Features, Technology

Algorithms “Can’t Buy Me Love”

Both Tina Turner and the Beatles got it right about the power of love in our lives above all else. And according to the Beatles, nothing can buy it, including all the money in the world. Well … maybe … NO, don’t go there! And if all the money in the world can’t buy it, algorithms certainly can’t either. However, those analytics tricks may very well lead you to precisely the one you will fall in love with. But technology can never facilitate making mutual love happen. Thank God, it is still a human-to-human emotional, physical, psychological, metaphysical and transformational event.

But, the concept of the advanced use of technology and data analytics to more efficiently and effectively connect two human beings who have a high potential to fall in love is actually at work in the world of retailing, in fact, all consumer-facing businesses.

The BIG Problem

The big problem is that while algorithms may be used to lead consumers to a potential retail love match, in many cases there is not another human being on the other end to reciprocate. And if there is a humanoid present (aka sales associate), he or she is often repellent to consumers. That’s a non-starter for any kind of love.

The dichotomy of technology’s ability to connect the right consumer to the right retailer, and the seeming inability of retailers to grab the enormous opportunity of a mutual lovefest, was dramatically confirmed by two presentations made at a recent conference hosted by The Store (WPP’s Global Retail Practice) in Miami.

The Match Maker – From Active to Passive

J. Walker Smith of Kantar Futures, was up first. And even though I consider myself moderately tech-savvy, Smith painted a futuristic picture of shock and awe. First of all, he clarifies that the power of the smartphone is not the device itself and the mobility it provides (along with its many other uses). It’s about what’s going on inside the device. There are 10 to 14 sensors that are “constantly pinging out information into the ether every time it makes a connection with a cell tower. What’s happening is that sensors are collecting data and sending it out to aggregators who then use algorithms to help consumers navigate their lifestyles and manage their interactions in the marketplace. That’s what these technologies really represent,” Smith says.

“They are the leading edge of a world in which consumers’ interactions with technology is shifting from one that, in the past was driven by screens, to one in the future that will be driven by sensors. In the past, if we wanted to unlock the power of technology or get access to that big black mass of the internet out there, we had to actively input something into a screen. We had to be actively engaged with the technology.

“Going forward, we won’t have to do that anymore. All of the information that we used to actively key in will be collected by the sensors, and then fed into algorithms which will do all of the work and make all of the decisions for us. Our engagement with technology won’t be active, it will become passive. We will just sit there and let the technologies collect all of the data and make all of the decisions. This is the most fundamental, technological transformation that has occurred since the internet was commercialized in the early-mid 1990s. At the time, if you wanted to get something out of that technology, you had to be actively involved with it. Going forward, it’s passive engagement. It’s algorithms doing all of the work.” This is major. It’s the big pivot from active to passive.

Algorithms are “transforming the ark of the marketplace because what they represent is the evolution of the marketplace…being carried forward by the internet of things. If you say ‘what is the internet of things really all about?’ It’s about this pivot to passive. It is, as we like to say at Kantar Futures, a world in which there is a driverless car in every category. Think about a driverless car –- you get in, then the car uses all its sensors to collect all the data, feeds it into algorithms, moves the car around town, gets you to your destination, and you don’t have to do any of the work. That’s coming to every category.”

Smith went on to provide several examples of algorithms doing all the work for you. A German company, Restricta, makes a camera that “when you get the image in your lens finder, it searches its database of images. If that picture that you are trying to take has been taken so many times that it’s now considered stereotypical, the camera won’t let you take that picture. It will shut the lens finder down until you move somewhere else to take the picture at a different angle or a different location. You think that’s kind of silly, but what this camera is really recognizing is that what you are probably going to post the picture somewhere and it is preventing you from being just like everybody else and forcing you to be more creative. The technology and the algorithms do all of the work.”

Another example is called The Vessel. It’s a smartcup you can order online. “You pour all of the beverages you drink during the day into the cup, and it has sensors in it that keep track of all of the vitamins and nutrients that you’re consuming during the day to let you know if you’re getting enough of what you need. If you consume every beverage that you drink during the day in the Vessel, this little white strip along the side will change color to let you know how well hydrated you are. It does all of the work for you.

“There is also a new toothbrush that monitors all of your tooth brushing habits, then with a Bluetooth connection, it automatically sends the data to your dentist. The next time you show up to the dentist, he or she will know if you are doing what you are supposed to be doing in between visits. This is likely to change the pricing model of dentistry because you will show up and your dentist is going to say ‘hmm, I see you haven’t been doing what you were supposed to do; therefore, I’m going to have to do more work to take care of your teeth, so I’m going to charge you more money for it.’ Dynamic pricing comes to dentistry.

“Pizza Hut is experimenting with a menu in the UK that has an eye tracking device that monitors how you look at the display of ingredients that you would put on your pizza. Any ingredient your eye lingers on for an extra millisecond of two is automatically ordered for your pizza. It does all of the work for you.”

Amazon provides another example, as Smith explains, “They took out a patent a couple of years ago for what they call their anticipatory shipping software. It basically does two things. One, it will make a prediction of whether or not, you as a past customer, are likely to buy a new item that is coming out — like a new book by your favorite author. It will then ship that item to a warehouse near you in anticipation that you are going to buy that product, which of course, if you do, it has then shortened the delivery time to deliver the item. The other thing this software does is monitor your browsing behavior on the Amazon website. If it determines, based on that behavior, that you are likely to buy the product that you are looking at, it will start shipping you that product before you click the buy button. They want it in their logistics system that fast because Amazon knows that one of the big playing fields in retail these days is closing the gap between order and fulfillment. They want it to be as fast as possible. This is the world that is emerging all around us through this kind of transformation brought by technology. “

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A final example is one that Smith called his favorite. A Japanese lingerie company developed what is called the True Love Bra. He described the product: “You put on this bra that snaps in the front and it locks into place. It then determines your biometrics and if it determines, based on that monitoring relative to some baseline measures, that if you are truly in love with the person that you are with, it automatically unsnaps the bra. It does all of the work for you.” Well, not quite all of the work.

