CEO Insights: Andrew Baxter on marketing and robotics

Introduction: Machine learning and robots are moving from providing invisible customer services like stacking shelves into providing frontline customer services. The helpful rolling robot at the airport advising you what departure lounge to head towards, to the in-store display panel that can demonstrate the same item in ten different colours, or the chatbot answering your questions about health insurance. So how is marketing being transformed and what does this mean for the consumer.

From the University of Sydney Business School. This is Sydney Business Insights, the podcast that explores the future of business.

I'm Sandra Peter and for this discussion on cutting edge technologies in customer service, I'm joined by Andrew Baxter the Chairman of Publicis Communications for Australia and New Zealand. Andrew has worked with some of the largest Australian and international companies. He's brought us Rhonda and Ketut, and share a Coke and writes regularly for The Australian around the future of marketing.

Sandra: Hi Andrew and thank you for talking to us today. I want to talk to you about marketing and robotics and about this whole range of industries that are being transformed in robotics. So where do you see the most interesting things happening?

Andrew: It's about 10 key industries I thought about in terms of robotics are marketing colliding and I'll quickly run through them then we might go back through them in some detail. I mean there's clearly been robotics in manufacturing for a long time and that does tap into marketing, e-commerce and retail, banking and finance, the travel sector. There's quite a lot happening. Health care, hospitality, the auto industry, driverless cars etc. is a big one. I think the home as a category is a really interesting one with what's going on with robotics and IoT there. Even the media industry is in itself being affected by robotics and data and IoT. And I think security is another one that ties it back a bit to the home. If I go back to the start I mean manufacturing is interesting in this country the group catch of the day scoopon, they were quite vocal about two years ago, they put a 70 robot warehouse in to try and help alleviate some of the costs and speed up the delivery of the products that they sell. And there's now a start-up in Australia that's robot based that's looking to go through warehouses and shelves to make sure that you've got the right stock on shelves, so rather than people doing that at night. In that manufacturing and logistics and warehousing space I think there's quite a lot happening. E-commerce and retailers you know one of the biggest ones was recently over at the VIVA Technology Conference in Paris, and caught up with a lot of people from the U.K. and Amazon's Alexa's rolled out in the U.K. And you know people are raving about the fact that they can just walk around the house and say please add strawberries to my shopping list, please add orange juice to my shopping list and then all the sudden you're saying Alexa please deliver my groceries at 10 a.m. tomorrow. So people were getting quite excited about the role that AI and robotics are playing in that e-commerce space.

Sandra : And they're coming to Australia soon.

Andrew: They are and I think the US and the UK have clearly got the infrastructure set up for what people want to buy. I think the big key here in Australia is going to be how they're going to either partner or buy or set up themselves. All of those things that we do want to buy. So that will be exciting when they get here. And look they've been playing around for a while. I mean there's been dashed buttons that you can push to order your laundry detergent thatV sit on your washing machine. So there's a lot of things that have been going on in that area. And I think within retail stores themselves someone like Lowe's for a few years have been playing around with a robot that rolls around the stores and you can walk up and you can show it a screw for example that you might have that you've run out of and you've got one left and it sees that and it says oh yes that screws X Y Z and it's down in aisle 4. So I think some of that customer service side is really interesting.

Sandra : Beware of Bunnings then?

Andrew: Yeah. Well exactly. Bunnings could well put that in, I think Bunnings have got great customer service anyway. One of the things in Australia is that some of the stores that are what we would call our lowest prices type stores Bunnings, Officeworks, JB Hi-Fi, strangely I have got some of the best in store customer service.

Sandra : So will be interesting to see how they face up to Amazon and the big players coming in that will come with technology and definitely not that customer service.

