Without Anyone Noticing, Virtual Beauty Advisors (and Chatbots) Reached a Tipping Point

This post was initially posted on LinkedIn

About two months ago, my co-founder Andy presented to a room of forty senior business leaders from a number of industries, including beauty and retail. As he began his talk, he decided to take a chance and go off-script to ask the audience a few questions. “How many of you believe that conversational AI will be critical to your business in the next three to five years?” To Andy’s surprise and relief, literally every hand in the room went up. “How many of you believe those experiences will be over text-based messaging platforms versus over voice?” This time about three quarters of the hands went up in favor of text-based messaging. But aren’t chatbots on messaging platforms like Facebook Messenger dead? What do these executives see that others don’t?

Chatbots have been steadily improving and meeting real customer needs

Those who have worked in and around new technology know that new technologies follow a consistent pattern when introduced in the market – what Gartner so brilliantly captured as their Hype Cycle. In the beginning, some new development unlocks potential applications and opportunities not previously possible. Early adopters and the media alike tout it as the next big thing and expectations grow sky-high (often fueled by hyperbole from tech companies large and small looking to jump on the bandwagon). Inevitably, these inflated expectations can’t be met and there is a backlash in the market with many becoming disillusioned.

But, as Scott Brinker points out, here is the important part that only the smartest executives get. It’s actually during this “trough of disillusionment” that the greatest competitive advantage can be gained. When others have given up on the new technology and shifted their attention elsewhere, companies who continue to invest have the opportunity to more strategically apply the technology to real consumer needs and business challenges. They figure out what works – and, more importantly, why it works – long before their competitors and can parlay that experience into a market position that others chase for years to come. Part of the reason for this is because the underlying technology continues to steadily (and often quietly) improve along with the market’s understanding of how best to use the technology to create consumer and business value.

As proven use cases and second-generations products and services emerge, companies revisit the technology with more realistic expectations and a more pragmatic mindset. Best practices are defined, additional high-value use cases are identified, the technology keeps improving and becomes more packaged, and the market enters a period of rapid growth.

Second-generation applications at the intersection of burning consumer needs and compelling business value

So, in the case of chatbots, what are these second-generation applications that will unlock the full potential of the market? Over the last year (as chatbots went from white-hot to “dead”), Automat has ignored the noise in the market, stayed the course, and taken a test-and-learn approach to uncovering consumers needs that messaging can best serve and to working with brands to develop those experiences in a way that creates business value for them as well. Given our strategic focus on the beauty industry, we’ve been able to really go deep in one domain rather than spreading our efforts across many different verticals, avoiding the surface-level results many others have obtained.

What we found is that, as more and more consumer purchases have moved online, brands across all industries have looked for ways to be more relevant through digital channels and to meet the needs of their increasingly mobile-first consumers. But beauty brands are especially susceptible to disruption from direct to consumer digital upstarts if they don’t respond to the rapidly evolving needs of modern beauty consumers who are overwhelmed by product choices and product claims. Over the last five years, beauty brands have invested heavily in mobile, social media, augmented reality and other technologies but consumers still lack access to the advice and expertise they need to buy online easily and with confidence in their purchases. Simplistic guided selling tools exist but don’t go deep enough in terms of getting to know consumers, providing personalized and trustworthy recommendations, and delivering positive experiences that cement relationships with consumers over time.

To more deeply understand these topics, Automat commissioned an independent, third-party consumer research study by Wakefield Research of 1,500 U.S. female beauty consumers to illuminate consumer shopping experiences and attitudes regarding beauty purchases, explore the extent to which technology influences those purchases, and identify areas of unmet needs that messaging experiences can help address. That research (released today and available here) shows that virtual beauty advisors can readily step into the void in the online customer journey and path to purchase. This creates an opportunity for beauty brands to provide assisted service online and offline not only where real human advisors don’t exist today, but even where they are available since most consumers prefer to be left alone while shopping yet continue to need access to advice and expertise to complete their purchases.

Some of the more notable findings from the consumer study include:

  • 70% of beauty consumers are overwhelmed by too many beauty product choices and 63% of consumers are confused by beauty product claims.
  • As a result, over two-thirds of beauty consumers perform extensive online research before making purchases. The most common purchase behavior is researching online and purchasing in a store.
  • Approximately two-thirds of consumers prefer to be left alone while shopping. Surprisingly, 71% of consumers use their mobile phones to do additional online research while standing at the shelf. As such, online and offline purchase behavior becomes deeply intertwined.
  • Nearly half (49%) of all respondents said that they would definitely use or likely use a virtual beauty advisor when shopping for beauty products whether online or offline.
  • Virtual beauty advisors especially appeal to the young, digitally-engaged, frequent beauty purchasers that beauty brands want to reach the most as part of their digital strategies.

So, beauty consumers are really struggling to make sense of which beauty products are right for them and expending way too much time and effort completing beauty purchases. Virtual beauty advisors make it possible to cut through this complexity and provide the ease of use, convenience, and personalized experiences that consumers clearly need and want (in some cases integrating with other complementary technologies like augmented reality and image-based analysis to create a complete solution for the consumer). And, most importantly, half of consumers confirm they indeed have this need and want this particular solution. Intersect that with the awesome business results and ROI we’ve seen with large beauty brands like L’Oreal and Coty deploying virtual beauty advisors and you have the two key ingredients to hit a tipping point in the market for this technology. More generally, this deep, vertical-based approach to use case identification and value creation is what’s going to enable chatbots to take off (across other verticals and eventually all verticals) like everyone originally predicted they would.

The future happens very slowly and then all at once

In the near future, we’ll look back and feel that conversational AI, virtual beauty advisors, and intelligent chatbots deployed via messaging platforms, the web and eventually voice were inevitable – and to a certain degree that will be true. What will also be true (but many people will forget) is that beauty use cases and technology developments will largely be what sets the example for other industries. As those of us working in beauty know, it is fast moving, digitally innovative domain and one that readily benefits from the types of advice, expertise, guidance, recommendation and consultative sales experience that virtual advisors can provide.  Like has been the case over the last year, these developments will happen with little fanfare and not a lot of people noticing at first. And then the future will hit us all at once and it will all seem so obvious. We’ve already hit the tipping point. The only question for companies is whether they want to get on board now and still have a chance to build competitive advantage or let others pass them by and at best reach parity later.

Still have questions?  We’re fired up to help as many brands as possible to raise the bar of user and customer experience in eCommerce.  If you need help implementing website engagement tools for your brand or want to talk further about any of the tactics in this article, we should talk ASAP!

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