While the True Love Bra may be a cute gimmick, however bizarre it is, it does reinforce the point that while algorithms may do all of the work to lead the proverbial “horse to water,” they cannot make the horse drink it, nor can they provide the experience of drinking the water. As Smith said, “There is one part of this innovation curve that algorithms can’t magically deliver: the usage experience. The algorithms can buy it, but the algorithms can’t eat it. They can’t wear it. They can’t watch it. They can’t use it. The opportunity that we have for an unmediated connection with our customers is actually in the usage experience. In the future, if we really want to get to our customers, we are going to have to get to them as they use it, not as they buy it.”

Retail as a Love Object?

The second WPP presentation by Jeffery Sears, of The Modernist Group (prior to which he was co-CEO of Pirch) turned algorithms on their head. His message: “Retail and the Concept of Love and Respect.”

Right off the bat he said many blame the internet for projected store closings and declining traffic in malls and legacy brick-and-mortar stores. Sears says, “What you are looking at is the longest liquidation process in the history of retail. These companies that are closing died a long time ago. It’s a horrible thing for retail because look at all of the phenomenal things that are occurring. It should be the most exciting moment in the news about what retail businesses are doing – but it’s not.” He went on to say, “As a consumer today thinking about going to a store, I would rather stay home to buy products than walk into the store and be offended. Not everyone, but I think most of us, owe the consumer an apology. We’ve been taking their money for a long time, and we haven’t given them much back.”

He added, “If we’re going to have a physical retail experience, maybe we should start thinking about how we’re investing in it. This is what really worries me about business. We have a lot of noise right now, rightfully so, and a lot of investment in things. Yet, are we really investing in our people? If you look at some of the great brands that are struggling right now with billions of dollars of deferred maintenance on their balance sheets that they can’t seem to fix, maybe the real deferred maintenance is the investment in the associate…in the proverbial ‘last three feet.’” You know, where the algorithm may have sent you, where you and a sales associate and the product intersect, and where falling in love can possibly happen.

Sears referred to Amazon as “having a maniacal, entrepreneurial obsession with taking care of us.” CEO, Jeff Bezos, from day one, has been notorious for his consumer-centric obsession. And while they do not have a human sales associate to make the love connection, one can nevertheless fall in love with Amazon’s ability to personalize the relationship. As Smith pointed out, their superior use of algorithms can predict what you want and desire even before you can. This, along with the never-failing and promised benefit of convenience, speed and value, is what you fall in love with.

But in the physical brick-and- mortar world, where sales associates are still necessary, they are the human touch point representing your brand, your persona. So, when the algorithm does the work for the customers and directs them to your brand, the sales associate (who should be called a brand ambassador or lover-in-chief) can be the biggest competitive advantage or the biggest competitive threat. The customer either falls in love with them (thus your brand), or they interact with blank humanoids trying to sell something at best. At worst, they may repel customers who may never return.

Algorithms Can Lure a Lover

Just as algorithms can guide the consumer to your brand, algorithms can also do the work for the retailer’s brand ambassadors, providing them with the personal knowledge of what each customer desires. The brand ambassador can use those engaging touch points to express love and respect through authentic interactions and the ability to foster a loyal friendship.

Sears emphasized his point by stating, “The customer is buying the experience not the product. The product is irrelevant. You don’t get any bonus points for product anymore; you get bonus points for experience.” And the experience must have love and respect at its core. It starts and ends with the brand ambassador. And, in my opinion, while robots may one day be the interface for commoditized products and services, they will never replace the human ambassadors necessary to personalize, love and respect customers seeking a meaningful social experience.

Sears went on to say, “Their job should only be one thing –- to make the customer’s time in the store the best part of their day. You have no idea what is going on in somebody’s life when they grace you with their presence. It’s a privilege to have a customer. They could have a sick child. They could have lost a parent. They could be having a great day. They could be suffering from cancer. You don’t know, but if your people are focused on not selling but having the confidence that what you are offering is desirable and all they do is focus on making that a phenomenal experience for the individual, you will win every time.”

A Scorecard

According to the findings of a survey conducted by research firm, TimeTrade, retailers are missing out on an estimated $150 billion in revenue due to lack of personalization. The study found that consumers would increase their spending by 4.7 percent if they had a personalized experience; 90 percent had difficulty finding sales associates in the store; 49 percent never felt a personalized experience, and 71 percent said they would leave the dressing room and the store if they did not have an associate assisting them.

Would this not suggest one of the greatest opportunities for brick-and-mortar retailers? And yet it is also one of the biggest challenges. The cost of hiring more and better associates, training them and possibly the need to pay more is a daunting commitment.

But as Sears concluded, “This is a very difficult process for anyone trying to turn around traditional retail or to reinvent their business into this phase of love and respect because the leadership in retail today is making beg bets (huge investments) across all parts of their value chains. But they can’t wait. You can’t study data for two years –- you don’t have two years. The leadership is going to have to make the bet and look at their team and say, ‘This is where we are going and we’re going there now.’”

I will close this cautionary report by repeating my mantra that for brick-and-mortar retailers to compel shoppers to come to their store, there must be an experience worth having beyond enormous piles of stuff at enormously discounted prices. And whatever that experience is, it starts and ends with a human being that should be qualified enough to be called a brand ambassador.

Not to get all mushy, but with the perfect human touch, how could a consumer not fall in love?

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