As soon as you receive positive feedback, it is time to operationalize. You should:
- Educate your employees or hire new talent.
- Select and embed advertising technology.
- Set up processes to ensure one person’s expertise is shared within the organization.
- Prioritize products, put analytics in place, and monitor progress.
With this five-step approach, we finish our starter’s guide to voice marketing.
What is the impact of voice marketing on your business?
In this article, we explored the extent to which voice recognition technology and voice marketing will disrupt consumer interaction.
Notably, voice marketing will become highly dependent on AI platforms. Companies should assess their need to prepare adequately, as failure to do so will result in an inability to reach future customers. Voice assistants will stand guard, and client communication will go through them.
Voice assistants will stand guard, and client communication will go through them.
To counter their control, you should focus on increasing brand awareness, securing position zero and, social norms and government guidelines permitting, advertising.
We encourage you to look into this new marketing channel and assess its opportunities for your business. Of course, there is only so much we can tell in an article, so if you'd like to learn more about our services, feel free to reach out to us.