Andrew: No that's right. So it's how much Australians will value as I call it Human CX instead of Digital CX in customer experience. The other area we're seeing a lot of growth in robotics is in banking and finance and that's really about the chat bots that are coming through. The ability either through Facebook Messenger or their own messaging platforms to be able to write to somebody and get an instant reply effectively from a robot. And there's been some good case studies recently, Yes bank in India have set up quite a good one. Lemonade which is the US insurance brand, that one's being well talked about. And then I saw only a couple of days ago, Capital One in the US doing one and a lot of this is about surprise and delight as much as it is about traditional Q&A. As the AI understand people better be serving up suggestions not just answers to questions I think is where that side of things going to go. I mentioned before guides in retail stores and at the technology show they had Pepper rolling around everywhere. You could ask them what part of the show you wanted to go to and where it was. I think LG has done some stuff around airports. Same sort of idea. But robots rolling around airports to tell you where the gate is that you are meant to go to or where the bathroom is or where that airport lounge is or where that duty free is. Lots of things going on in health care and the medical space. I think that's one area that IBM Watson's seems to have focussed on a little bit. I heard them talk at the VIVA Technology show and they've obviously been pushing into the machine every bit of content, every article, every bit of information that the Australian team here did a project over summer around melanoma getting people to tell their stories about melanoma so that the machine itself could learn as much as possible about melanoma and try and find the patterns as to why and how. I haven't seen any results of that yet but it looked like an interesting project in the healthcare space. And wearables clearly almost IoT meets AI meets a bit of robotics, everyone's running around with either their Samsung watches or Apple Watches or fit bits. And I think that whole space from a marketing point of view is really interesting because you're now seeing health insurance companies in the US and some of the Australian ones are starting to look at it around, well if they know you're being healthier then they're willing to give more discounts to you.

Sandra : And rather that's run by companies giving health bands or insurance companies giving them out or your employer making sure that you're doing what supposed to do.

Andrew: So I think that's a really interesting space as well.

Sandra : How does marketing mediate this relationship, you know, is it customer service? Is it developing content? Is it developing strategies? Is it all of those things?

Andrew: The short answer is it is all of those things. I think interestingly there's some programs in the US that have automated media planning and even content production without any human involvement. There's a couple of journalistic sites where they're taking in all the information about a certain story and recreating a story that's unique for a platform without any human intervening in there. So I think there is an ability for almost automated content and automated strategy which is partly scary in itself.

Sandra : So you might be reading something in the Wall Street Journal, a market update that's been written by a robot that read three databases and then created a nice bit of content.

Andrew: That's correct. But look I think specifically the customer service area is the big area that's affecting marketing. We talked about that customer service in store and I think that's being augmented in a good way by IoT and beacon devices and things like that. So there's a huge role that customer service can play in that space. For example Macy's ran a promotion effectively to say well come into store and tap into our beacon technology and download our app and you go in the draw to win a prize, can't remember what it was, but they drove millions of dollars of sales off the back of that because they then knew those people were in-store and were able to push them further either ads or offers and there was some great research done, I think late last year, where about 50 percent of people are willing to receive location based information from stores while they're in there. Now it still means 50 percent don't want to be bugged and hassled but 50 percent do, and on of those 50 percent that did I think if you served them up and ad they were seven times more likely to buy. If you served up a specific offer for a product they were like 19 times more likely to buy. They're big results in terms of enabling you to specifically impersonalized market to somebody in a relevant way in the context of the store that they're already in. It sounds like a simple example but there's clearly a lot of complex technology behind it. They're some of the things we're seeing. I think technology is playing a role in marketing and customer service. You see like in an Apple store there's really no checkouts anymore, people are walking around with a handheld device. You're getting your receipt wherever you are standing in the store. Having travelled around Europe and the US recently that's very prevalent in a lot of stores now. You see in some of the higher end luxury stores, I was over in Shanghai a couple of years ago, and they're walking around with tablets showing you different versions of different watches or handbags or different colours on the tablet. So it's just becoming a seamless customer service experience with human interaction as well as the technology that can help a sale or a service. A lot of it is also about enabling people to buy. If it's not in store you can still buy it and get it delivered. Something like 18 percent of people who go in the store are happy to actually buy online in the store. So they're not intending to actually take the product away.

Sandra : So are stores becoming a bit like showrooms?

