Digital Assistants Are Eliminating Transactions … And That’s a Good Thing
“Alexa, place an order for AAA batteries.”
This simple request is just one example of the millions of purchases made each day by digital assistants. As connected devices like Amazon’s Alexa or Google Home become more mainstream, the very act of going to the store to buy batteries, for example, is becoming antiquated. But as the Internet of Things (IoT) becomes an integral part of our lives, what happens when the very decision to make a purchase no longer requires a human brain?
At a time when stellar customer service is the standard, online retailers have an opportunity to reimagine service delivery in the increasingly connected world. IoT technology is the new frontier for customer experience, fundamentally changing how companies conduct business and raising the bar for the customer service experience. For companies fighting to stand out amongst competitors, they’ll have to reframe their strategies for a future where devices, not people, have purchasing power.
Forget the Act of Buying
Actions like exchanging cash or swiping a credit card are dropping into the background of the buying experience. Companies can (and should) let this evolution happen, and adapt to better serve customers who will soon forget what it once meant to pay.
In this vein, many brands are taking steps to impress customers with experiences that minimize clunky transactions and will eventually eliminate the physical act of buying. Uber is a well-known example, eliminating the payments hassle so users can simply tap their phone and hop in the car to get where they’re headed. Just this year, MasterCard eliminated signatures (Visa just announced it will follow suit as well), finding that 80 percent of retail transactions made through credit cards currently don’t require signatures at all. Elsewhere, Pay with Google promised to make online shopping easier with a new system to store payment information. Major brands like Target have also invested significantly in innovations like mobile pay.
Many of the purchases customers want to make can now happen unconsciously — and they’re OK with that. Why? Because automatic purchases are largely for items that we consider "essentials" and that we need on a regular basis. In our homes, we want low-cost items like toilet paper to be there when we reach for them. For manufacturers, raw materials like plastics and metals must be restocked on a regular basis to continue operations. It won’t be long before consumers look at other higher cost consumables, from buying a pair of jeans to services like shoveling the driveway, as sensors indicate when these items need replacement. As a species conditioned to seek convenience across all goods and services, this evolution will escalate rapidly.
Embrace a New generation of Business Opportunities
IoT has been on the radar for decades, but customer acceptance of a world in which things buy things is still new. It will take years, and numerous technological breakthroughs, to see this transpire in daily life. In a consumer survey, nearly half of respondents said they’d feel comfortable with a connected device, like a refrigerator, ordering on their behalf. However, 62 percent still want to approve purchases beforehand. This shift in consumer expectation offers a blueprint for forward-looking businesses. The decision and logistics behind making a purchase can and should disappear, but businesses must consider how to maintain a sense of control for their customers when it comes to spending. There's a business opportunity for companies to explore here, and what’s more, they must realize that the expectation for constant innovation has changed. Those that fail to take full advantage and impress customers risk vanishing into oblivion.
To start, IoT will have an impact on product innovation and create new opportunities for brands to differentiate themselves. Amazon.com leads the way with this mind-set, prioritizing convenience and experience while pushing the envelope with provocative, buzzworthy innovations like in-home deliveries.
The opportunities stretch across industries. At home, a dishwasher can automatically purchase detergent when it's low or schedule a repairman appointment when connected sensors recognize it's due for maintenance. Elsewhere, IoT tools that power automatic reordering and robo-carts are overhauling retail inventory management. Individuals and businesses alike benefit from these product innovations, and both are eager for more to come.
Ultimately, cutting out the friction of payments is the key to innovating the customer experience and differentiating a company’s position in the market. With legacy forms of payment falling out of favor, companies can innovate on the touchpoints that most directly build brand love, from mobile browsing to physical spaces and immersive experiences that keep customers coming back for more. This is a wakeup call to businesses around the world. In an era where business is more than a transaction, innovation must touch every facet of the customer experience. In fact, it must be ingrained into a company's very DNA.
Andy Barker is the head of global payments at Magento, an e-commerce platform and cloud solutions provider.