Big Thoughts: Anticipating Amazon Alexa

By Dan West (Digital Strategy Director)

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Last month, Amazon Alexa entered the Australian and New Zealand market. For Alexa’s launch, Amazon signed up a number of partners, including Air New Zealand, TVNZ and the New Zealand Herald – all categories that had seen success in other markets. Each brand has launched an Alexa Skills Kit (equivalent to an Alexa-specific app) with varying degrees of complexity: Air New Zealand offers users information on flight times, cancellations and what to do next, while the New Zealand Herald provides summaries of the news. We can expect the utilities of each to expand as these brands come to grips with the potential of voice.

Currently, Amazon offers two types of Skills Kits to clients: Flash Briefing Skills are simple to create and only require content for Alexa to read aloud to the user, whereas Custom Skills require brands to jump through a few more sign-off hoops with Amazon, but can include more complex functionality. For example, the New Zealand Herald provides the top news stories of the day as their Flash Briefing. Meanwhile, the Custom Skill created by Google Calendar allows you to add events to your diary and hear your plans recited for that day.

For those that are first delving into voice, it’s useful to understand how customers are currently interacting with it as a product. At present, voice-enabled assistants are primarily used by millennials (those born between 1981 and 2000), followed a fair distance behind by Gen X. Nearly 9 in 10 people who have a voice assistant talk to it every day, whereas one-third report that they use it more than 5 times per day. 53% of people who own a voice-activated speaker say they feel natural speaking to it, with many reporting that it feels like talking to a friend. One of the top reasons people use the device is because it allows them to more easily multi-task—getting the news whilst brushing their teeth, for example.

Though advertising is not currently available on Alexa, consumers are open to proactive brand messaging on their devices so long as it feels native to the experience. When advertising does come to Alexa, 30% of users want to be asked whether they want an ad to be played, 28% want to get to choose the brands from which they hear ads, and 25% are happy with ads that are personalised based on commands or questions they often ask. Above all, it is about relevance and personalisation. Mobile was once seen as a highly personal device, but more recently owners of voice assistants have referred to them as e-relatives, and have even found themselves apologising to Alexa as they would to a family member. While Amazon pull together their plan for advertising on Alexa, they have already started trialing the option of monetizing Skills Kits in the US. As yet, however, information into its success is thin on the ground.

There are seven key considerations when it comes to Alexa and voice:

    1. Alexa experiences should have voice at their heart, rather than simply translating a web experience to voice. If you’re translating a web experience into Alexa, it was probably better in web in the first place.
    2. Brands need to consider use cases which take into account context around time, location, and who might also be around. For example, offering personal bank account details in what could be a crowded room might not be a great idea.
    3. If the experience is quicker or better through a laptop or smartphone, it’s probably not right for Alexa. For example, Mitre 10’s “How to Build a Deck” series might not be right for Alexa, but the opening hours of your local store would be.
    4. Short, sharp experiences work best. The most commonly used Skills Kit in Germany is, “Which bins do I put out today?”
    5. Find your “raw chicken on your hands” functionality. To be successful on Alexa, brands need to be useful. Take, for example, setting a timer while chopping raw chicken in the kitchen – this is 10x easier to do by speaking to Alexa than washing your hands and setting a timer on your phone.
    6. People want content over transactions. The screen is still a vital part of any online transaction; people want to see what they are buying before making a purchase or placing a bet.
    7. Guided voice experiences can also be successful on Alexa – this is where Alexa takes the user through a series of questions to better understand their needs.

Nowadays, voice is all the rage. It was one of the year’s hottest topics at CES 2018. But being “all the rage” doesn’t necessarily mean voice has reached critical mass. According to the Global Web Index, voice-controlled smart assistants (like Echo, Dot and Google Home) are currently sitting at 11.7% penetration in the UK and 13.5% in the US, despite having launched in 2014. As such, I don’t expect the uptake among our target audience in New Zealand will be huge in the first year – but that being said, voice goes beyond Alexa to include mobile assistants such as Siri, Cortana and Google Assistant, which is where most people’s experiences with voice occur.

If you do decide to create a voice product, remember: voice is hard! People ask for things in different ways, and there are literally thousands of variations for the same command. Working out how to understand all these commands, and how best to get users from A to B without causing delays or frustration is a huge challenge. There is a lot of strategy, CX and UX planning that needs to be done before launching into creating an Alexa Skills Kit. To top it off, your data needs to be in a highly organised format and, depending on the complexity of the Skills Kit, you will need to have an API to easily allow Alexa to help your customers.

For those wondering whether Alexa is going to chew up their sales opportunity, it will be comforting to discover that the majority of users aren’t yet making purchases through Alexa. According to a recent survey by IFTTT, only 5% of users had bought products using voice assistants, preferring to use the technology for information and utility. However, the sales statistic is slowly growing as more people gain confidence with their voice assistants and start asking them for items. The same IFTTT study reports that 36% of users would prefer to shop with Alexa than an in-store assistant, so businesses need to prepare for this future.

It should be noted that Alexa currently has a sales cap, limiting expensive purchases as a safety measure—they don’t want people (and especially children) accidentally purchasing costly items. Currently, products users are interested in purchasing through Alexa include meals such as Domino’s Pizza (56%), electronics (52%), clothing (46%), groceries (45%) and personal care (45%). Retailers should also note that Amazon Alexa can be an ally, as it does allow consumers to shop through retailers other than Amazon. Best Buy in the US recently announced that consumers can now use Alexa to learn about and purchase the big-box retailer’s Deal of the Day products. That being said, Amazon will most likely be the default purchase platform for most users.

However, as Amazon Prime is not yet launching in New Zealand, this is not going to be possible for a few months at least—currently only Prime products are eligible for purchase via Alexa. Google Home offers more sales integration opportunities, and a number of retailers have already partnered with the tech behemoth to capitalise on them. With Amazon Alexa still controlling around 80% of the home assistant market, however, Google is still a relatively small player in this space – albeit growing rapidly.

Whatever your particular voice strategy, all businesses need one—and more specifically, one that looks into the next three years. 2018 will be the tipping point for voice and, though it won’t reach critical mass this year, its growth is starting to speed up. Brands that want to thrive in the voice era need to put a robust plan in place now.