Andrew: For some people they are. This is a point of view that that's where it will all end up being in 30 years time I think that argument is a bit like people saying we wouldn't be reading hardcover books anymore. There's still a number of people that want to do one way or the other way. Or a combination of both. So I think as marketers we need to understand that people still want to do all of these things and we need to cover everything. But you're right some people are literally using it as a show room, going in looking at stuff maybe trying it a lot and going well I've got other things to do. I'm happy to get that delivered tomorrow so I'm just going to jump online now and order that thing I just tried on. It's pretty cool. The fact that beacon technology has come down in price and it can be hidden away and even some of the devices it sits within look quite cool. It's a much more affordable and easy to set up, even a push notification type technology which they all runoff does require the app of that store to have been downloaded on to somebodies phone. I think that's going to be some of the marketers biggest challenge. We only ever have about 60 apps sitting on our phone at any one time, we tend to only use regularly seven of those. So how do you become one of those. I think the technology is going to be less of a challenge now.

Sandra : Does that give a huge advantage to companies like Amazon that, you know now with Amazon acquiring things like wholefoods and so on that becomes concentrated in the hands of the one app that you don't need another app.

Andrew: Yes. In China with Alibaba, it's the same sort of thing. Everybody's always on that app for various reasons every day so if it can be done on that just like Google starting obviously doing and Amazon. So yeah all of these things. If they are the regular app that you're using and you can buy things, exchange money, pay, do whatever you need to do, then yes I think the likelihood is people are going to stick to those one or two or three or up to seven apps. That's the biggest challenge I think for market is how do we get people using that app more often from a retail point of view anyway.

Sandra : So we talked about beacon's and apps, and all of these things require, that as customers we give up a bit of our data and a bit of our privacy. What do you think the trade-off there is between our right to have our own privacy and what we know about it and also what companies can do to help us if we do?

Andrew: My simple take on data is it's a bit like being neighbours. You can be that nice neighbour next door that's very helpful. Having gotten to know the next door neighbour, or you can be sort of that pervy over the back fence spying on your neighbour. And I think clearly from a marketing point of view, it wouldn't be the nice helpful neighbour if you think about that as an analogy. But you're right I mean there's a lot of data that we give up. People will say they don't know how much data they give up. There's some interesting statistics floating around. I saw some a couple of years ago on banking that 73 percent of people were very happy to give up their data to a bank as long as they were receiving personalized and relevant offers or advice back. Now that still means 27 percent of people absolutely didn't want to. You hear stories about people who move house in any one of the three Telcos and the frustration about getting your home line and your broadband and your cable and having to ring three times and customers will say "well you know all my data why is this so hard?" So on one hand people will use data for saying we want better customer service out of you. But at the same time on other hands they may not be willing to give it away and you just got to be careful. I mean I think you've got to use data wisely. You can't be using it to an extreme. It's got to be helpful at the end of the day. Marketing is around helping solving problems and needs and that's what we've got to try and do.

Sandra : Is this data also creating ever increasing barriers to entry in some of these industries. So I'm thinking of a shop like Myer. Obviously if they have access to their customers data but then they also work with let's say one of the big four banks, where those customers have their credit cards and so on, and are able to connect all these databases, that would give them a huge advantage versus a small company, a small shop where you might not be able to do the same sort of thing or take advantage at all of these technologies.

Andrew: You're right. But the great coffee shop that you go back to and it's become a whole Australian thing about having coffee and what you have. But you will walk into that coffee shop and without even asking the barista, he'll remember or she will remember from three days ago exactly what you have and all the sudden there's a coffee sitting there. And that to you is amazing customer service. In effect you just try and replicate that on a mass scale with some of these bigger organizations and butcher shops are also the same. There's shops that you've always gone to all your life that have just had that incredible customer service. Your local newsagent whatever it might be. And I think because they've only got X amount of customers they can almost remember every single one of them and they can offer those personalized experience based on what they've done before. I think through robotics and AI we're just trying to do that in the same way.

Sandra : I walk in, it recognises my phone, it makes my favourite cup of coffee.

Andrew: Yeah or it knows that you last bought a pair of jeans two years ago and that you might be in the market for another pair or whatever it might be. But it's got that information sitting there.

Sandra : Most horribly probably knows what I weigh now, and it won't give me a new pair of jeans.

Andrew: Technology is coming down in price all the time and Moore's Law with this sort of technology also enables more power going through. But you're right I mean I think there'll be a period of time where some of the bigger ones will have a bigger advantage. But at the same time the bigger ones are having issues because they've got so many different data sets they're trying to bring together, and a lot of them are all working off multiple systems. Because if you think about banks, they might have had retail bank, wealth banking they might have had insurance as part of their offer. All of that in the past has sat on separate platforms, and pulling all that together has proven difficult matching all that data up. So at the same time yes they should have an advantage but they've got some legacy issues they've got to overcome to get there.

Sandra : What do you think is the most promising technology and where can marketing have sort of the biggest impact on growth?

Andrew: Look I think the big push in the next few years is going to be around this whole robotics, AI, IoT space, I mean it's clearly where a lot of investment companies like Intel and Cisco are putting a huge amount of money behind it. The Chinese government have said that they want to be the biggest player and the world leader in AI by 2025. They think it will be a 22 billion dollar industry just in China. This is where a lot of that's going on. Virtual reality is going to be really interesting. There's a lot of early adoption of that that hasn't quite taken off because again that's going to need consumers to be wanting to have headsets on making that easier. But you can see that there's some great potential uses of virtual reality whether that be in shopping or clearly gaming is a big one right now. You know I think even in media there's going to be some interesting VR opportunities there. So they're the main technologies that we're seeing clients wanting to investigate. With the rise of digital CX and tying that back to human CX, I think there's a big thing around customer service now where you forget that young Carlson's Moments of Truth was written in 1989. It was seen back then as a management book but really when you think about it in today's context it's one of the great marketing books the 50000 moments of truth every day for that airline. One of the guys from Accenture or Deloitte in the UK recently started talking about you know we want to make sure from a digital point of view that every touch point we're making sure is a positive. Well it's exactly the same theory as young Carlson came out with Scandinavian Airlines all those years ago. And I think as marketers if we think back to that and you think about the role technology can play but also the role the human has to play in that there is this dearth of traditional customer service in this country I think, you walk into a department store and you struggle to find somebody to help you. You wait on line for an airline or a telco or a bank for 15, 20, 30 minutes. There's a balance still to be found between the technology, I think I read somewhere that 85 percent of customer service will be dealt with by AI by 2020. Again, when you're reading 70 percent of people over the age of 55 still want to talk to somebody human on a phone in their local market who understands the local market. Then there's a bit of a dichotomy going on. It clearly will transition over time. But right now we're at this juxtaposition of one generation expecting one thing that they've had all their life and then a younger generation who are clearly are expecting us to better use data and robotics and AI to help them through chat bots and other things. So we're at this counter point where you still need to do both as marketers. You can't just do one or the other.

Sandra : Where do you think marketing will have the biggest impact for growth?

Andrew: I still fundamentally think that marketing has always been there to solve the biggest needs and biggest problems of a company, that may well be through digital technology and it may well not be. Ideation, creative thinking through marketing, coming up with new products or services based on a need that's out there that marketers can identify is still the fundamental of what we all do and why we get out of bed every day. It's just that how we execute it could be completely different to how we executed it five years ago, 10 years ago, 20 years ago. I remember one of my first lecturers 25 or 30 years ago telling me the mousetrap story, well there's never been a new mousetrap because there's never been a need to have a better mousetrap. So many people have tried to invent a better mousetrap and it has never worked. There was a need that was fulfilled has been fulfilled by a certain product for 150 years or something.

Sandra : Mousetrap with a beacon delivering a specific type of cheese.

Andrew: With infra-red spotting the mouse coming over. But sometimes we try to overcomplicate things. I think marketing's about simplicity, you know what's the simplest way to meet a need for a customer out there to help them either change their behaviour to buy something or do something different. We too often forget the fundamentals of what we're trying to do here. In this excitement is clearly an exciting time for us in terms of what's possible, but I do think from a growth point of view you've got to go back to what business are we in? Who is our target audience? What do they need? How we're going to deliver either a better experience or a better brand or a better product or a better service for them?

Sandra : And technology is just another tool to help us do that.

Andrew: Correct.

Sandra : Thank you so much for talking to us today.

Andrew: No problem at all. I enjoyed it.

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